what is market analysis?
TRANSCRIPT
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Market Analysis
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Report Outline
I. The Nature and Scope of Market Analysis
II. Importance of Feasibility Studies to Market Analysis
III.
Definition of Terms
IV. Typologies or Approaches to Market Analysis
V. Points in Evaluating the Contents of Market Analysis
A. General
B. Applied to Clean Development Mechanism Project
VI. General Technique/Method in Conducting Market
Analysis
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Market Analysis
It is done to determine the extent to which
goods and services to be generated by the
project are needed or demanded
It is done to design the appropriate
marketing strategies and plans that will
help ensure that a projects target users
are reached and will accept the projectsoutputs
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A project study must define:
- Types and nature of products or services
to be generated by the projects
- Specific uses- Geographic influence area
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Market Study
"lifeblood" of every project feasibility study
addresses the question of demand and profitability
seeks to determine:
size, nature and growth of total demand for the product
description and price of the product to be sold
supply situation and the nature of competition
different factors affecting the market of the product
appropriate marketing program
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The Nature and Scope of Market
AnalysisObjectives of a market study:1) To determine the extent to which goods and services to begenerated by the project are needed or demanded
2) To design the appropriate marketing strategies and plans thatwill help ensure that a project's target users are reached and willaccept the project outputs
- project's expected outputs are analyzed in terms of their pastand present demand-and-supply situations, expected future
behaviors, and the resulting demand-supply situations, expectedfuture behaviors, and the resulting demand-supply gaps as theyrelate to project outputs
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The Nature and Scope of Market
Analysis A project study must clearly define the types
and nature of products or services to begenerated by the project, their specific uses,
potential users, geographical influence area,and other characteristics.
When more than one type of output is
expected, the expected product range shouldbe described
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Market Analysis and CDM
Market analysis can be applied to answer the
following questions:
Demand for a climate change-mitigating measure in the
host country
Demand for carbon credits in Annex I countries
Sources of supply to fulfill the project (e.g. search for a
dumpsite, location for wind farm)
How to address concerns by host communities regarding
impact of the project
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Definition of Terms
Market- refers to an arena for potential
exchanges that may involve money; where
demand-and-supply conditions for goods or
services are taken into account, whether or
not such goods or services carry a market
selling price
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Identifying demand
determinants Consumer demand demand for product for final consumption
purposes
Producer demand - demand for a product used as an input in theproduction of other goods
Demand for social services (special case of consumer demand
where services have no market price and the limiting factor is thegovernments ability to pay)
Demand determinants: Population
Income
Prices
Substitution possibilities Changes in users taste
Rate of investments
Government policies and budget
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Factors Affecting the Market
Demand
Population growth
income changes
tastes
urban/rural development
prices of substitute/complementary products
advertising and promotion
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Estimating past and present
demand
Sources of Data
Historical Data Coverage
Techniques for Demand Estimation
Standards or Coefficients
Chain ratio method
Market-buildup method
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Projecting Demand
Survey of Peoples Intentions and NeedsAssessment
Experts Opinion
Time Series Analysis
Statistical Demand Analysis
Use of planning standards
Market testing
Other demand considerations
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Supply Analysis
Supply Analysis - evaluation of existing
supply conditions
Identifying supply sources
Estimating past and present supply
Projecting supply
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Demand- Supply Consolidation
Past and present supply-demand gap
Future supply-demand gap, without the
project
Future supply-demand gap, with project
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Other market considerations
Competitiveness of product
Government policies
Marketing program
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Parts of a Marketing Plan
Introduction
General Business Condition
Competitive Conditions
Market Research Results
Sales and Distributions Plan
Advertising and Sales Promotion
Other related aspects (product formulation,packaging,legal clearance, raw material procurement, etc.)
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Typologies/Approaches
Trend or Time Series Analysis Graphical approach
Freehand drawing
Two-point line
Average growth methods
Arithmetic average growth (straight line)
Geometric and compound growth
Smoothing techniques Moving average method Use of seasonal index
Curve fitting
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Correlation and Regression
Analysis Can be used to find out if the outcome from
one variable depends on the value of the
other variable, which would mean a
dependency from one variable on the other.
Regression and correlation analysis can be
used to describe the nature and strength of
the relationship between two continuous
variables
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Stages for Correlation and
Regression AnalysisCreate a scatterplot for the two variables and
evaluate the quality of the relationship.
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Stages for Correlation and Regression Analysis
Pearsons Correlation Coefficient can be
calculated as:
Pearson's correlation coefficient (named after Karl Pearson, 1857-1936) is
a number between -1 and 1, that measures the strength of a linear
relationship between two continuous variables. The absolute value of the
coefficient measures how closely the variables are related. The closer it is
to 1 the closer the relationship. A correlation coefficient over 0.8 indicates
a strong correlation between the variables.
If the scatterplot shows a reasonable linear relationship (straightline) calculate Pearson's correlation coefficient to evaluate the
strength of the linear relationship.
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Stages for Correlation and Regression
Analysis
If we want to use a variable x to draw conclusions concerning a variable y:
y is called dependent or response variable.
x is called independent, predictor, os explanatory variable.
If the relationship between two variables is linear is can be summarized by a
straight line. A straight line can be described by an equation:
y = a + b x
a is called the intercept and b the slope of the equation.
The slope is the amount by which y increases when x increases by 1 unit.
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Limitations of Regression and
correlation analyses
Forecasts are obtained by extrapolating data fromestablished relationships of the variables beingstudies whose behavior may not necessarily holdat other times or places
The methodology assumes that no lineardependence exists among the independentvariables so that a high degree ofinterdependence among the independent
variables will affect the precision of estimation It is not recommended for analyzing small projects
where the cost and effort in obtaining needed dateare not commensurate to the project cost.
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Planning standards
Illustration of Demand projections
Illustration of Supply projections
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Other statistical techniques
Statistical Demand/Supply Analysis
Regression
Used to examine the type of relationship that exists
between demand/supply and its determinants
Help the analyst establish the type of association
between two or more variables
Correlation analyses