1.

Market Analysis Research The key questions that should be answered in the Market Analysis section of the feasibility study are presented below. In nearly all cases, research is required in order to obtain enough information to answer the questions. See p. 7 of this chapter for techniques for conducting market research. If these questions cannot be answered adequately, the project is not feasible. a. What is the current or projected demand for your proposed products or services? In other words, how many units can you reasonably expect to sell each month? b. What are the target markets for this product or service? What demographic characteristics do these potential customers have in common? How many of them are there? c. What is the projected supply in your area of the products or services needed for your project? d. What competition exists in this market? Can you establish a market niche which will enable you to compete effectively with others providing this product or service? e. Is the location of your proposed business or project likely to affect its success? If so, is the identified site the most appropriate one available? The market analysis should be conducted first because it is critical to the success of the business. If you cannot substantiate through research that adequate demand for your product or service exists, or if you cannot obtain sufficient quantity to meet expected demand, then your project is not feasible. You should not continue to the next step in the feasibility study. One...major reason for business failure is incompatibility of goals among owners. This often leads to a breakdown of communication and conflict about use of resources. Harold MC Laughlin Building Your Business Plan 2. Key Organizational and Technological Issues Once market issues have been addressed, it is time to take a look at key organizational and technology issues that are relevant to your project. Organizational Issues Key questions to answer include: a. What organizational structure is the right one for your project? Remember that cooperatives are not the best form of legal business structure for every project. b. Who will serve on the board of directors? What are their qualifications? c. What qualifications are needed to manage this business? d. Who will manage the business (if possible)? e. What other staffing needs does the co-op have? How do you expect staffing needs to change over the next 2-3 years?

Because all subsequent decisions depend on the organizations legal business structure, the first question is critical and should be answered before you continue with the feasibility analysis. It is an important question and may take some research. Dont hesitate to call on a qualified attorney or other advisor if necessary. While you need not know the answers to all the other questions in order for the business to be feasible, they must all be satisfactorily answered before you begin operations. This is a good time to begin the process of identifying appropriate individuals for the board, management and other staff positions, and to think carefully about what qualifications are necessary to manage this business. Be specific, and detailed, yet concise as possible. Dont think bulk is a substitute for vigorous research and thinking. Harold MC Laughlin Building Your Business Plan Technological Issues The cost and availability of technology may be of critical importance to the feasibility of a project, or it may not be an issue at all. For example, a service organization, such as a child care center, will have a few equipment and other technology- related issues to address. A manufacturing enterprise, on the other hand, may have a number of complex technology questions to analyze in order to determine whether or not the business is feasible. Key questions to answer include: a. What are the technology needs for the proposed business? b. What other equipment does your proposed business need? c. Where will you obtain this technology and equipment? d. When can you get the necessary equipment? How does your ability to obtain this technology and equipment affect your startup timeline? e. How much will the equipment and technology cost? Keep in mind that technology doesnt necessarily mean complex machinery; if your business simply needs a personal computer, printer, and fax machine, those are your technological needs. However, making wise decisions on even simple purchases such as office machines may require some research. Obviously there are numerous types of personal computers on the market. You many want to check Consumer Reports for their recommendations, do some comparative shopping, and ask acquaintances about their experiences with different companies. Your cost estimates (question #e) will get plugged into your financial projections. Naturally, the more complex the technology you need, the more research that will be required to make good decisions about it. Dont skimp on this foot work; you may regret it. 3. Financial Issues Once your analyses of marketing, organizational and technology issues have been completed, the third and final step of a feasibility analysis is to take a look at key financial issues. Answer the following questions as well as you can at this point and identify key issues that will require additional research.

