MARKET FEASIBILITY

QUIZ

DEFINE MARKET WHAT DOES IT MEAN BY DEMAND? WHY DO WE NEED TO DO A DEMAND

ANALYSIS BEFORE STARTING A BUSINESS?

MYSTERIOUS LANDSCAPE

Can you spot the mythical creature hidden in this landscape?

POINTING FINGER

POINTING FINGERS

Can you tell which of these two fingers is pointing at the exact center the vertical line? A or B?

WHICH IS BIGGER?

TWO SPHERES

MARKET STUDY

LIFEBLOOD OF VIRTUALLY EVERY PROJECT FEASIBILITY STUDY

FOCAL POINT OF A PROJECT STUDY- PROFITABILITY

MOST BASIC ISSUE- DEMAND NO DISCUSSION OF PROFITABILITY

OR OF THE OTHER ASPECTS OF THE FEASIBILITY STUDY IF THERE IS NO DEMAND!

MARKET

gathering for buying and selling: a gathering in a public place for buying and selling merchandise or farm products, especially one held regularly

A PLACE FOR BUYING & SELLING GOODS & SERVICES TO SATISFY HUMAN WANTS

The whole area of economic activity in which the laws of supply and demand operate, often thought of as a regulatory force affecting both economic and political affairs.

THE TRADE IN A PARTICULAR COMMODITY

DETERMINE THE FOLLOWING THE SIZE, NATURE, & GROWTH OF TOTAL

DEMAND FOR THE PRODUCT OR SERVICES THE DESCRIPTION & PRICE OF THE

PRODUCT TO BE SOLD THE SUPPLY SITUATION AND THE NATURE

OF COMPETITION THE DIFFERENT FACTORS AFFECTING THE

MARKET OF THE PRODUCT/SERVICE THE APPROPRIATE MARKETING PROGRAM

FOR THE PRODUCT/ SERVICE

PRODUCT DESCRIPTION

NAME OF THE PRODUCT/ SERVICE POPULAR & SCIENTIFIC (IF ANY) & THE REASON

FOR CHOOSING IT PROPERTIES OF THE PRODUCT/SERVICE

PHYSICAL, CHEMICAL, &/ OR AGRONOMIC USES OF THE PRODUCT/ SERVICE

AS A FINISHED COMMODITY, AS AN INPUT TO OTHER PRODUCTION ACTIVITIES

MAJOR USERS OF THE PRODUCT/SERVICE INDIVIDUALS &/OR FIRMS

GEOGRAPHICAL AREAS OF DISPERSION WHERE THE PRODUCT IS MOSTLY FOUND

DEMAND

the level of desire or need that exists for particular goods or services.

CUSTOMER INTEREST IN ACQUIRING SOMETHING

NECESSITY REQUIREMENT

DEMAND ANALYSIS

ANALYSIS OF DEMAND TO IDENTIFY THE NEEDS OF CONSUMERS & TO DETERMINE WHETHER THEY ARE WILLING & HAVE THE CAPABILITY TO PAY FOR THE PRODUCT/SERVICE A BUSINESS IS CONTEMPLATING ON PRODUCING

CONSIDERATIONS

PRODUCTION & IMPORTATION FIGURES OF THE PAST

CREDIT AVAILABILITY INCOME DISTRIBUTION POPULATION GROWTH PRICE VARIATIONS AGE COMPOSITION THE DEGREE OF URBANIZATION TASTES & PREFERENCES MONEY SUPPLY GNP

DEMAND ANALYSIS

MACROECONOMICS VARIABLES ECONOMIC DATA THAT ADD UP THE ACTIVITIES OF

CONSUMERS, FIRMS, GOV’T, & THE IMPORT-EXPORT SECTORS▪ EX. ▪ STUDY GNP & ITS COMPONENTS- IF GNP IS EXPECTED TO RISE

RAPIDLY, BUSINESSMEN COULD ORDINARILY EXPECT GOOD TIMES FOR THEIR BUSINESS.

▪ OR IF ONE IS PLANNING TO ON SELLING A PRODUCT FOR MASS CONSUMPTION, HE MIGHT GIVE MORE ATTENTION TO THE GROWTH RATE OF A GNP COMPONENT, PERSONAL CONSUMPTION EXPENDITURES.

▪ OR A PRODUCER OF EQUIPMENT WOULD BE MORE INTERESTED IN THE GROSS DOMESTIC CAPITAL FORMATION COMPONENT

▪ AN EXPLORER WOULD, OF COURSE, BE INTERESTED IN THE EXPORT OF GOODS AND SERVICES ITEMS.

