Market feasibility is a study that identifies the success of a product in a particular market. It helps to identify the potential markets, market competition, potential development in the market, and market analysis to evaluate the business idea.
Market feasibility is highly important for the companies who are planning to start a business. It helps the entrepreneurs to identify their target market, analyze the market opportunity and the unmet customer needs in the particular market segment.
Market feasibility studies are different from the marketing plan. feasibility studies are usually conducted based on ideas, products. campaigns, processes, businesses, and trends in the market. Feasibility studies are done based on how things are happening in the current market, how the market will respond to the product, and the potential advantages and problems that may arise.
Feasibility tests are not just reports that are made to sell the business idea to the investors but those are tools that will help to assess the business potential which will consider both advantages and disadvantages in the business implementation in the particular market.
A marketing plan emphasizes the specific strategies, data, estimations, and campaigns that are planning to be implemented. Compared to a marketing plan, the feasibility studies can be identified as a logical study that identifies the practicability of a market plan or a proposal.
When implementing a feasibility study, the marketing managers should determine the availability of enough financial and other resources, people, and relevant technology available to access the potential market. Apart from that, the return on investment, the financial benefit to the company, and the benefits to society should be assessed as a part of the market feasibility study.
In certain instances, the feasibility study may include the changes in operating the business such as an acquisition of a competitor or changing the production processes. As a result of these operation changes, the cash flow of the business also can be changed. Assessing the risk factor is more important in situations like these.
Importance of conducting a market feasibility study
Any entrepreneur who is planning to start a new business, or an investor who is planning to invest in a new business takes a huge risk. The risk of not being successful in the selected market or not being successful in the selected product category can create a huge impact on the entrepreneur as well as the investor.
Through logical tools, feasibility studies can identify whether the particular product has a possibility of being successful in the selected market segment. It provides the advantages and disadvantages in entering a particular market and allows the entrepreneur/ investor or the marketing team to make an informed decision. This reduces the risk of financial losses as well as reputational damages.
As mentioned above, feasibility studies reveal both pros and cons of entering the selected target market. It is advantageous for the business to foresee the pros of entering the market and take maximum advantage of that and identify the cons and take necessary actions to eliminate or minimize the disadvantages that can happen in the future.
In addition, the market feasibility studies help the business to identify the best market segment that the marketing department should focus on. It also helps to determine the market share that can be achieved through entering the particular market. Overall, the feasibility study provides a better perspective about the target market of the product and helps the business to enter the market with more understanding and knowledge.
As marketing is an essential part of the success of any product or a service, it is important for the business to carry out a feasibility study before entering the market. In that way, the risk will be minimized and the product gets more chance to be successful in the market segment and the marketing planning process will be easier with a proper market feasibility study.