Professional Documents
Culture Documents
I. Module 3: Market Study: Study of Demand Study of Supply Demand-Supply Analysis Study of The Price Marketing Program
I. Module 3: Market Study: Study of Demand Study of Supply Demand-Supply Analysis Study of The Price Marketing Program
I. Module 3: Market Study: Study of Demand Study of Supply Demand-Supply Analysis Study of The Price Marketing Program
MIDTERM PERIOD
Topic Highlights:
Study of Demand
Study of Supply
Demand-Supply Analysis
Study of the Price
Marketing Program
4. identify whether there is adequate demand for the product and that the project shall enjoy
competitive marketing position.
5. To analyze the past and present demand and supply situations, expected future
behaviours and the resulting demand –supply gaps as they relate to the outputs of the
projects whether they carry market prices or not (e.g. Public goods); and
Instructions: Write your answer in the activity worksheet attached this module.
The Marketing is considered the most important area. This is so because it describes market
situations where the product can be identified through the demand analysis.
To determine the extent to which the goods/ services be generated by the project are needed or
demanded and to design the appropriate marketing strategies and plans that will help ensure that
the project’s outputs will reach and be accepted by the target users.
1. Market Analysis
Demand
Supply
Demand Supply Consolidation
References:
1| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
2. Marketing Planning
Forecasting Techniques
Market
Involves the estimation of market demand for the output(s) of the proposed project. –
It involves
a. identification and analysis of demand determinants;
b. estimation of past and present demand
c. projection of future demand
Demand Determinants
Population
Income
Prices
Substitution Possibilities
Changes in users' taste
rate of investments
government policies and budget
The relative importance of the above factors as demand determinants depends on whether one is
analyzing consumer or producer demand for non-marketed goods, such as social services.
Consumer Demand
Final demand reflects the demand for a product for final consumption purposes (e.g.
basic food commodities, housing, clothing, health care, and basic educational services)
Important consumer demand determinants are population, per capita income, consumer
preference in the case of marketed goods and services.
population characteristics or may have to be specified as to age, gender, geographic
distribution, social background, income class for more meaningful consumer demand
analysis.
the relationship between some determinants such as income and prices and the demand
for a consumer good can often be described mathematically (e.g. demand and income
can be reflected in terms of income elasticity of demand)
References:
2| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
Producer Demand
Intermediate demand is the demand for a product which is used as an input to the
production of other goods and services: also called derived demand (e.g. demand for
lumber, furniture, fuels for industrial purposes, demand for research, training, skills for
various productive applications.
Producers demand for the project's output depends on the nature of their production
processes, scale of operations, rate of investment and ultimately on the level of demand
for thier own product.
Estimating Past and Present Demand
Once the determinants of demand have been identified, the past and present behavior of
these determinants are examined to measure the prospective demand for the project's
output.
The choice of quantitative and qualitative data to be analyzed should be highly selective
and directly relevant to this purpose.
Sources of Data
Data on demand can be obtained either first hand or from existing documentation or both.
Proper judgment must be exercises in deciding which methods to use.
Existing Documentation (secondary statistics) - includes: statistics generated by
government agencies, trade associations and firms; general surveys such as economic
census, research institute studies; social services surveys (e.g. data on consumption of
imported commodities may be obtained from the Department of Economic Research,
Central Bank of the Philippines; National Census and Statistics Office; Bureau of
Customs and private firms that compile data on imports.
There is a tendency for some project planners to over-indulge in secondary data even
when first-hand information is access able and cheap to generate.
There is likewise an unfortunate tendency for planners to be selective in the secondary
data used to avoid presenting data that will tarnish the image of the product of being laid
out.
Sources of Data cont.,
Interviews and special surveys are usually used to supplement the data collected from
existing secondary sources.
For many projects however, it makes a lot of sense to rely on first-hand rather than
structured surveys. These should, however, be conducted with proper expertise.
In addition, costs of conducting the interviews/survey should be weighed against the
quality and the extent of data needed.
Historical Data Coverage
The period from which data on the quantitative and qualitative aspects of demand are
collected and synthesized depends on the following:
References:
3| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
Homogeneity of Statistics- statistics availed of should be comparable over the period, i.e.