MACROECONOMICS

study of large-scale economic systems: a branch of economics that focuses on the general features and processes that make up a national economy and the ways in which different segments of the economy are connected

DEMAND..

MICROECONOMICS VARIABLES DATA ON THE LEVEL OF INDIVIDUAL FIRM

OR AT LEAST ON THE LEVEL OF AN INDUSTRY GROUPING.▪ DEMAND FOR A FIRM’S PRODUCT▪ PRICE OF THE PRODUCT▪ PRICE OF THE SUBSTITUTE PRODUCT▪ INCOME▪ POPULATION

▪ * AN ANALYSIS OF INCOME DISTRIBUTION- TYPE OF PRODUCTS/SERVICE CONSUMERS CAN AFFORD

MICROECONOMICS

the study of particular aspects of an economy

OTHER IMPORTANT CONCEPTS IN DEMAND ANALYSIS

PRICE ELASTICITY- MEASURES THE RESPONSE OF QUANTITY DEMANDED OF A PARTICULAR PRODUCT TO VARIATIONS IN ITS PRICE

INCOME ELASTICITY- MEASURES THE RESPONSE OF QUANTITY DEMANDED OF A PARTICULAR PRODUCT TO VARIATIONS IN INCOME

THE SIZE, NATURE, & GROWTH OF TOTAL DEMAND FOR THE PRODUCT MUST BE DETERMINED IN THE FOLLOWING MANNER: WHO & WHERE IS THE MARKET?

TYPE MANNER OF USE INCOME CLASSIFICATION LOCATION AGE, ETC.

WHAT IS THE TOTAL DOMESTIC DEMAND FROM THE HISTORICAL POINT OF VIEW?

IS THERE A FOREIGN MARKET? EVALUATE DEMAND GROWTH PATTERNS IN THE

PAST & PROJECT FUTURE DEMAND BY APPLYING APPROPRIATE PROJECTION METHODS

SUPPLY

quantity available in market: the quantity of a good or service available in a market at a specific time.

an amount or quantity of something available for use.

SOURCE

THE SUPPLY SITUATION MAY BE DETERMINED AS FOLLOWS:

WHO & WHERE ARE THE DIRECT COMPETITORS? SIZE PRODUCT QUALITY LOCATION PERFORMANCE MARKET-SEGMENT PERFORMANCE

HISTORICAL DOMESTIC SUPPLY AS COMPRISE BY LOCAL PRODUCTION & IMPORTATIONS

FOREIGN MARKET- HISTORICAL SUPPLY PATTERNS IN THE TARGETED COUNTRIES AS COMPRISED BY THEIR LOCAL PRODN & IMPORTATIONS

EVALUATE SUPPLY GROWTH PATTERNS & PROJECT FUTURE SUPPLY BY APPLYING APPROPRIATE PROJECTION METHODS.

DEMAND-SUPPLY ANALYSIS COMPARE THE DEMAND AND SUPPLY TRENDS DETERMINE THE AMOUNT OF DEMAND

UNSATISFIED, ESP IN THE PROJECTIONS. IF FAIRLY SATISFIED▪ WHETHER THE FACTORS AFFECTING THE MARKET MAY

DISRUPT THE EQUILIBRIUM SO AS TO CAUSE DEMAND TO GROW FASTER THAN SUPPLY

▪ WHETHER THE QUALITY OF THE PRODUCT IS SUCH THAT IT MAY CREATE ADDITIONAL DEMAND OR REDIRECT PART OF EXISTING DEMAND IN ITS FAVOR

DETERMINE THE SHARE OF THE MARKET BY ESTABLISHING THE PROPOSED PRODN VOLUME (DETERMINED IN THE TECHNICAL STUDY) AS AGAINST THE TOTAL MARKET SIZE

PRICE STUDY

IN ECONOMIC THEORY, PRICE IS DETERMINED MAINLY BY THE DEMAND-SUPPLY SITUATION. AN INCREASE IN DEMAND WITH SUPPLY

CONSTANT WILL HIKE PRICES. AN INCREASE IN SUPPLY WITH DEMAND

CONSTANT WILL DECLINE PRICES.

PRICE STUDY

OTHER FACTORS THAT INFLUENCE PRICES: W/O ANY CHANGE IN DEMAND OR

SUPPLY, PRICES MAY GO UP IF RAW MATERIAL COSTS RISE; OR

PRICES MAY DECLINE IF THE GOV’T DECIDES TO SUBSIDIZE PRODN

PRICE STUDY PRICES MAY ALSO BE DETERMINED BY THE SIMPLE COST-PLUS

METHOD OF ACCOUNTANTS. DETERMINE THE SELLING PRICE OF ALL SIMILAR AND

SUBSTITUTE PRODUCTS. LOOK INTO THE HISTORY OF THESE PRICES (INCLUDING THE

RANGE OF FLUCTUATIONS) & ESTABLIST THE FACTORS THAT MOSTLY INFLUENCE THEIR FLUCTUATIONS OVER TIME.

