Market Feasibility Presented To: DR\ Hesham Dar Presented From: Merath Emad Abd El Azim Mohamed Fatma Elzahraa Youssef Farouk Sara Muhamed Muhamed Alboghdady Shahd Amr Ahmed Ahmed Introduction In today's dynamic business landscape, conducting a thorough market feasibility analysis is crucial for the success of any venture. This essay explores the concept of market feasibility, examining its importance and the challenges that arise when assessing the viability of a potential market. By delving into key factors such as target market identification, competition analysis, market trends, and financial projections, we aim to shed light on the significance of market feasibility in making informed business decisions. What is Market Feasibility How do you know if a product, strategy, or idea will find success in a specific market? Instead of guessing what could be needed or possibly popular, a market feasibility study delivers concrete information about what to expect. Market study is an essential part of the detailed feasibility study as it helps the project owner in knowing the volume of demand for project products or services as the market study aims to study a set of criteria that give the project owner sufficient information and knowledge about the project status and its position in the market with competitors knowledge and one of these criteria : Study the determinants of demand for the proposed project products, estimate the current and expected demand for project products, estimate the market size by estimating the volume of demand, estimate the expected share of project products from the local market, and study the effects resulting from the production of complementary and alternative goods for the 1 produced goods, Arafa market structure and characteristics and advantages, the study of specific factors for display and analysis is carried through this study estimate expected during the first five years of the life of the project total revenues. A market opportunity has a better chance of success when it can meet the unmet consumer needs in a specific segment. Market feasibility identifies those gaps, helping entrepreneurs determine if it makes sense to pursue that idea. Difference between Market Feasibility and marketing study The difference between market feasibility and a marketing study lies in their focus and purpose. Market feasibility primarily examines the overall viability and potential success of entering a specific market. It assesses factors such as target market identification, competition analysis, market trends, and financial projections, size and growth potential of the market to determine if it's a viable opportunity. On the other hand, a marketing study is more specific and focuses on understanding the target market's needs, preferences, and behavior. It delves into aspects like consumer demographics, buying patterns, market segmentation, and marketing strategies to effectively reach and engage the target audience. It involves conducting research to gather data on consumer demographics, buying habits, market segmentation, and competitors. The insights gained from a marketing study 2 help in developing effective marketing strategies and campaigns to reach and engage the target audience. While market feasibility provides a broader assessment of entering a market, a marketing study provides detailed insights to develop effective marketing plans and strategies. Both are important in making informed business decisions, but they serve different purposes. Importance of Market Feasibility Market feasibility is incredibly important when it comes to making business decisions. It helps determine the viability and potential success of entering a specific market. By conducting a thorough market feasibility analysis, businesses can assess factors like target market identification, competition analysis, market trends, and financial projections. Market feasibility provides valuable insights that can guide decision-making processes, such as whether to enter a market, how to position a product or service, and what strategies to implement. It helps mitigate risks, identify opportunities, and optimize resource allocation. Ultimately, market feasibility plays a crucial role in making informed business decisions and increasing the chances of success in the marketplace. Market feasibility helps you understand the market, the competitors and customers. It also helps you to understand the size of your target market and its growth rate. It is an important part of establishing whether or not it’s feasible for you to compete in a particular industry. 3 Goals of Market Feasibility The goal of market feasibility is to answer two essential questions: Is there a need for the product or service, and can the business make a profit by meeting that need? By answering these questions, entrepreneurs can make informed decisions about whether to pursue a business idea, how to structure their business to maximize its chances of success or whether to expand the business into new markets or not. The market feasibility analysis helps you understand the market, the competitors and customers. It also helps you to understand the size of your target market and its growth rate. This analysis is an important part of establishing whether or not it’s feasible for you to compete in a particular industry. We can set up the goals of the market feasibility study as follows: • Determine the market structure and shape. • Determine exact demand for product. • Identify the factors affecting the market demand and supply. • Identify the micro and macro size of the market. • Identify market targeted groups, and market segments. • Selecting the price policy and the best price mechanism to sell the products. 