The same definitions are used, same geographical coverage holds, etc.
In general the longer the period considered, the better the demand analysis and estimate.
In some cases, however, the data available are limited to a few years, leaving no choice in
the length of period to be used
Factors which may have significantly changed the trend of demand for the project output.
It is important to take account of recent events and changes in government policies that
may have affected the market.
For instance, historical data on log exports are no longer relevant in the face of recent
policies limiting log exports. The project planner will thus have to rely on his own
judgment when fixing a limit to his own inquiries into the past.
In general, statistics on basic products (steel, rice) can be used over a longer period while
those on less essential goods and services, particularly those which are subject to
dynamic changes in technology and involve wide product ranges (electronic devices) are
significant for shorter period of 5 to 10 years.
Techniques for Demand Estimation
1. Standards Coefficients- for example the market demand for a certain food product in a
specific location maybe derived from actual per capita consumption estimates. Similarly,
the demand for classrooms may be calculated on the basis of an accepted national
planning standard such as classroom-pupil ratio.
2. Chain Ratio Method-An example of the application of this method is when the demand
for cow’s meat is estimated to be equal to: Population X Personal discretionary income
per capita X Average percentage of food expenses spent on meat X average percentage of
food expenses spent on cow’s meat.
3. Market- Build-up Method- this is an aggregation of the potential beneficiaries in each
market. Since this method is a more direct approach to demand estimation, it is
generally preferable.
A good illustration is the project study on the feasibility of a poultry dressing
plant for backyard raisers in particular province to be owned and operated by
the government.
If the outlets of dressed chicken will be mainly the public markets, the potential
demand estimated is shown below.
References:
4| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
Projecting Demand
These are the various methods for estimating future demand, among which are the following:
Are based on the potential clients’ say they will do, a)survey of the people’s intentions
and b) needs assessments;
Base on clients’ expected to do, a)expert’s opinions) b)time series analysis(trend
projection);c)statistical demand analysis, d)use of planning standards (coefficients,
international, or interregional data comparisons) and e)market (pilot project) testing. *
The choice of forecasting technique would depend on various factors including the
quality and quantity of data available.
Techniques in Projecting Demand
Survey of people’s intentions and Needs Assessment- the determination of whether and
to what extent the target population feels a need for the outputs of a proposed project.
In general it entails the collection of information through field investigations where
specific questions relating the outputs of the project under consideration to the actual and
perceived needs of the target population are asked through direct contact with a sample of
the population.
The results of needs assessment can also be used to verify what the intended beneficiaries
want in contrast to the project designer’s assumptions.
References:
5| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
A relatively long series of historical data is required to ensure that short term economic
fluctuations or changes in the social environment do not unduly affect the median line to be
extrapolated.
Trend projections assumes that factors affecting past demand will continue to prevail in the
future
For preliminary estimation purposes or for small scale projects, this method is usually sufficient.
Statistical Demand Analysis- quantifying the functional relationship between the level of
demand and various demand determinants.
Use of Planning Standards- the use of comparisons of market data from other regions or
other countries in cases where local data for the project’s output are limited.
Cautions should be exercised in the selections of regions/ countries with which the data
are indeed comparable. Some factors to account for are possible differences in the
demand determinants, levels of development, definitions used and statistical coverage.
Market Testing- a more direct approach, when the potential beneficiaries are not clear about
their preferences or are not quite consistent in what they say or do or where experts cannot make
good guesses.
For instance if the planner is interested in the probable demand for a new rice hybrid
which is proposed for national marketing he may try to conduct pilot marketing of that
product in the selected areas.
Limitations of Market Testing: a) where the basic fixed capital requirements (e.g.
building, equipment) are substantial, there may be no middle ground between doing it
fully or not doing it at all; b) where the approach is applicable, the problem include
selecting market segments that will reasonably represent the market as a whole estimating
the future on the basis of past market conditions and the existence of exogenous factors
that could affect the outcome on the test(e.g. water)
Supply Analysis
An evaluation of existing supply conditions towards bridging the gap between the level of supply
and the level of demand for the proposed project’s output.
