Hello guys,
This post is a continuation of the series of feasibility study. You can check the previous post(s) here:
Market feasibility provides information on the sales, organization, management and the nature and extent of market and market area. It discusses the extent of competition including other similar facilities in the market area and all risks related to the project/products/service. It involves description of the industry, competitiveness of the industry, market potential, access to market outlets, sales projection, among others.
Specifically market feasibility study deals with:
Assuming consumers are familiar with the types of products to be produced and also assume that the product or services are already in the market, and are already on sale, surveys on this products are usually easier than those for a completely new one. The major questions to be asked may focus on what are the things that consumers like or dislike about existing competitor’s products.
On the other hand, if the entrepreneur wishes to make products that are new to an area, he needs to have samples for potential consumers to taste and give their opinion on whether they like the product and would be willing to buy it.
A different set of questions would be needed to assess the size of the market for a particular type of product by estimating the total weight of the product that would be bought per week, per month or per year. There would also be the need to estimate the value of the market by estimating the amount of money that would be spent on that product each week, month or year.
At the same time it is possible to gather information about the types of people who would buy the particular product and where they would buy it. The information gathered from potential consumers, using questionnaires or interview method, can be analyzed by the entrepreneur to get a good idea of the quality characteristics of the product that they perceived that consumers prefer. When analyzing data collected about market size and value, it is often helpful to find official statistics about the people who are expected to be the consumers for a new product.
Market surveys and the calculation of market size and value are important to find out whether the demand for a product really exists. Even if no one else is currently making a product locally, it is likely that once a new business starts production and is seen by others to be successful, they too will start up in competition.
It is therefore important from the beginning, to estimate the proportion of the total market that a new business could reasonably expect to have. This is known as the market share. It is often difficult to estimate a realistic market share and the figure depends on a large number of variables. In many cases, new entrepreneurs over-estimate the share that they could expect, with the result that production operates at only a small proportion of the planned capacity.
