Feasibility Study: Market Analysis and Project Viability

Feasibility Study

A feasibility study provides the background to estimate the advantages or economic disadvantages of a project. A pre-feasibility study examines these chapters in greater depth and with a smaller range of variation. It must establish the most fundamental technical aspects: size, location, technology, and databases to tender. As a rule, it requires the final approval of the project.

1. Market Study

1.1 Definition of the Product

1.2 Study Area

Delimit the geographic area or physical area to which the product concerns.

1.3 Demand Analysis

Determine who the potential buyers of the product are and what the demand projection is.

• a. Current Situation: Current amount of consumption.
• b. Demand Features: Why users consume the good.
  • Population: The estimated current and future population to consume the product.
  • Income: Payment capacity of users.
  • Consumption Characteristics: The reasons why consumers demand the product (habits, customs).
• c. Future Situation: Projecting the demand for the period of useful life of the project, extrapolation of historical trends.

1.4 Analysis of the Supply

Determine other similar products on the market.

• a. Current Supply Situation: Available background found, current volume, list of major suppliers, and so on.
• b. Market System:
  • Nature and degree of state intervention.
  • Degree of competition.
• c. Future Situation: Trends in supply on factors influencing participation in the tender project.
  • Utilization of idle capacity: How people expect producers to use existing facilities.
  • Plans and expansion projects: Revision of current expectations of the major vendors.
  • Determinants of supply: Structural and cyclical evolution of the economic system.

All backgrounds can make the difference between supply and demand required by the project.

1.5 Price Analysis

Consider the price influence on the good:

• The price of the commodity in question.
• The tastes and preferences of consumers.
• Disposable income of consumers.
• Prices of goods closely related to the well of interest: substitutes and complements.
• Other variables such as expectations of rising prices, fashion, etc.

• a. Price Formation: Composition of production or processing costs.
• b. Maximum and Minimum Values: A range of probable prices are the maximum and minimum values in the market.

1.6 Analysis of Marketing

Aimed at satisfying the needs and desires through exchange.

• a. Current Situation: Consider how the current production units use the 4Ps analysis (product, price, promotion, place).
• b. Future Situation: Proposition that each new project can conquer the market.

1.7 Outlooks

Willing to consume at price levels that are planned and competitive conditions. Can define the conditions if the projected wait or stop its realization.