References:
6| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
2. Estimating Past and Present Supply- employing of historical estimates of supply and
some knowledge of its historical trends/ fluctuations that may be due to the influence of
economic and social policies and technological changes on the supply determinants (e.g.
the effect of imports constraints, shortages of raw materials, innovation in productions
process, changes in social environment.)
For Social services, the use of social service indicators may be particularly helpful
in the analysis of past and present supply situations , for instance health service
indicators (e.g. no. of people per heath worker, midwife, doctor, clinic/ health
centre hospital)
3. Projecting Supply
The approach and considerations are essentially similar to those relating to
demand.
The methodology and factors used in forecasting should be cited.
Two sets of supply projections are made (with or without the project). In both
sets, rated capacities and production efficiencies assumed for the different
producers should be made.
Expected market should be cited in the case of projections of the project.
For social services, the targeted level and volume of specific types of social
services to be provided by each agency and their respected areas should also be
cited.
Demand and Supply Consolidation
Determines whether and to what extent there is a market for the project’s output of goods and
services.
1. Past and Present Supply- Demand Gap- to provide indications of total current shortage, if
any, and to specify the areas affected by said shortage.
Specific reasons (e.g. Technical, financial, administrative) behind current
bottlenecks should likewise be identified to arrive at proper solutions to the
problems.
2. Future Demand – Supply Gap, Without the project
Yields information on the expected shortages/surpluses in supply according to the
type of demand, sources of production, seasonal variations, geographic
fluctuations, etc.
The analysis, therefore, serves as a basis for the identification of alternative sizes,
locations, production processes and other specifications of the proposed projects.
References:
7| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
Instances where demand and supply gap may not be necessary to justify a project (Market
goods/services):
o Exportation of a good or services despite the adequacy supply in the world
market in view of a comparative advantage enjoyed by the country resulting in
the price competitiveness of the product.
o Setting up hydroelectric power plant despite adequacy of power supply in the
project influence area in view of lower power generation costs relative to, say,
power generation using oil-fired plants.
For social services, supply and demand have a different meaning, particularly where the
purpose of the project is to help eradicate a social problem(e.g. poor health, low levels of
education), the demand-supply gap in this case becomes “relevant”.
Competitiveness of a Product
o For producing market goods/services, its competitive position can be analyzed in
terms of the price of the project output with that of competing products in the
market should be made to determine the extent of price competitiveness.
o This involves the knowledge of past price behaviour and expected future price
movement of a certain products.
o The comparison of the quality specifications of the project’s output to determine
the extent of quality competitiveness.
o For social projects, the associated costs that the user bears in utilizing the project
services should be compared with the costs of other alternative available (e.g. the
interest cost differential between credit from project sub loans and from
traditional money lenders can be lost if users have to spend time and money
travelling between project offices and villages to collect signatures and complete
the paper work of loan processing.)
o For producing market goods/services, its competitive position can be analyzed in terms
of the price of the project output with that of competing products in the market should
be made to determine the extent of price competitiveness.
o This involves the knowledge of past price behaviour and expected future price
movement of a certain products.
o The comparison of the quality specifications of the project’s output to determine the
extent of quality competitiveness.
o For social projects, the associated costs that the user bears in utilizing the project
services should be compared with the costs of other alternative available (e.g. the
interest cost differential between credit from project sub loans and from traditional
money lenders can be lost if users have to spend time and money travelling between
project offices and villages to collect signatures and complete the paper work of loan
processing.)
Government Policies
o Specific policies directly affecting the industry or sector to which the project
belongs should be analyzed.
References:
8| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
o In the case of marketed goods, these would include existing trade agreements,
tariff rates, quantitative import or export restrictions, and financial and tax
incentives, all of which might affect the overall marketability of project’s output.
Marketing Program
o Is a basic consideration in the market study, and is often a critical determinant of
the success of the project.
o Strong marketing program of a project which promises to yield market shares can
be rated feasible even in the absence of a shortage of supply or a relative
advantage in production, at least in a market standpoint.
Marketing Planning
o A market study serves as the bases of marketing plan
o Typically deals with four areas: market segmentation and targeting, product mix
strategy, marketing mix, and marketing organization.
o These aspects should be viewed in the context of specific projects, since the
relevance of these aspects vary according to project.