Note that some of the questions below -- specifically revenue projections -- are directly based on your market analysis (the first step in the feasibility study), in which you estimated the number of units of product or service you could sell. If you didnt do that part of the feasibility study thoroughly, you wont be able to do the financial analysis adequately. a. Start-Up Costs: These are the costs incurred in starting up a new business, including capital goods such as land, buildings, equipment, etc. The business may have to borrow money from a lending institution to cover these costs. b. Operating Costs: These are the ongoing costs, such as rent, utilities, and wages that are incurred in the everyday operation of a business. The total should include interest and principle payments on any debt for start-up costs. c. Revenue Projections: How will you price your goods or services? Assess what the estimated monthly revenue will be. d. Sources of Financing: If your proposed business will need to borrow money from a bank or other lending institution, you may need to research potential lending sources. e. Profitability Analysis: This is the bottom line for the proposed business. Given the costs and revenue analyses above, will your business bring in enough revenue to cover operating expenses? Will it break even, lose money or make a profit? Is there anything you can do to improve the bottom line? Conclusion Your feasibility study should give you a clear idea whether the proposed co-op is a sound business idea. Some techniques for conducting the Market Analysis part of the feasibility study are presented on the following pages. HELP WITH MARKET RESEARCH Note that a local business school or small business development center can help guide you in conducting your own market research. College students may be a good source of labor for conducting telephone or other type of interviews. Target Markets What are the target markets for this product or service? What demographic characteristics do these potential customers have in common? How many customers are there in your target market? How many units of your product or services is each customer likely to buy monthly? Target Markets Identifying a target market allows you to focus your efforts on marketing to a distinct class of customers. This is also called market segmentation. It is the act of dividing a large potential market into smaller groups, which are more easily approached. One of the advantages you gain from targeting a particular niche is the ability to respond quickly when customer tastes and needs change. In order to serve

your customers, you have to know who they are, where they live, what their behavioral characteristics are. Describe your target market in terms of: Geographic Characteristics. Do your customers live primarily in a certain area or region? Demographic Characteristics. (Age, sex, family status, education, income, class, occupation, education; and, if relevant, religion and race.) Psychographic Characteristics. (Life style, personality types; attitudes; interests, and buying motives.) For example, a manufacturer of educational computer games might identify its target market as primarily at-home users, with a secondary market segment of schools. Then the manufacturer would describe each target market in terms of its typical demographics (household income, education, family status, and using habits). Their description might read something like this: The typical buyer in our target market is married, living in a two-income household with an average of two children, has a college education, is employed as a professional, and has at least one personal computer at home. They buy our computer games to provide educational, yet fun experiences for their children. If you find that you have more than one target market, you should discuss the relative importance of these target market segments. Do the in-home users generate a higher margin than the small businesses? Is the market among small businesses growing faster than that of home users? Will this relative importance change over the next few years? Customers are natural allies, worthy of products that are safe, wholesome and priced fairly. Bill Patrie North Dakota Assn. of Rural Electric Co-ops Projected Supply What is the projected supply in your area of the products or services needed for your proposed business? This question should be a little easier to answer than the demand questions. Your projected supply is the amount you can obtain of the goods or the amount of the service(s) you can provide, within a given time period. Limitations on this will include your manufacturing capacity, suppliers ability to provide raw materials to you, and your personnel (how many services can your staff realistically provide in one month?). Many cooperatives obtain supply information directly from the co-ops potential membership through a survey (surveys are also useful for collecting information about the co-ops potential customers). Please see Appendix E for information about how to conduct a survey. What About the Competition What competition exists in this market? Can you establish a market niche which will enable you to compete effectively with others providing this product or service? How much is your competition charging for similar product?

Competition Analysis Identify your 3-4 leading competitors and specifically explain why your company will be able to compete effectively with them. Be as realistic and as specific as possible; stay away from generalizations about your competition. Try to find out what market share each one has of the market. Also write up an assessment of their strengths and weaknesses; and how your product or service stacks up against each. How crowded is the market? If your market is already crowded with competitors, what market share would be available to a new company? If the overall market is growing, then you may be able to capture part of the new market. Competitors are not enemies, they do not need to be defeated. Alliances are possible with competitors. Bill Patrie North Dakota Assn. of Rural Electric Co-ops Conclusion Feasibility studies require a lot of hard work, and the market analysis research is the most difficult part of the process. We hope the questions weve identified above and the guidelines for answering them are helpful. Excerpts from actual feasibility studies are provided in Appendix F. If the study indicates that your business idea is feasible, the next step is a business plan. The business plan continues the analysis youve begun at a deeper and more complex level, building on the foundation created by the feasibility study. Marketing Feasibility Study The purpose of the Marketing Feasibility Study is to determine the suitability of this property for profitable development, and to define optimal products and amenities in accordance with projected market demand, and to project sales absorption and annual revenues from development of this property. The methodology entails examination of the site's market potential followed by research on the real estate consumer market and on competitive real estate products. Research findings are analyzed with respect to property location, potential competition, and preliminary development plans to define marketing feasibility in terms of potential market share, marketing constraints and opportunities and projected absorption rate and pricing ranges. These feasibility components provide the basis for definitive recommendations on development potential, development strategy and a cost-effective marketing and sales strategy. Market research is the process of systematic gathering, recording and analyzing of data about customers, competitors and the market. Market research can help create a business plan, launch a new product or service, fine tune existing products and services, expand into new markets etc. It can be used to determine which portion of the population will purchase the product/service, based on variables like age, gender, location and income level. It can be found out what market characteristics your target market has. With market research companies can learn more about current and potential customers.

