2007 Q2 Critical Steps in Market Feasibility Studies
We are often approached by entrepreneurs that have a patent on a product or are considering building a facility for a specific purpose. In order to determine the feasibility of a product or service, the entrepreneur needs to assess the marketplace to determine the likelihood of success. Likewise, before outside investors will consider an investment opportunity, most want to have an independent assessment of the estimated demand for the product or service.
Typically, there are three critical components to the market feasibility analysis
- Assessment of the industry
- Competitive analysis
- Feedback from prospective customers
Information for the industry assessment is typically available through various databases, several of which require subscriptions. Industry trends, barriers to entry, key success factors, etc. are compiled to provide a comprehensive picture of the dynamics of the industry. The second component of the feasibility study is the competitive analysis. Determining the strengths and weakness of competitors can be extremely useful in determining areas of vulnerability and provide insight on how you should position your product or service.
Lastly, feedback from prospective customers is usually done either by telephone or on line surveys. By asking the right questions without bias, the survey can provide a wealth of information that will provide insight regarding the marketability of the product, service or facility.
Once you have completed the market feasibility study you are left with a GO / NO GO decision. Often times the decision to move forward is an easy one based on sound knowledge and analysis of the marketplace. Armed with the market feasibility study you will be in a much better position to attract the investment capital needed to launch the product or service.