Product Description – the primary (and secondary, if any) product/s of the proposed project
is/are to be vividly described in this section.
Industry Profile – it describes the general trade practices of an industry or business which sells
the same product. Some of these practices are pricing, sales, methods of transportation,
promotion, channels of distribution, supplies, packaging resources available, the values of
people, and also the opportunities, threats, strengths and weaknesses of the industry.
Demand – in this section the student/researcher pinpoints the specific customers who are willing
and are able to buy the proposed product/s. This could be done through segmenting the market
geographically and demographically.
1. Sex
2. Age
3. Religion
4. Educational Attainment
5. Ethnic Group
6. Income level
7. occupation
8. Credit availability.
The first thing to do is to enumerate the competitors, their location, and their capacity/size. Then
the student/researcher will determine the 5 year historical supply as well as the 5 year future
supply by using one of the projection methods.
Marketing Plans or strategies should be done in order to attract customers and even the
customers of the competitors.
1. Occupants – Who are the target markets? What are their values, culture, religion etc.?
References:
9| Feasibility Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
2. Object – What makes the products attractive to the target market- Packaging, color, shape,
size, etc?
3. Objective – What is/ are their objective/s in buying the product status symbol, price quality,
etc?
4. Occasion – When do the customers usually buy the products- daily, weekly, during
birthdays, anniversaries, or Christmas season?
5. Outlet – Where could the target buyers buy the products—from the wholesalers, retailers,
brokers, contractors?
6. Organization in the Family – What is the customer’s role in the family— initiator, buyer, or
decision maker?
References:
10| Feasibility
Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
Example 2: Midnight Specials – This is offered by Motels (9:00 p.m. to 6:00p.m. at the price
of 3 hours stay.)
Example 3 – Discounting Plan - The Company offers lower charges for the following calls. -
Night calls - Sundays and Holidays - Morning overseas calls during weekend hours
Example 4 – Season Specials 40 % discounts on all room categories.
G. Marked Down Pricing – in cases where demand is limited and competition is intense, the
usual mark-up pricing approach is temporarily suspended in favor of a markdown to
capture a segment of the market. The concept behind the markdown pricing is the
“thought” that the lower you can make your price, the more you sell, and you generate
revenues sufficient to cover costs and provide a profit.
H. Bonus-Pack Pricing – for the end-users, this is commonly used so that they will buy more
than the required quantity. A good example is the:
5. People – this refers to the salesmen who will be selling and promoting the products. Do they
know the product? Are they committed to the company? Are they motivated and satisfied?
Sources:
https://www2.slideshare.net/jezielcamarillo/marketing-aspects-of-feasibility-study
https://www2.slideshare.net/wualankcloy/feasibility-study-marketing-technical-and-
management-aspect
Aduana, N. L. (2015). Writing Project Feasibility Study. Quezon City: C & E Publishing, Inc.
Instructions: Write your answer in the activity worksheet attached this module.
References:
11| Feasibility
Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
I. Study of Demand
The primary question to be resolved ---- Is there a demand?
Primary steps to perform in order to answer the question:
References:
12| Feasibility
Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
1. Compute correctly the three elements of cost ( direct materials, direct labor, and
factory overhead) incurred in making the product
2. Decide on the proposed mark up on finished goods
3. Compare the proposed selling price with the prices of similar products or substitutes
4. Make necessary adjustments if there is a huge difference
5. Determine the history of prices of similar or substitute products
6. Determine the expended operating expenses
7. Set the selling price after all concerns have been properly studied and evaluated
Several computations are shown in this section to arrive at the expected
selling price
Alternative prices should also be indicated in this section
V. Marketing Program
1. Target market
2. Terms of sale
3. Channel of distribution
4. Transportation arrangement
5. Estimated selling price
6. Promotion and advertising activities
7. Distribution network
8. Packaging
9. Marketing staff
References:
13| Feasibility
Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.
swd
References:
14| Feasibility
Study
Aduana, N. L. (2015). Writing Project Feasibility Study. 839 EDSA, South Triangle, Quezon City. C & E Publishing, Inc.
Ditablan, E. (2014). Feasibility Study Handbook. 125 Pioneer Street, Mandaluyong City. National Book Store, Inc.