What is Market Analysis

Market analysis is the first step to analyze the investment decision. Under this, we analyze to estimate the potential size of the market, of the product and market share to be captured by the proposed product. It is important that market and demand analysis should be carried out in orderly and systematic manner. The main steps in this analysis are as follows:-

1. Situational analysis and specification of objectives.
2. Collection of secondary information.
3. Conduct of market survey.
4. Characteristics of the market.
5. Demand forecasting.
6. Market planning.

Situational analysis and specification of objectives: – in this, we firstly analyze the relationship between product and its market. The product analysts informally talk to customers, competitors, middlemen and others. He also looks after the preferences and purchasing power of the customers, actions and strategies of competitors and practices of the middle man.

The objectives of market and demand analysis answers the following questions:-

Who are the buyers? What is the total current demand? How is the demand distributed geographically? What price will the customers be willing to pay? What channels of distribution are most suited? What are the prospects of immediate sale?

Collection of secondary information:-in order to answer the questions listed above information regarding this may be obtained from secondary and primary sources. While collecting the secondary information the analyst should carefully examine its reliability, accuracy and relevancy.

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