PART 2 (Click here for Part 1)

How to do a Market Feasibility Study
This is where you ask yourself, 'What sales potential does my business or new product/service have? Is that enough?'

The marketing process begins by identifying the market opportunities that will best help your business achieve its mission, given the products or services you have or wish to offer.

Through research and evaluation, you can gain an understanding of who your target customers are, and their buying behaviours.

Investigate the competition. This includes doing the necessary research about the competitors - their strengths and weaknesses. Understand what gaps there are in the market and how you will be able to gain a competitive advantage.

Armed with this information, you can then develop an appropriate strategy for your business.

• Review your company's internal sales and order information to reveal existing customers' buying patterns and characteristics.
• Gather marketing intelligence - through reading newspapers and trade publications; talking with customers, suppliers, and team members; checking Internet sources.
• Perform market research - either by an internal research team or an outside firm through devices such as market surveys, product preference tests, focus groups, and so forth.
• Use secondary data sources - such as government publications, business information, and commercial data.

In a start-up situation, a market feasibility study should include the following steps:

1. Decide on the type of business you want to start (ie define exactly the product(s) or service(s) you intend to sell).
2. Identify your proposed target market (that part of the population to which you intend to sell - eg retirees, under-18 females, young families, vehicle owners).
3. Select a suitable location. Don't sign a lease or purchase agreement yet. Your location may have to be changed if your study indicates it isn't appropriate (see 5 below).
4. Determine the physical size of the trading area relevant to your proposed location. This is the area that is likely to provide about two thirds of your potential customers.
5. Estimate the likely total sales of your product or service within that trading area, using data about population (and trends) average income levels, expenditure patterns, and buying habits. Don't forget to factor in your competitors to get your likely share of total trading area sales - your market share.
6. Make enquiries about any future council plans and the overall economic potential of your geographic/economic region. Also establish if there has been any application by a new competitor to enter into that market before you or at the same time. If things look gloomy, look for another location and start again.

Once you have completed your market study, discuss the details with us to confirm that the sales will be adequate to make the proposed business venture financially worthwhile.

Adapted from articles contributed by Principa