Why Market Feasibility?
Market Feasibility is quite appropriate where you are planning to open a new business or extend an existing line of product. Your aim is to determine how ‘feasible’ your product would be in the current market.
It will allow for better evaluation of your product’s suitability to the market. You will need to:
- Define your objective(s)
- Gather your information
- Make your analyses
- Make a decision
To be able to accomplish these you would have had to conduct a market research.
Having done your research there are two methods to further proceed.
1. Go/no go decision
Based on information collected and market trends should you or should you not go ahead with your business decision. Do you need to make adjustments to the original ideas? If so, what changes?
2. Return on investment
Evaluate your business as an investment, look at the opportunity costs (the cost of opportunity forgone. By deciding to go ahead with this venture, what other opportunities are you giving up? Are they more or less profitable ventures?). Based on the estimated sales determined from market research, would there be adequate returns in a given period of time? How long can you go on without positive returns?
The marketing strategy is the business’ approach to marketing the product. It helps you to focus on and better serve your target market. Your target market, location, and your budget can affect your marketing strategy. Given these considerations you will have to determine a specific product, promotional strategies, price and the distribution method you will need to employ to suit your target market. Your marketing strategy is what you use to determine your marketing plan.
A marketing plan is a written description of your marketing objectives. It is the detailed layout of the information mentioned in your marketing strategy. It will look at:
- How you will increase product awareness
- How you will appeal to customers and convince them to buy
- How you will deliver your product to the customers
- Where you intend to sell and to whom you intend to sell
- Product choices and how you will tailor that product to the market, considering pricing, sales and promotion
As a small business owner your resources may be quite limited and so market segmentation could be a viable option. Market segmentation focuses on satisfying the needs of one or two markets instead of the general market. You could focus on satisfying the needs of specific geographic areas such as neighbourhood shops or neighbouring communities. You could also segment according to the target market, thus focusing on the section of people that are most likely to buy your product.
In summary, for effective marketing we need to examine:
- Market research – evaluate customers’ needs
- Marketing strategy – develope by analysing competitive and comparative advantages
- Marketing plan – detailed description of specific product, pricing, distribution and promotional methods
- Target marketing – determine the specific markets you will serve
- Marketing mix – determine how to satisfy your target customers by identifying and applying a market mix
Click the link to download a Market Feasibility Study Template.