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
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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
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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.
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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.
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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
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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.
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• 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
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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).
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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
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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.
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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
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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.
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• 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.
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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
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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.
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•
•
•
•
•
•
•
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?
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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
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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
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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
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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.
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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/
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