Module 2

PREPARING A MARKET ANALYSIS

This module will help students learn how the market analysis will be conducted,
including data and information gathering. Also, it aids students to know how to make
supply and demand projection and sales projection and how to formulate marketing
strategies.

Objectives
The students shall be able to:
1. Calculate and projected supply and demand for five years;
2. Determine the demand-supply gap;
3. Calculate the projected sales
3. Analyze current market situation & industry and present facts and figures;
4. Identify major competitors (direct/indirect) in the industry; and
5. Formulate a proposed marketing strategies in terms of product, placement, pricing and
promotion.
 Market Survey
The present demand can be determined through a market survey. The results of the
market survey will serve as basis for preparing demand projections.

 Demand Analysis
The demand aspects of the study has to focus on the following important areas:
1. What was the annual volume of the domestic demand for the past ten years?
2. Who are the major consumers of the product/services?
3. What is the projected annual volume of the domestic demand for the next five
years?(include the method to be used and the factors to be considered in preparing the
projections)
4. Who are the current buyers and potential buyers of the product or services and
where they are located?
 Supply Analysis
Like the demand of the study the supply aspects has to consider the following areas:
1.What is the annual volume of the domestic supply for the past ten years?
2.Who are the major producer of the product/services?
3.What is the projected annual volume of the domestic supply for the next five
years? (Indicate the method to be used and factors to be considered in preparing
the projection).
4.Who are the current and potential producers of the product or service and where
they are located
5.What are the production capabilities and brands used by the current
Producers?
  Demand-Supply Gap
Demand and supply should eventually analyze as one since the market operates within the
force of both demand and supply. The produce’s pricing decision depends on how responsive
demand is in relation to a change in price.
Important decision about what and how many goods to produce depends very much on the
firm’s estimate of future demand. The simplest way of forecasting the demand for the product is he
average arithmetical growth rate method. Another method is regression analysis which is more
sophisticated. For better understanding of forecasting techniques for demand and supply analysis, a
review of statistics ad econometric would be done by the proponents.

 Projected Sales
These provide useful information for identifying the expected volume or amount of goods to be
sold in the market and the members of existing companies engaged in producing or servicing the
people or customers within the area or place you intend to offer your product or service. Market
analysis is needed to determine the opportunity to compete with the existing companies producing
the same product/service you intend to offer in the same market and also to identify the
competitor’s share and your firm’s share in the target market. The competitive position and prices
should be carefully studied.

1.Look into the history of the prices and establish the factors that mostly influence their
fluctuations overtime.
2.Prevailing prices of the products.( Determine the selling prices of all similar and substitute
products).
3.What prices shall be adopted including tariff protection expected for the project.
What is the quality of the product relative to the products of the current and potential
producers?

 Competitors’ Profile
In the competitive analysis, the following must be determined:
1. The strengths and weaknesses of the firm’s competitors;
2. The strategies that will give the firm a competitive advantage;
3. Barriers that can be developed to prevent competitors or would-be competitors from
exploiting the firm’s market; and
4. Any opportunity that can be exploited.

The aim of competitor analysis is to determine how the firm stands against competition.
After determining its position, the firm must take stock of its strengths and weaknesses
and craft an appropriate strategy to achieve its business objectives.

 Industry Analysis (PESTLE Analysis)

 An industry sector contains a segment of industries of a particular type in a given
economy. Examples are materials sector, financial sector, food sector, energy sector,
transportation sectors, health sector, education sector etc. A researcher can analyze such
industry sectors by considering the common objectives, the challenges faced and the
opportunities for them.
An industry is a specific group of companies with very similar business activities. For
example, financial sector can be broken into banking industry, insurance industry, assent
management industry, etc. Thus while breaking down the given economy, the industry sectors
forms a first set of groups which describe a general economic activity. Then all of the companies
that fall into that sector are categorized further into industries where they are grouped only
with companies with which they share very similar business activities.
However, Industries can be further sub-categorized into various, more specific groupings.
All the industries within an industry sector will be having same objectives but may follow
different methods to realize their objectives. Researcher can try to identify what are the
different types of industries lying within a given industry sector and also the different
companies under each industry. In industry analysis, analyzing an industry sector is like studying
an organization’s parent body. Studying the industry sector is essential in the process of
analyzing an industry because the objective of an industry is derived from its industry sector.