The purpose of market research is to help companies make better business decisions about the development and marketing of new products. Market research represents the voice of the consumer in a company. A list of questions that can be answered through market research: What is happening in the market? What are the trends? Who are the competitors? How do consumers talk about the products in the market? Which needs are important? Are the needs being met by current products? A simple example of what market research can do for a business is the following. At the company Chevrolet they brought several disciplines together in a crossfunctional team to developed a concept for a completely new Corvette. This team enabled the marketers to come up with an alternative concept, one that balanced 4 attributes: comfort and convenience, quality, styling, and performance. This was considered radical because comfort and convenience were not traditional Corvette values. However, market research demonstrated that consumers supported the alternative concept. As a result the new Corvette was a huge success in the market. [Burns 2001] With market research you can get some kind of confirmation that there is a market for your idea, and that a successful launch and growth are possible. Market research for business planning Market research is discovering what people want, need, or believe. It can also involve discovering how they act. Once that research is complete it can be used to determine how to market your specific product. Whenever possible, try to reduce risks at the earliest possible stage. For example you could carry out market research early on and not wait until you are almost ready to enter the market. If early market research reveals that your business idea has real potential, you can use this information in planning the build-up of your business. [Ilar 1998] For starting up a business there are a few things should be found out through market research in order to know if your business is feasible. These are things like: Market information Market information is making known the prices of the different commodities in the market, the supply and the demand. Information about the markets can be obtained in several different varieties and formats. The most basic form of market information is the best quotation and last sale data, including the number of shares, with respect to a particular security at a given time. [Market research 2006] Examples of market information questions are: o Who are the customers? o Where are they located and how can they be contacted? o What quantity and quality do they want? o What is the best time to sell? o What is the long-term or historical price data over a number of years? o What is the expected production in the country? o Is there more demand for one product or another? Etc. Market segmentation Market segmentation is the division of the market or population into subgroups with similar motivations. Widely used bases for segmenting include geographic differences, personality differences, demographic differences, use of product differences, and psychographic differences. Market trends The upward or downward movements of a market, during a period of time. The market size is more difficult to estimate if you are starting with something completely new. In this case, you will have to derive the figures from the number of potential customers or customer segments. [Ilar 1998]

But besides information about the target market you also need information about your competitor, your customers, products etc. A few techniques are: Customer analysis Competitor analysis Risk analysis Product research Advertising research In the last chapter you can read how to perform market research, with interviews and questionnaires, but there is already a lot of information available. Market research firms and industry experts publish much of their information on websites, and in trade and business magazines. Reference sites index these magazines, many offer the texts online and if not the libraries stock them. Trade associations publish many listings and statistics on their websites as well as in hard copy publications. So there is already a lot of information available. Perform market research This chapter introduces the steps involved in the market research process. It also provides you with a brief preview of each of the steps necessary to conduct a market research effort. As you can see in figure 1, the market research process has 4 basic steps. These steps include: 1. Defining the research problem 2. Establishing the research design 3. Collecting and analysing data 4. Formulate findings Figure 1 is the meta-process model of market research. The model shows every activity that must be performed. And every activity has a few sequential activities. Every sequential activity is connected with an arrow which implies that these activities need to be carried out in a pre-defined order.

Figure 1: Meta-process model for Market research Before these 4 steps are discussed it is important to make a few comments about these steps. First although the list does strongly imply an orderly step-by-step process, it is rare that a research project follows these steps in the exact order that they are presented in the figure. Market research is more of an interactive process whereby a researcher, by discovering something in a given step, may move backward in the process and begin again at another step [Market research 2006] Finding some new information while collecting data, may cause the researcher to establish different research objectives. In the following the different market research steps are described. Defining the research problem The step defining the research problem exists of 2 main steps: (1) formulating the problem and (2) establishing research objectives.

