Market analysis (MODULE – II)

A market analysis is a quantitative and qualitative

assessment of a market. It examines the market size,
various market segments, customer buying patterns, the
competition, and the economic environment.
Market analysis provides you with a holistic, or well-rounded picture of the
markets you are interested in operating in.  The components of the analysis
include several evaluation tools, including a discussion of your industry and its
outlook in the market. It also analyzes the target market, conducts a competitive
analysis, and identifies cultural and legal regulations.
A market analysis studies the attractiveness and the dynamics of a
special market within a special industry. It is part of the industry analysis and thus
in turn of the global environmental analysis. Through all of these analyses, the
strengths, weaknesses, opportunities and
threats (SWOT) of a company can be identified. Finally, with the help of
a SWOT analysis, adequate business strategies of a company will be defined.
The market analysis is also known as a documented investigation of a
market that is used to inform a firm's planning activities, particularly around
decisions of inventory, purchase, work force expansion/contraction, facility
expansion, purchases of capital equipment, promotional activities, and many
other aspects of a company.

MARKET SIZING
Market size is the number of individuals in a certain market segment who
are potential buyers. Companies should determine market size before
launching a new product or service.
Understanding market size helps you distinguish between two categories: the
addressable market, which is the total revenue opportunity for your product or
service; and the available market, which is the portion of the addressable
market for which you can realistically compete. By outlining the difference
between these two, you can develop a product offering to tackle that consumer
sweet spot.
Modes to determine Market Size :-
1. Government data,
2. Trade association data,
3.  Censuses and 
4. Customer surveys 
DEMAND FUNCTION AND SUPPLY ESTIMATION
In economic theory, the law of supply and demand is considered one of the fundamental principles
It is described as the state where as supply
governing an economy.
increases the price will tend to drop or vice versa, and as demand
increases the price will tend to increase or vice versa. Basically this is a
principle that most people intuitively grasp regarding the relationship of goods and services against
the demand for those goods and services.

When supply and demand are in balance, the economy is said to be in equilibrium between price and
quantity. 

This is a very simple principle but is it actually a “law” and is it completely true?

When we examine specific instances of goods and services against a particular demand, we see that
this behavior seems to hold true and so where could there be a problem with this model?

Let’s examine the supply side first. This is the component that provides the goods and services, so
effectively this is the element that brings things to “market” for which the consumer or demand side
reacts. One of the big items considered on the supply side is the cost of labor. 

“…as wages rise, the supply of goods and services is reduced,

because wages are the input price of labor. Labor accounts for about
two-thirds of all input costs, and thus wage increases create supply
reductions …” (Introduction to Economic Analysis, McAfee)
No doubt, this all makes sense and probably sounds like a statement
of the obvious. However , let’s examine the demand side of this relationship. What is it? Where
is it? How does it manifest?

Here’s where we encounter the problem with this model. There is no independent demand side of the
equation. Demand is based on the consumption of the goods and services provided by the supply side,
but the means by which this demand is met requires trade in exchange for the item(s) involved. In
modern times that trade is through the use of money (or credit).

So the obvious question becomes, where does the consumer or “demand side” acquire its money? The
answer is; from the supply side. In other words, despite the statement above which indicates that
labor accounts for about two-thirds of the input costs, in reality, what is happening is that the supply
side (labor cost) is subsidizing and creating the consumer or demand side of the equation. There is no
independent demand side.

The problem this creates is that when the supply side attempts to reduce its cost of products (by
reducing the cost of labor), it is correspondingly reducing the money available to the demand side. In
effect, it becomes a death spiral, while every attempt by the supply side to reduce its costs further,
the demand side shrinks as the jobs and means of acting on the demand are reduced.

The problem is that supply and demand aren’t independent variables interacting, they represent a
symbiotic relationship where each is absolutely dependent on the other. Disruption of one
automatically disrupts the other.

This leads us to a second assumption in the “law of supply and demand” and that’s for the model to
hold, it must be a closed system. So it is worth exploring what the bounds for such a closed system
must be.

Generally, it is sufficient to consider the system along national boundaries, since there is a common
currency, common regulations, and a relatively fixed base of individuals the system is modeling.
Without this constraint, the model no longer produces valid results, since they are skewed by
irregularities (i.e. different rules in various circumstances).

