Question

What are the factors affecting market assessment ?

Hint:

A useful framework for remembering the external factors affecting market assessment is {PESTLE} Analysis: {P}olitical, {E}conomic, {S}ocial, {T}echnological, {L}egal, and {E}nvironmental. These, combined with an analysis of competition (Porter's Five Forces), form the core of a thorough market assessment.

Answer 1

Market assessment is the process of evaluating the attractiveness and dynamics of a specific market. It is a crucial step for any business looking to launch a new product, enter a new market, or formulate its marketing strategy. The assessment is affected by a variety of internal and external factors. The key factors are:

Demand and Market Size: This is the most fundamental factor. The assessment involves estimating the total current and potential size of the market. Key questions include: How many potential customers are there? What is their purchasing power? What is the expected growth rate of the demand? A large and growing market is generally more attractive.

Competition: The level and nature of competition significantly affect market assessment. This includes analyzing the number of existing competitors, their market share, their strengths and weaknesses, their pricing strategies, and the threat of new entrants. A highly saturated market with intense competition may be less attractive.

Economic Factors: The overall health of the economy impacts market attractiveness. Factors like GDP growth rate, inflation, interest rates, and consumer income levels determine the purchasing power and spending habits of customers.

Technological Factors: The level of technology in the industry and the pace of technological change are critical. The assessment must consider whether the business has access to the required technology and whether there is a risk of its products becoming obsolete quickly.

Social and Cultural Factors: These factors include the demographic profile of the population (age, gender, lifestyle), cultural norms, values, and consumer trends. A business must ensure its products and marketing messages align with the socio-cultural context of the target market.

Regulatory and Legal Factors: The market assessment must consider the legal and regulatory environment. This includes government policies, trade regulations, tax laws, environmental regulations, and industry-specific rules. A stable and favourable regulatory environment makes a market more attractive.

Distribution Channels and Supply Chain: The availability and efficiency of distribution channels (wholesalers, retailers, e-commerce platforms) and the supply chain infrastructure affect the ability to reach customers. The cost and complexity of distribution must be assessed.