what is market analysis?

7/27/2019 What is Market Analysis?

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Market Analysis


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Report Outline

I. The Nature and Scope of Market Analysis

II. Importance of Feasibility Studies to Market Analysis

III.

Definition of Terms

IV. Typologies or Approaches to Market Analysis

V. Points in Evaluating the Contents of Market Analysis

A. General

B. Applied to Clean Development Mechanism Project

VI. General Technique/Method in Conducting Market

Analysis


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Market Analysis

It is done to determine the extent to which

goods and services to be generated by the

project are needed or demanded

It is done to design the appropriate

marketing strategies and plans that will

help ensure that a projects target users

are reached and will accept the projectsoutputs


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A project study must define:

- Types and nature of products or services

to be generated by the projects

- Specific uses- Geographic influence area


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Market Study

"lifeblood" of every project feasibility study

addresses the question of demand and profitability

seeks to determine:

size, nature and growth of total demand for the product

description and price of the product to be sold

supply situation and the nature of competition

different factors affecting the market of the product

appropriate marketing program


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The Nature and Scope of Market

AnalysisObjectives of a market study:1) To determine the extent to which goods and services to begenerated by the project are needed or demanded

2) To design the appropriate marketing strategies and plans thatwill help ensure that a project's target users are reached and willaccept the project outputs

- project's expected outputs are analyzed in terms of their pastand present demand-and-supply situations, expected future

behaviors, and the resulting demand-supply situations, expectedfuture behaviors, and the resulting demand-supply gaps as theyrelate to project outputs


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The Nature and Scope of Market

Analysis A project study must clearly define the types

and nature of products or services to begenerated by the project, their specific uses,

potential users, geographical influence area,and other characteristics.

When more than one type of output is

expected, the expected product range shouldbe described


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Market Analysis and CDM

Market analysis can be applied to answer the

following questions:

Demand for a climate change-mitigating measure in the

host country

Demand for carbon credits in Annex I countries

Sources of supply to fulfill the project (e.g. search for a

dumpsite, location for wind farm)

How to address concerns by host communities regarding

impact of the project


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Definition of Terms

Market- refers to an arena for potential

exchanges that may involve money; where

demand-and-supply conditions for goods or

services are taken into account, whether or

not such goods or services carry a market

selling price


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Identifying demand

determinants Consumer demand demand for product for final consumption

purposes

Producer demand - demand for a product used as an input in theproduction of other goods

Demand for social services (special case of consumer demand

where services have no market price and the limiting factor is thegovernments ability to pay)

Demand determinants: Population

Income

Prices

Substitution possibilities Changes in users taste

Rate of investments

Government policies and budget


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Factors Affecting the Market

Demand

Population growth

income changes

tastes

urban/rural development

prices of substitute/complementary products

advertising and promotion


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Estimating past and present

demand

Sources of Data

Historical Data Coverage

Techniques for Demand Estimation

Standards or Coefficients

Chain ratio method

Market-buildup method


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Projecting Demand

Survey of Peoples Intentions and NeedsAssessment

Experts Opinion

Time Series Analysis

Statistical Demand Analysis

Use of planning standards

Market testing

Other demand considerations


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Supply Analysis

Supply Analysis - evaluation of existing

supply conditions

Identifying supply sources

Estimating past and present supply

Projecting supply


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Demand- Supply Consolidation

Past and present supply-demand gap

Future supply-demand gap, without the

project

Future supply-demand gap, with project


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Other market considerations

Competitiveness of product

Government policies

Marketing program


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Parts of a Marketing Plan

Introduction

General Business Condition

Competitive Conditions

Market Research Results

Sales and Distributions Plan

Advertising and Sales Promotion

Other related aspects (product formulation,packaging,legal clearance, raw material procurement, etc.)


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Typologies/Approaches

Trend or Time Series Analysis Graphical approach

Freehand drawing

Two-point line

Average growth methods

Arithmetic average growth (straight line)

Geometric and compound growth

Smoothing techniques Moving average method Use of seasonal index

Curve fitting


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Correlation and Regression

Analysis Can be used to find out if the outcome from

one variable depends on the value of the

other variable, which would mean a

dependency from one variable on the other.

Regression and correlation analysis can be

used to describe the nature and strength of

the relationship between two continuous

variables


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Stages for Correlation and

Regression AnalysisCreate a scatterplot for the two variables and

evaluate the quality of the relationship.


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Stages for Correlation and Regression Analysis

Pearsons Correlation Coefficient can be

calculated as:

Pearson's correlation coefficient (named after Karl Pearson, 1857-1936) is

a number between -1 and 1, that measures the strength of a linear

relationship between two continuous variables. The absolute value of the

coefficient measures how closely the variables are related. The closer it is

to 1 the closer the relationship. A correlation coefficient over 0.8 indicates

a strong correlation between the variables.

If the scatterplot shows a reasonable linear relationship (straightline) calculate Pearson's correlation coefficient to evaluate the

strength of the linear relationship.


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Stages for Correlation and Regression

Analysis

If we want to use a variable x to draw conclusions concerning a variable y:

y is called dependent or response variable.

x is called independent, predictor, os explanatory variable.

If the relationship between two variables is linear is can be summarized by a

straight line. A straight line can be described by an equation:

y = a + b x

a is called the intercept and b the slope of the equation.

The slope is the amount by which y increases when x increases by 1 unit.


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Limitations of Regression and

correlation analyses

Forecasts are obtained by extrapolating data fromestablished relationships of the variables beingstudies whose behavior may not necessarily holdat other times or places

The methodology assumes that no lineardependence exists among the independentvariables so that a high degree ofinterdependence among the independent

variables will affect the precision of estimation It is not recommended for analyzing small projects

where the cost and effort in obtaining needed dateare not commensurate to the project cost.


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Planning standards

Illustration of Demand projections

Illustration of Supply projections


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Other statistical techniques

Statistical Demand/Supply Analysis

Regression

Used to examine the type of relationship that exists

between demand/supply and its determinants

Help the analyst establish the type of association

between two or more variables

Correlation analyses

what is market analysis?

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