Defining the problem is the single most important step in the market research process. A clear statement of the problem is a key to a good research. A firm may spend hundreds or thousands of dollars doing market research, but if it has not correctly identified the problem, those dollars are wasted. In our case it is obvious that the problem here is setting up a business. But even if this is clear, you still need to know what exactly you need to know to make the new business a success and what specific related to the product is difficult to find out. Problems that may be encountered are: it is unknown what potential markets there are, what customer groups are interested in your products, who the competitors are? After formulating your problem, you need to formulate your research questions. What questions need to be answered and which possible subquestions do you have. With the problem or opportunity defined, the next step is to set objectives [link to Wikipedia] for your market research operations. Research objectives, related to and determined by the problem formulation, are set so that when achieved they provide the necessary information to solve the problem. A good way of setting research objectives is to ask, What information is needed in order to solve the problem?" Your objective might be to explore the nature of a problem so you may further define it, or perhaps it is to determine how many people will buy your product packaged in a certain way and offered at a certain price. Your objective might even be to test possible cause and effect relationships. For example, if you lower your price, how much will it increase your sales volume? And what impact will it have on your profit? Clear objectives can lead to clear results. An example of this is a situation at Camaro/Firebird. Auto manufacturers are sometimes criticized for creating expensive vehicles with unwanted features and technologies that do not meet the needs of the target market. To avoid this trap engineering team of this company turned to market research to evaluate how changes in performance and fuel economy would affect sales volume and customer satisfaction. It turned out that customers were willing to pay more for greater performance if the car also offered simultaneous increases in fuel economy. [Burns 2001] The problem description, the research question, sub questions and the research objectives are part of an overall document problem description. After describing and formulating the problem and the objectives, the next step is to prepare a detailed and realistic time frame to complete all steps of the market research process. If your business operates in cycles, establish target dates that will allow the best accessibility to your market. For example, a holiday greeting card business may want to conduct research before or around the holiday season buying period, when their customers are most likely to be thinking about their purchases. [Market research 2006] Selecting and establishing research design The step selecting and establishing research design consists of 3 main steps: (1) select the research design, (2) identify information types and sources and (3) determine and design research instrument. Select the research design As stated earlier, every research project and every business is different. Still, there are enough commonalities among research projects to categorize them by research methods and procedures used to collect and analyze data. There are three types of research design: Exploratory research design Descriptive research Causal research Exploratory research is defined as collecting information in an unstructured and informal way. For example if the owners of a new restaurant often eat out at

competitors restaurants in order to gather information about menu selections, prices and service quality. Descriptive research refers to a set of methods and procedures that describe marketing variables. Descriptive studies portray these variables by answering who, what, why and how questions. These types of research studies may describe such things as consumers attitudes, intentions, and behaviours, or the number of competitors and their strategies. Causal research design is conducted by controlling various factors to determine which factor is causing the problem. It allows you to isolate causes and effects. By changing one factor, say price you can monitor its effects on a key consequence such as sales. Although causal research can give you a high level of understanding of the variable you are studying, the designs often require experiments that are complex and expensive. Identify information types and sources There are two types of information available to a market researcher: primary data and secondary data. Primary data is original information gathered for a specific purpose. Secondary data refers to information that already exists somewhere and has been collected for some other purpose. Both types of research have a number of activities and methods of conducting associated with them. Secondary research is usually faster and less expensive to obtain than primary research. Gathering secondary research may be as simple as making a trip to a local library or business information center or browsing the Internet. There is already a lot of statistics about different businesses that can be used for this research. Determining and design research instrument After determining which type(s) of information are needed, the methods of accessing data must be determined. There are several different methods of collecting data. These methods include telephone surveys, mail surveys, personal interviews or group surveys. The actual design of the research instrument, the data collection form that is used to ask and record the information is critical to the success of the project. There are two basic methods to collect information: by asking questions or by observing. The most common research instrument is the questionnaire. There are two types of forms: structured and unstructured. Structured questionnaires list close-end questions. These include multiple choice questions which offer respondents the ability to answer "yes" or "no" or choose from a list of several answer choices. Close-end questions also include scales refer to questions that ask respondents to rank their answers at a particular point on a scale. Unstructured questionnaires have open-ended questions. Respondents can answer in their own words. Collecting and analysing data Data collection is usually done by trained interviewers who are employed by field data collection companies to collect primary data. A choice has to be made between collecting the data yourself or hiring an external office who are specialised in interviews. Data analysis is needed to give the raw data any meaning. The first step in analysing the data is cleaning the data. This is the process of checking the raw data to verify that the data has been correctly entered into the files from the data collection form. After that the data have to be coded. This is the process of assigning all response categories a numerical value. For example males = 1, females = 2. After that the data can be tabulated, which refers to the actual counting of the number of observations that fall in to each possible response category.

