When launching a new venture, whether business or product, some business owners fall into a subtle trap. They believe their product will be successful and dive right into moving forward with the new venture. The business owner's research isn't usually thorough, and the product's success is based on a small sampling size of the target audience.
More than a great attitude and good feedback about your product is needed to ensure its long-term success. This is where market feasibility analysis comes in. By thoroughly analyzing target market dynamics, you'll develop a better understanding of a market's potential for your product or new business.
In this article, you'll learn more about how market feasibility analysis plays into the success of new ventures (products, service or businesses).
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Which road would you rather build: One where someone says cars should have no trouble traveling down a specific path or one that has been soil tested, potential traffic analysis performed and cost estimates provided?
There's a reason the second option sounds more appealing - it's because the chances of success or failure are better known. More knowledge about what is involved in building the road is available. It's also possible to perform an adequate amount of analysis given the data. Ultimately, you aren't walking into the situation with only historical evidence.
A market feasibility study works the same way. Rather than plowing headlong into a market armed with little information, the study will reveal facts and provide data where previously there were none. Some data that will be revealed by a market feasibility study include:
Variables such as income differences, pricing, tastes, preferences, and future price expectations all have a marked effect on demand levels.
Market conditions such as growth or decline
Availability of manufacturers for key components
The above is important because you certainly don't want to enter into an industry that is in decline. You may find out that the industry is full of other companies that offer similar technologies and are all competing on price. The field could be dominated by just a few large companies.
Additionally, payment terms may present a high barrier to entry. For example, a common practice is to provide 90-day net terms on invoices; this means you can be waiting on average 90 days to get paid. If suppliers are expecting payment within 30 days, that leaves a large 60-day gap in financing that you will have to fill somehow. In the meantime, you are likely to run into cash flow shortage situations.
There may be only a handful of manufacturers in the field who produce key components that can't be found anywhere else. If this is the case, it may difficult to fulfill orders. Worse, some of these manufacturers may be contracted out for years, making them virtually unavailable.
Entrepreneurs can be blinded by the potential success of a product or business venture. They may believe so strongly in a product that they brush off the need to do intense market research. This can lead to an unexpected and disappointing outcome. A market feasibility study can be seen as an unnecessary expense and constraint on time. In fact, the exact opposite is true. A market feasibility study will help to reveal obstacles and overall potential of a product or business venture.
Many companies do not have the expertise or time to perform an in-depth market feasibility analysis. Instead of attempting to perform the analysis in-house, offloading it is a far better option.The research team at Research Optimus has years of experience and the specific skill set needed to produce a thorough market feasibility analysis that will provide your company with the confidence to make an informed decision aboutCONTACT US TODAY!
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