 Marketing Strategies
Marketing strategies refer to the what the business plans do to achieve the market objective of
the firm. Market strategies consist of the following:
a. Definition of the market - it determines which part of the potential market will be
served by the firm. The market must be defined in terms of size, demographics,
structure, growth prospects, trends and sales potential.
b. Determination of the market share – the following steps may be used:
1. Determine the number of prospects in the target market;
2. Determine the number of times the product or service is purchased by the target
market;
3. Figure out the potential annual purchaser; and
4. Determine the percentage of the potential annual purchase that the firm can
attain
c. Positioning strategy – refers to how the firm differentiates its product or service from
those of the competitors and serving a niche. Positioning strategy is one where the
firm identifies a target market and develops a strategy mix to address the desires of
that segment.
The following questions must be considered in adapting positioning strategy:
1. What does the customer really want to buy from the firm?
2. How is the product or service different from the competitors? A product or
service may be different from the competition in terms of quality, maintenance
requirements, number of uses, ease of operation, accessibility and others.
 3. What makes the product or service unique?
d. Pricing Strategy – in determining the right price, the following factors must be
considered:
1. The customer’s perception of value in the firm’s kind of business;
2. The cost involved such as overhead, storage, financing, production, and
distribution; and
3. The profit objectives of the firm.
The firm’s price may be established through any of the following:
1. Cost plus pricing – this method covers all costs, variable and fixed plus profit
2. Demand pricing – this method includes prices based on buyer desires.
3. Competitive pricing – this method calls for price-setting on the basis of prices
charged to by competitors
4. Market pricing- firm set prices by adding per-unit merchandise costs, operating
expenses and desired profit.
e. Distribution strategy – refers to the process of moving goods and services from the
firm to the buyers.
Common distribution channels are the following:
1. Direct sales – if the plan is to move goods directly to the ultimate users.
2. Original equipment manufacturer sales – it involves selling a manufactured
product to another manufacturer, who, in turn, incorporates the same to his
product and which is later sold as a finished product to the end user.
3. Manufacturer’s representatives – they are wholesalers employed by one or
several producers and paid on commission according to quantity sold.
4. Wholesalers – these are channel members that sell to retailers or other agents for
further distribution through the channel until they reach the final users.
5. Brokers – they ae distributors who buy directly from distributors or wholesalers
and sell to retailers or end users.
6. Retailers – they sell directly to consumers.
7. Direct mail – these are printed materials used in a targeted campaign to
consumers such as catalogs, letters, email and other direct appeals.

f. Promotion Strategy
The promotion strategy must include the following
1. Advertising aspects – advertising budget, positioning message, and first year’s
media schedule
2. Packaging which describes how the company’s products will be packaged.
3. Public relations – this include a list of media that will be tapped to convey the
firm’s message to the target market.
4. Sales promotion – use to support the sales message like special sales, coupons,
contests, premium awards and among others.
 5. Personal sales – which includes pricing procedures, rules on returns and
adjustments, methods of sales representations, policies on customer services,
compensation of salesmen and responsibilities of salesmen.

Types of Promotional Strategies:

1. Events - Organizing, sponsoring and participating in various events like fairs,
exhibitions, school and college promotion, flash -mob, nukad natak will be a good
platform for small enterprise where they can have direct interaction with their
target customers. Events provide an opportunity to induce the
feelings for the product and give a real time experience.
2. .Website - it is a certain aspect to understand the importance and benefits of
internet in today’s competitive era. This promotional tool is efficient, cost effective
and its reach is unassuming and overwhelming. SMEs can create their own website
and promote their products and services at a global level. Social media now a days is
also one of the most effective and affordable ways to be in touch with customers.
3. Direct- Marketing - this is the most effective tool for small enterprise as this is the
direct channel to reach and deliver goods and services to customer without using
marketing middleman and avoiding unlikely costs by using direct mails, bulk SMS,
telecalling.
4. Advertising - it is indirect in approach & has a long term perspective, like brand
image and brand recall. Being flexible and selective in nature, it is the best medium
for SME for advertising their products. Local newspapers, local radios, Paper inserts,
local magazines, and outdoor medium such as pamphlets, posters, banners,
hoardings etc are the conventional mediums through which the SME can reach the
target customers effectively and efficiently in minimum cost.
5. Sales promotion - it makes the consumer to take a favorable purchase decision by
providing one or other kind of direct inducement like discount, price off, gift, coupon
etc. It is a short term & direct approach and expects an immediate response in terms
of sales. Free samples, premiums, exchange offers are effective method of sales
promotions in the introduction stage of any SME.

References
Calayag, E.H. & Valenzuela, E.E. (2019). Feasibility Study Guidelines for Undergraduate
Courses. Great Books Trading.
Flores, M. F. (2016). Methods in Business Research Education. Unlimited Books Library
Services & Publishing Inc.
Masanja, N.W. (2020). A Practical Guide in Writing a Feasibility
Study.https://www.researchgate.net/publication/341134813