In preparing a proposal or feasibility study, it is important to conduct a market study to determine if the proposed project or idea is feasible in terms of market.
Market study recognizes whether there is adequate demand for the product and that the project shall enjoy competitive marketing position.
An investor is interested to invest in a business project with a minimal risk and a higher rate of return on investment. However, the major consideration is where there is an ample demand for the product being produced or proposed to produce.
Steps in Market Study
- Identify if there is an ample demand for the product being produced or proposed to produce. It means if there is a substantial excess demand, the new firm could enter into the industry.
- If there is a sufficient demand for the product, investigate the competitive position of the firm in the industry. The information on the prevailing prices of the product are gathered and scrutinized.
- The prices to be adopted for the project and the quality of the product relative to the product of the current and potential producers are also carefully studied.
- The present marketing practices of the competitors, selling organization, terms of sales, channels of distribution, location of sales outlets, transportation and storing facilities and other information relative thereto are also taken into account.