Suppose we consider a closed system as being the United States. We will ignore foreign trade,
imports/exports, etc. for the time being. From this limited view, we would expect the law of supply
and demand to function as predicted because in a closed system, the constraints that drive these
metrics will work.

If there is a shortage of skills, then employers must pay higher wages to attract individuals to work. If
there is a surplus of goods, then prices will fall, all in keeping with the “law of supply and demand”.

However, let’s consider what happens if we take labor out of the equation and allow the supply side to
operate outside this system and obtain cheaper labor from a different source. Suddenly the demand
side no longer has the “subsidy” needed in order to generate a demand, so as demand drops, the
price of goods and services must drop to accommodate it. However, if demand drops to zero (i.e. no
money), then there is no equilibrium point for the supply to drop to and the economy collapses.  

In effect, by moving the labor costs outside the system, the rules have been skewed so that supply
and demand no longer holds. While it may be considered valid on a larger system (i.e. the world), this
is an impractical model since there are no consistent rules with which to model any of the actors. In
other words, the supply/demand relationship has been subverted by moving outside the system and
rendering one of the driving economic forces impotent.

Continuing to use the example of the labor markets,
compete with each other, this is an economic fallacy
system. Different governments, different laws, different
which economic competition can be gauged, so what
model is
while it is often stated that different groups
since they are not operating from the same
standards of living, do not provide a means by
actually happens is that the supply/demand
rendered inoperative.

So in practical terms, the “law of supply and demand” needs to be restated to indicate that it reflects
the relationship between supply (goods and services) and demand (consumers) within a closed
system. It is the closed system that ensures that the cost of labor in producing supply is recycled into
the demand side of the equation so that goods and services can be consumed.  

Please note that I’m not making any statements about how foreign trade should be conducted, nor am
I discussing isolationist policies. I am simply describing the necessary conditions for the  “law of supply
and demand” to hold. Any variations from this will render this “law” moot.

This situation will be exacerbated when we have supply and demand side players that can operate
from different rules whereby one uses a global basis of operation while the other is confined to local
operations. In the next post, I will explore the effects on a national economy by global players.
RULE OF THUMB
A rule of thumb is a rule or principle that you follow which is not based on exact
calculations, but rather on experience.

A rule of thumb is a principle with a broad application that is not intended to be strictly accurate
or reliable for every situation.
It is an easily learned and easily applied procedure for approximately calculating or recalling
some value or for making some determination (“Rule of Thumb”).
“Project managers are not clerks wearing a tie while using Excel and giggling for their
certification plaque on the wall. They are rather pirates trying to board the ship of opportunities
by doing something that nobody in the company had dared to do beforehand.”

Another valuable heuristic is to analyze the scope of the work and come up with the
minimal project scope that’s most important. Then try to schedule this “must have”
scope before some other work that your stakeholders could live without. Let’s say
you’re planning to paint the walls in your living room and whitewash the ceiling in the
kitchen by the time your spouse comes back home from a business trip. So if you
promised your spouse only to refresh the living room, then it would be important for
you to finish painting the walls there first. Only then, if you have time, you’ll get down
to whitewashing the ceiling in the kitchen to please your spouse even more.

Another heuristic method would be helpful when you have some tasks with unclear
and risky estimates. In many cases, due to underestimation, such tasks might not even
be on the original critical path, but if a task takes much longer than you planned, it will
become part of your critical path when it’s too late. To mitigate this risk, you might
want to put such tasks with unreliable estimates sooner, rather than later, in your
schedule, or at least allocate sometime early in the project schedule to elaborate on
blurry estimates (prototype, research, detail). This will help you to adjust your
estimates for the project and proactively manage the risks.

Heuristics or rules of thumb are models based on experience and applied in situations
when you have a choice. When you use heuristic methods, it's important to remember
that these models have their limitations and often involve trade-offs. It’s important for
you, as a project manager, to constantly evaluate the decisions you make and adjust
your practices and processes based on what works and what doesn’t. This might seem
obvious, but as it turns out, many people miss great learning opportunities along the
way. Each iteration is a chance to learn. Each problem is a chance to do a “5 whys”
analysis and improve the process. As you grow in your career, you’ll be able to build
your own “project management intuition,” a body of experience that includes tools,
practices and processes, and an understanding of when they work best and when they
don’t.