DETERMINE THE RESPONSIVENESS OF DEMAND TO PRICE CHANGES. WILL THERE BE A TREMENDOUS, SLIGHT, OR NEGLIGIBLE INCREASE OR DECREASE IN DEMAND IF PRICES ARE LOWERED OR RAISED?

ESTABLISHED THE PRODUCT’S SELLING PRICE, TAKING INTO CONSIDERATION ALL OF THE ABOVE, THE MARKET SEGMENT TARGETED, AND THE OPERATING COSTS & EXPENSES (DETERMINED IN THE TECHNICAL & FINANCIAL STUDIES). LIKEWISE, ESTIMATE THE INCREASE FORESEEN IN SUBSEQUENT YEARS.

FACTORS AFFECTING THE MARKET

1. DEMAND MAY BE SIGNIFICANTLY AFFECTED BY: POPULATION GROWTH INCOME CHANGES TASTES RURAL/URBAN DEVELOPMENTS PRICE OF SUBSTITUTES AND COMPLIMENTARY

PRODUCTS, AND MARKETING TOOLS▪ ADVERTISING▪ PROMOTIONS▪ CREDIT POLICIES, ETC.

FACTORS..

2. SUPPLY MAY BE INFLUENCED BY THE DEV’T OF SUBSTITUTE PRODUCTS, THE ENTRY OR EXIT OF FIRMS, SOURCES AND COST OF PRODUCTION

FACTORS, GOV’T POLICIES, IMPROVED TECHNOLOGY, ETC.

FACTORS..

3. PRICES MAY BE AFFECTED BY PRODUCTION COSTS PRICE CONTROLS INFLATION, ETC

MARKETING PROGRAM

END PRODUCT OF THE MARKET STUDY

“AFTER DEFINING MARKET AND

PRICE TARGETS, THE MARKETING PROGRAM COMES IN AS THE IMPLEMENTING ARM”.

PROCEDURES

1. DETERMINE THE TYPES OF MARKETING PROGRAMS PREVALENT IN THE INDUSTRY AND GAUGE THEIR RESPECTIVE EFFECTIVENESS.

PROCEDURES

2. DRAW UP A MARKETING PLAN THAT IDENTIFIES THE TGT MARKET, THE SELLING PRICE, THE PACKAGING OF THE PRODUCT, THE DISTRIBUTION NETWORK, THE SALES MGT MECHANISM, & THE ADVERTISING & PROMOTIONS PROGRAM. IMPORTANT COMPONENTS OF A MKTG

PROGRAM:▪ PRODUCT▪ PRICE▪ PLACE▪ PROMOTIONS

PROCEDURES

3. DESIGN THE MARKETING ORGANIZATION W/C WILL IMPLEMENT THE PLAN & DETERMINE THE COST INVOLVED. THE ORGANIZATION WOULD AGAIN DEPEND GREATLY

ON THE TYPE OF PRODUCT BEING MARKETED. IN GENERAL, A CONSUMER PRODUCT WOULD REQUIRE A SIZEABLE ORGANIZATION THAT CONCENTRATES ON DISTRIBUTION CHANNELS & PROMOTIONS.

NON-CONSUMER ITEMS WOULD PROBABLY REQUIRE EITHER A DISTRIBUTION NETWORK OR A SMALL-SIZED SALES FORCE. IN ANY CASE, THE MOST IDEAL ORGANIZATION IS ONE THAT ALLOWS MAXIMUM EFFICIENCY AT THE LOWEST MANPOWER LEVEL POSSIBLE.

REMINDERS THE SALES PROMOTION PLAN AND THE CHANNELS OF

DISTRIBUTION SHOULD BE APPROPRIATE TO THE PRODUCT AND THE MARKET.

THE CONSUMER BUYING HABITS IN THE PARTICULAR FIELD SHOULD BE CONSIDERED IN THE SELECTION OF OUTLETS.

POTENTIAL DISTRIBUTORS MAY INCLUDE RETAILERS WHOLESALERS JOBBERS INDUSTRIAL LEADERS INDUSTRIAL DISTRIBUTORS MANUFACTURER’S AGENTS

A PLAN FOR CONSUMER CREDIT AND FINANCING, AND FOR SALES ALLOWANCES CAN BE FORMULATED ON THE BASIS OF MARKETING CHANNELS SELECTED.

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