4 Benefits of conducting Market Feasibility It is never easy to break into a new market. Businesses have to face many challenges such as fierce competition, complex ecosystems, and constantly changing industry trends. And in this expansion journey, understanding the market is the key to any market expansion. Here are some key benefits of conducting a market feasibility study: 1- Identifies market demand: A market feasibility analysis helps entrepreneurs identify the demand for their product or service. It provides insights into the size of the target market, consumer preferences, and behavior, which helps entrepreneurs understand their potential customers better. 2- Evaluates competition: A market feasibility analysis helps entrepreneurs evaluate their competition. It provides insights into the number of competitors, their strengths and weaknesses, and the strategies they use. This information helps entrepreneurs understand how they can differentiate their product or service from their competitors. 3- Helps in pricing strategy: A market feasibility analysis helps entrepreneurs determine the price of their product or service. It provides insights into the pricing 5 strategies of competitors and the willingness of customers to pay for the product or service. 6- Helps in marketing strategy: A market feasibility analysis helps entrepreneurs develop their marketing strategy including which go-to-market channels to use and what will be their market entry strategy. It provides insights into the target audience, their needs and preferences, and the best ways to reach them. 5- Reduces business risk: A market feasibility analysis helps entrepreneurs identify potential challenges and risks that could derail their business, such as a lack of demand, intense competition, or pricing barriers. By addressing these issues proactively, entrepreneurs can reduce the risk of failure and avoid costly mistakes. Market Feasibility stages 1-Factors determining supply and demand in the market. First: Factors affecting demand: • Market structure. • Price of commodities. • Price of alternative commodities • Price of complementary goods. • • Consumer's income. • Consumers tastes. • Gross national income and its distribution mechanisms. • The use and the quality of the goods. 6 • Population and its distribution, gender and geography and education. • Population growth rate. • National developments, investments planes. • Consumer expectations. • Governmental interferences. • The consumer traditional way of marketing. second: factors affecting supply: • Price of goods itself • Prices of factors of Product and services prices. • Level of technological and advancement of the project. • Investment environment. • Elasticity of supply of production factors. • Time of production process of goods or services. • Changes in stock and storage capacity of the project. Third: Sales projection Different methods are used in sales projection, regression analysis; either simple or multiple are important methods for the projection. The projection depends on time 7 series data is another method. If there is no enough data, the projection depends on Delphi technique is the most suitable method for the sales projection. 2-Identifying the data and information needed to study market factors. The most important data and information required for market feasibility. a) populations Data, • Current population and its distribution. (geographical, age, education......, etc.) • The population growth rate. b) Data related to individual and national income. • National income distribution over various sectors. • national spending. • income per capita. • Personal income distribution on individual consumption. • Income distribution at different population groups. c) Data on transport and communications (transportation used within different State). d) Data on alternative and complementary goods. e) Data on exports and imports and quantity that include global demand trends toward our country products with world price index. f) Any information on consumers (food preferences, favorable charges, their motives ... purchasing habits...). g) State policies (boundaries and incentives). 8 3-Identify sources and methods of data, information collection and required analysis. We can use two different sources of information to get all the above data. First: primary sources, field collection of data and information imperative is obtained directly from the field or from research communities that are targeted by researchers or specialists. Second: secondary sources, a collection and obtaining of data and information from existing reliable sources of the most important institutions or organizations in the country. The most important secondary sources, A. statistical services publications of centralized State. B. ready-made information from published research and articles. c. periodic or seasonal reports of similar projects, most reliable data of these reports are regular sales men reports. Field tools for collecting primary data or file information: Researchers uses different tools for collecting data, tool differs from researcher to another for different objectives of compiling this information and, depending on the purpose of the study. Some of these tools are: 1. Survey or questionnaire 2. scientific observation 3. The interview 9 Survey or questionnaire: - a list of questions developed by the researcher by consulting certain specialists in this area. The questionnaires are of different types: • Facts or reality questionnaire: - Aims to obtain data and information directly from field to express certain facts; (such as age, sex and nationality). • Opinion surveys:- Aims to know the attitude of the public in a particular case at a specific time. • motives questionnaire:- Aims to find out the real Enhancement and motivations behind an act or public behaviors. scientific observation: It is process of research observation based on certain strategies identified in advance and monitored by a researcher in some cases. The interview: - It's the best way to answer the survey questions. The interview is of two types normally: - Single individual interview - Group or collective interview. 