A Project Must Deal With No More Than One Serious

Challenge
Only dealing with one serious challenge to the project at a time comes from common sense, but
it also has a mathematical foundation. A project must focus on a tangible, measurable, and
potentially achievable objective. Not two, no more than one. Let’s see why. If we have a plan
with many unrelated challenges which don’t depend on one another, then our project is not a
project, but rather it is a set of independent projects. 

A Project Is Behind The Schedule The Very Moment It Starts

Time zero and we are already late? Yes, it seems an exaggeration, but it is not. Every project
must entail a quirk of uncertainty that makes every single second left behind potentially a source
of devastating nonlinear impact on the schedule. We have a plan, but it sounds meaningless, it
is good just for the proposal time not for the staff that must do things. There are so many
missing parts. Do our partners share the same vision? If you feel this pressure, in the beginning,
it is because you are a good project manager. A good 90% of the work done on a project is in
the first 50% of the project time. It is quite likely that the remaining 10% of the work that takes
infinite time. However, remember, good is better than perfect. Sell your results when they are
decent.

A Project Manager Is Not A Manager.

He is not the guy sitting in the leather chair acquainted with the C-level executives. He is not the
one who envisions the strategy, hires the staff, sends the commands and collects the results. A
project manager is a person that feels the pressure on his shoulders because must get the
things done. Don’t be surprised if the star engineer in the team earns much more than you and
does not seem to be to too concerned a lot of the time. Higher pay does not equate to more
worried.

Survey of Expert’s Opinions

Definition: In Survey of Expert’s Opinions, 

the specialized group of people in the concerned fields,

from both inside and outside the organization,

are approached and asked to give their opinions on sales trend and on other issues.
The Survey of Expert’s Opinions is the most common method of sales forecasting, employed
by the organizations. This method is also based on the judgment of experienced
people but is different from the jury method.

In the case of a jury method, the group of executives within the organization are gathered
to forecast the sales, whereas, in the case of the Survey of Expert’s Opinions, the experts
from both inside and outside the organization are approached to give their estimates on
sales. This is a comprehensive sale forecasting method that helps in developing the overall
industry sales forecast, while the jury method is restricted to the company sales forecast.

The expert’s opinions method is used when the organization wants the forecast to be more
accurate and which holds true for the entire industry. This is only possible through the
group of experts who have the complete information on the overall economic environment
and the conditions prevailing in the industry. Hence, people from outside the
organization, who are very close to the market are approached and are required to
sit with the company’s executives and reach to the final forecast.

The Survey of Expert’s Opinions gives due weights to the experience and expertise of people
who know the market and the firm. This method, when employed successfully can give
accurate forecasts.

But however, this also suffers from the demerits. Firstly, the experts from outside may be
reluctant to give the complete information about the conditions prevailing in the
industry. Secondly, the discussions could be biased that may result in false
predictions. Thirdly, the responsibility to take decisions is distributed on all and hence no
single person could be held responsible in case the forecast proves to be wrong. Finally, a
general forecast is made and could not be readily broken down into the product-wise,
month-wise and department-wise forecasts.

The Impact of Influencer Marketing on Consumers

What is the impact of influencer marketing on consumers? In short, it works. Why?

Influencers are people. People like people . People trust people.

People trust people more than they trust brands and more than
they trust marketers.

Influencers are real. The best influencers are honest, know and respect
their audience, don’t lie about products just to make a buck, and can deliver real value for both
brands and the audience of friends and followers they’ve amassed over the years. Trust is key.
Influencers are also—or can be—entertaining and offer new and exciting ways of sharing a
brand’s message. When I write this, I think of my 12-year-olds watching makeup tutorials on
YouTube. They are discovering personalities, products, methods of application, tricks and tips
that they are eating up. And they love the influencers who are sharing this information and these
products with them. From what I can see, those influencers love them right back. It’s a
relationship, not a one way sales channel that brands and agencies have been accustomed to in
the past.

In the past year, influencer marketing was the fastest-growing method of customer

acquisition over email marketing campaigns, along with paid and organic search. It was a $2
billion-dollar business in 2017 and is predicted to be a $10 billion-dollar business by 2020. And
with good reason.

Are you using influencer marketing? What are you finding your biggest challenges to be? Don’t
let the lack of a gigantic budget get in your way, but in order for influencer marketing to deliver
value for you, in most instances, you’ve got to come to the table with some kind of budget. After
all, influencers have kids to feed and mortgages to pay and that business of “working for
exposure” or free products? Well, that’s just ridiculous.