At first, we need to estimate the potential size of the market for the product. After that, we need to get an idea about the market share that is likely to be capture. The market and demand analysis is related to two broad issues.
- What’s the aggregate demand for the products?
- What share of the market will the project enjoy?
These are very important and difficult question in project management. Only intelligent and meaningful answers required like –
- Price elasticity of demand
- Income
- Patterns of consumption
- Compositions of market
- Nature of competition
- Availability of substitutes
- Reach of distribution channels and so on.
However, the market and demand analysis is easy to shift with the help of project feasibility studies .there are two statements about market and demand analysis –
- The market is attractive
- The demand is expected exceed supply
There is a systematic and orderly manner to analysis the market and demand. The key steps related in the market and demand analysis are described below –
- Situational analysis and specification of objectives
- Collection of secondary information
- Conduct of market survey
- Characteristic of the market
- Demand forecasting
- Market planning
Now , here , I only discussed about the Situational analysis and specification of objectives and in my next article , you will find the other steps of the market and demand analysis. Let’s move –
- Situational analysis and specification of objectives: the informal conversation with customers, competitors, middle and others is very important to get a feel the relationship between product and market.
The experts look at the past experienced the company to know about the preference and purchasing power of the buyers, actions of the competitors, and practice of the middleman. If these analyses provide enough data to measure the market then a formal study needs not to be carried out. But most of cases a formal study are warranted. Besides, it is necessary to spell out its objectives clearly. For these, making questionnaire is very important. besides, we should keep in mind that collecting information is related with forecasting the overall market demand and assessing the share of the market .this questionnaire may not relevant with the market and demand .
Suppose, a small industry has developed improved refrigerators based on new principles. This principle offers several advantages over the conventional refrigerator. So, the chief executives need to know where and how to market this new product. For these, there needs to answer some following questions-
- Who are the buyers of refrigerators?
- What is the demand for a refrigerator?
- How is the demand to distribute?
- What is the break-up of the demand refrigerator?
- What is the purchasing power of customers?
- How can potential customers be influenced?
- What is the price and warranty of the refrigerator?
- What are the distribution channels?
- What are the prospects of immediate sales?
So, friends, we learn situational analysis and specification of objectives. Stay with us for getting more articles. Besides, you can comment below – what types of article you want?