Formulate findings After analysing the data you can make your findings based on this data. Once the findings about the target market, competition and environment are finished, present it in an organized manner to the decision makers of the business. In this case report the findings in the market analysis section of your business plan. In summary, the resulting data was created to help guide your business decisions, so it needs to be readily accessible to the decision makers. A core component of Forward Analytics' tourism market research and feasibility services includes destination development assignments, especially in the area of arts, culture, and recreation. Forward Analytics works with a broad range of arts, institutional, government, and corporate clients by conducting market feasibility studies, concept enhancement testing, and providing new concept market research. In order to build successful destination, tourism, and economic development plans for tomorrow, our clients depend upon us today for extensive background information, sharply honed analytical skills, and a sound instinct for capturing the most influential business intelligence hidden in the marketplace. Forward Analytics' comprehensive approach to conducting a market feasibility study taps into existing data sources, or secondary research, and combines that information with primary research to paint a complete picture. Early Stage Research and Due Dilligence Step one is to perform a SWOT (strengths, weaknesses, opportunities, and threats) analysis. A Thorough evaluation of various communities and attractions that represent competition for new concepts and plans is undertaken. This early stage competitive intelligence research helps all parties involved to juxtapose the new development opportunities and strengths, along side the weaknesses and threats. A destination development plan involving many elements means that opportunities may exist to serve a broad range of community, civic and commercial demands. Thus, the planning team needs to perform a suitable in-depth evaluation of needs and community opportunities that the development can meet. The market research process should include several community input and data-gathering exercises in order to identify the full-range of opportunities for planning and development. In some cases, our market research process begins with conducting a need assessment survey. We use custom survey research to identify unmet needs, missed opportunities and development preferences as indicated by community residents or the potential market. We recommend surveying to be extended to surrounding communities, since the attraction of dollars from the outside community will maximize the economic impact of any proposed developments. The survey findings also enable us to perform market segmentation research procedures to identify populations demanding each identified development need. New Concept Research and Concept Enhancement Testing After conducting the needs assessment, Forward Analytics presents the findings at a "visioning" work session. In addition to performing information gathering functions, we will perform thorough on-the-ground fieldwork, examining general attractions, site characteristics, key location factors, transportation access, etc., that may contribute to the development strategy and plan. Even prior to testing we work collaboratively with project stakeholders to identify and prioritize development concepts that present the best opportunities for successful enhancement. Forward Analytics has experience creating complex market analysis. We understand that a successful plan requires a detailed appreciation of the new concept, products or services offered; accurate identification of markets; an appraisal of the most efficient and effective means of communication with those markets; and knowledge of the media, mechanisms and relationships that support such

communication efforts. The complexity of such projects dictates that we design custom market research to serve each client's need. The next step in our new concept market research and testing project evaluates the potential attractions, events, promotions and other key elements of the proposed development plan. The research will measure the level of interest in the new development concepts and evaluate behaviors such as: annual days spent in tourism activities and average length of trip, average party size and spending per day, mode of travel preference, preferred types of tourism activities and destinations, to name a few. The concept testing research should target a statistically significant (quantitative) sample of key audiences. Key audiences will have been determined via earlier market segmentation research that will have profiled likely tourist or visitor demographic characteristics. Deliverables for our Tourism Market Feasibility Study Forward Analytics will provide a detailed development plan for tourism and destination development based on the results of the concept creation and testing process. Our plans typically comprise the following core elements: Recommendations regarding specific new developments to be pursued Narrative and diagrams detailed the symbiotic relationships between project elements Recommendations for timing and sequence of developments Recommendations for infrastructure improvements Estimates of potential visitor market demand for each of the core elements of the plan Timetable for conducting future need assessment surveys Details on how the developments appeal to each audience segment, showing the specific linked clusters of developments required for the successful attraction and retention of your audience If you are considering a large-scale community project, Forward Analytics can help you unlock the business intelligence needed to ensure your success. We aim to provide the highest value to our clients. If your project requires further outside consulting, we provide collaboration with leading architects, engineers and development firms throughout the United States. If you have a need for a market feasibility study, new program development, or concept market research and testing, you will find Forward Analytics to be an interested and responsive partner. Our status as a woman-owned business, along with our project resume and skill sets, can go a long way toward raising the profile and "uniqueness" of your projects