4-Data analysis and information prior to accessing previous goals and signpost market policy. 5-Specifies the size of the demand and market quota (the project share in the market total supply) for project. 10 Steps and Indicators for Market Feasibility: 1. Demand estimations Demand is a buyer's willingness and ability to pay a price for a specific quantity of a good or service. Demand refers to how much (quantity) of a product or service is desired by buyers at various prices. • Quantity demanded: is the amount of a product people are willing or able to buy at a certain price. • Demand curve: is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. And shows a negative relationship between price and quantity demanded. There are two types of demand: 1- Real or effective demand It is the quantities actually the consumer wish to purchase at a certain price level at a given time. This type required three conditions to be provided: Need: the consumer should be in real need for the commodity and cannot delay buying the commodity for later time. Desire: the desire to buy and have the commodity 11 Ability: to have the power to pay for the price of the demanded goods or services 2- Ineffective demand This type is considered in the absence of the above preceding conditions 2. Supply projection Supply is the amount of a product per unit of time that producers are willing to sell at various given prices when all other factors are held constant. • Quantity supplied: is the amount of a good that sellers are willing to sell and are able to sell. • Supply curve, in economics, graphic representation of the relationship between product price and quantity of product that a seller is willing and able to supply. And show a positive relationship between 3. Determining the market gap Determining the gap between supply and demand in the targeted market of the product is a good indicator, to know how easy or difficult the market strategy for the goods to be produced is. Strategies of market gap results • Supply - demand = (+) surplus stop studying and begin to search other investment alternatives because the supply in a state of surplus. 12 • Supply - demand = (-) deficit continue work on your study because the supply in a state of deficit, which represent a chance for investment • Supply - demand = (0) market is at equilibrium state and cannot accommodate more goods. In this case to continuing in your studding or to look for other alternatives depends on the entrepreneurs decision, and whether investment depends on factors other than or only on the current demand, for example, the strategic importance of the good, business plan development. If the decision of entrepreneur is to invest then you are requires immediately fined another targeted market group of the production to be produced. 4. targeted group A target market is a group of customers a business has decided to aim its marketing efforts and ultimately its merchandise towards. A target market consists of customers that share similar characteristics, such as age, location, income and lifestyle, to which a business directs its marketing efforts and sells its products. Target markets can be separated into primary and secondary target markets. Primary target markets are those market segments to which marketing efforts are primarily directed. secondary markets are smaller or less important. 13 For instance, the primary target market for a jewelry store might be middle aged women who care about fashion, and their secondary target market could be middle aged men who may want to buy gifts for the women in their lives. Why it is important to determine your targe market? • It is important for a business to identify and select a target market so it can direct its marketing efforts to that group of customers and better satisfy their needs and wants. • It allows for better understanding of customers and therefore enables the creation of promotional materials that are more relevant to customer needs. • targeting makes it possible to collect more precise data about customer needs and behaviors and then analyze that information over time in order to prepare and refine market strategies effectively. 5. Identification of price policy Pricing policy refers to the way a company sets the prices for its services and products based on their value, demand, cost of production and market competition. Pricing policy is essential for all companies as it provides a guideline for creating profits and areas that bring losses. It can be as follow: • Line pricing is the use of a limited number of prices for all prc offered by a business. E.g. each product had a price scale 5-10 ILS. • A loss leader is a product that has a price set below the operating margin. This results in a loss to the 14 business on that particular item in the hope that it will draw customers into the store and that some of those customers will buy other, higher margin items. • The price/quality relationship refers to the perception by most consumers that a relatively high price is a sign of good quality. The belief in this relationship is most important with complex products that are hard to test • Premium pricing (prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract statusconscious consumers. The high pricing of a premium product is used to enhance and reinforce a product's luxury image. • Demand-based pricing, also known as dynamic pricing, is a pricing method that uses consumer demand - based on perceived value - as the central element. • Multidimensional pricing is the pricing of a product or service using multiple numbers. In this practice, price no longer consists of a single monetary amount, but rather consists of various dimensions (e.g., monthly payments, number of payments, and a down payment). Pricing Objectives • • • • • • • • • • • • maximize long-run profit. maximize short run profit. increase sales volume (quantity) increase cash sales. Increase market share. company growth. maintain price leadership. discourage new entrants into the industry. match competitors’ prices. encourage the exit of firms from the industry. survival avoid government investigation or intervention. 