Market Analysis

The Purpose Of Market Analysis And Its Data Requirements

The overall objective of the market analysis is to determine whether or not the product to be produced through the direct investment contemplated will have a sufficiently large market in the country selected. For this reason, the market analysis aims at; searching, gathering, processing, analyzing, and evaluating lots of data and information in order to determine in advance the existing and the possible future conditions of the market to be entered into. In other words, the market analysis aims at gathering and collecting information so as to find out in advance the reactions and effects of the surrounding environment where the project is going to take place in. Thus, the market analysis, on one hand, deals with the commodity market (sales market) and, on the other hand, with the factors market (procurement market). As such, it involves lots of studies and work to be done.

At the end of a detailed market analysis in terms of clarifying consumer behaviors, defining supply and demand conditions, and describing competitive environment, the project manager should be able to estimate the possible market share to be captured by the investment project. If the product to be manufactured is believed to be marketable, that is, if it will have a large enough market, then, the feasibility study should continue with a technical analysis as will be explained later. However, if the product is not marketable, that is, the market share that might be captured is not sufficient due to low level of demand and/or severe competition in the market; then the idea of investing in the selected country should be given up.

Nonetheless, before starting a market analysis, it should be indicated that since the market analysis is essentially information oriented, depending on the amount of data and information needed, it may turn out to be a detailed marketing research study. For this reason, before conducting a market analysis the needs for data and information should be determined first. Then, the search for the data and information needed should be planned through the familiar techniques known as desk surveys of secondary data sources and field surveys to obtain primary data and information through the methods of observations, questionnaires, and personal interviews as summarized below.

• 1.

  Desk surveys of secondary data sources include the search for and review of all published documents related to macro and micro economic conditions as well as market operations of the country in question. For this purpose research reports (published by universities, public institutions such as statistical institutes, central banks, and commissions or boards for capital markets and banking, governmental ministries of Finance, Economy, Treasury, Trade, and Industry, and professional institutions like chambers of commerce, industry, and commodity exchanges, etc.) are valuable sources of information and data for market analysis. Furthermore, country reports published by international institutions such as International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD), United Nations Industrial Development Organization (UNIDO), United Nations Conference on Trade and Development (UNCTAD), World Trade Organization (WTO), and World Bank (IBRD) may cover relevant information regarding the countries studied for the direct investment.

• 2.

  Field surveys are carried out to collect data and information if the information and data needed for evaluating the desirability of a country is neither sufficient nor available at all in the secondary data sources. Thus, the project managers collect the needed data and information through field surveys according to their own needs. The data and information collected through specific field surveys is called primary data and information since it is obtained firstly by those that needed it. The methods used in field surveys to gather the required data and information are those traditional search methods called “observation”, “personal interview”, and “questionnaire”. In the observation method the field researchers watch or observe personally the events which they want to gather information about for an adequate time period and take notes to compile the required data and information regarding the market place in specific and the country in general. For instance, information concerning purchasing behaviors of consumers is quite often obtained in this way.