15 • • • • • • • obtain or maintain the loyalty and enthusiasm of distributors. enhance the image of the firm, brand, or product. Be perceived as "Fair" by customers and potential customers. create interest and excitement about a product. discourage competitors from cutting prices. use price to make the product "visible.” social, ethical objectives How to create a Market Feasibility There is a difference between a “great” idea and a “feasible” one. When you have both, you have a better chance of being successful. When you follow these steps, you can create your own market feasibility study. 1. Create your outline Begin the study with a look at the scope of the project or your plan’s outline. This information should clearly state the idea being pursued before determining if it is feasible. You’ll want to answer the following questions during this step. · Why is this idea important to my business? · Is there an existing landscape or concept in the marketplace already? · Have others tried this idea before? · What can I do differently to create a successful outcome? 16 This information makes evaluating the risks of introducing a new idea to the market easier. You can see if contractor marketing services are necessary or if social media marketing services would be a better investment. 2. Conduct a survey Once you know what you hope to accomplish, it’s time to perform a market analysis to ensure you understand the current conditions. This step helps you identify potential competitors, consumer demographics, market value and your potential share when pursuing an idea. Focus groups, social media polls, public domain data, phone interviews and email correspondence are all common ways to gather feasibility information in this step. 3. Answer the core questions Once you’ve identified the need in the marketplace to meet, it becomes necessary to determine if entering that niche is financially feasible. Will your idea solve problems in ways that people appreciate? Can you earn a profit or justify your costs? There could be legal or technical issues to navigate during this step. You’ll get the 17 information you need to determine if continuing is the right choice, or if it would be better to repeat the first two steps. Imagine that you need legal translation services. Would it be better to focus on translation services from English to Russian, adopt Chinese translation services or pursue website translation services? This step answers those questions. 4. Calculate the costs If you decide to proceed, your business will need capital to invest in bringing products or services to the marketplace. Where will that cash come from right now? What will be required to earn a profit in the future? When you know what to expect for fixed costs and other potential expenses, it’s easier to find the right balance for your profit margin. 5. Polish and present Once you’ve answered all the questions regarding market feasibility for an idea, you can present the information to others. This data should always be open and transparent, inviting feedback from others to ensure no info gets missed. Market feasibility lets a business know it is clear to proceed with an idea or that now might not be 18 the right time to pursue it. Although the future is unpredictable, this data lets you know if the risks are worth taking. When to conduct a market Feasibility Before Making Significant Investments A market feasibility study is a strategic tool that should be conducted at specific junctures in the business development process. It is particularly crucial when contemplating the introduction of a new product or service or entering a new market. Conducting a market feasibility study at the early stages of conceptualization allows businesses to evaluate the viability and potential success of their ideas. It is advisable to initiate a market feasibility study before making significant investments or allocating resources to ensure that there is a demand for the proposed offering. If there are changes in market conditions, consumer preferences, or regulatory landscapes, it’s also an opportune time to revisit and update existing feasibility studies. In essence, the timing for a market feasibility study aligns with pivotal decision points in a business’s growth trajectory, offering valuable insights to inform strategic planning and minimize risks. Conclusion In conclusion, market feasibility analysis plays a crucial role in determining the viability of a market opportunity. By evaluating factors such as technical feasibility, economic feasibility, legal and regulatory feasibility, operational feasibility, and social and cultural feasibility, businesses can make informed 19 decisions and minimize risks. Market feasibility analysis helps ensure that businesses enter markets with a clear understanding of the potential challenges and opportunities. It serves as a valuable tool in achieving successful market entry and long-term sustainability. 20 Reference https://www.slideshare.net/alfar20/chapter-4-market-feasibility-study https://www.linkedin.com/pulse/what-market-feasibility-kenshō-mindfulcommunications https://www.slideshare.net/alfar20/chapter-4-market-feasibility-study https://www.linkedin.com/pulse/what-market-feasibility-kensh%C5%8D-mindfulcommunications https://www.feasibility.pro/how-to-do-a-market-feasibility-study/ 21
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