Market assessment is:

• a detailed and objective evaluation of the potential of a new product, new business idea or new investment.

• a comprehensive analysis of environment forces, market trends, entry barriers, competition, risks, opportunities and the company’s resources and constraints.

It is useful for the following Situations:

• New Entrepreneurs: Thinking of Starting a New Business

• Expanding Businesses: Venturing into a new market

• Growing Businesses: Launching a new product

• It is the first step to determine if there is a need or a potential customer base for your product.

• Enables your company to decide where to use limited resources and to go after markets and opportunities that will provide the best returns on investments.

• Failure to conduct proper market assessment could result in wastage of resources, missed opportunities, poor returns on investments and even substantial financial losses which could be detrimental to the future of your company.

• Step 1: Understand Market Conditions.

  • Gather basic information about your intended market – size, competition, potential customers and income levels. You will also need information about the business environment – political, economic, social and technological.

• Step 2: Identify Market Risks and Opportunities.

  • Gather more targeted information about potential risks or opportunities in the potential market. Other information required includes data on market growth, trends, opportunities, risks and key players in the market.

• Step 3: Analyse the Overall Picture.

  • Compile all the information you have collected and determine if your business venture is still viable.

• Step 4: Move on to Market Planning

  • Once you are confident that you should proceed with the venture, you can start developing your marketing plan.

Tips

As you analyze market conditions, environment forces and key players in your target market, you should identify negative issues (red flag items) that are areas of weakness, which generate risks. You should also identify positive issues (green flag items) that are areas of strengths, competitive advantages or even good timing, which favors entry into the market.

Make an objective assessment of all risks and opportunities before making a decision to venture into prospective markets.

New Coke (1985)

In 1985, Coca-Cola replaced the original Coke with New Coke. This was done in an attempt to challenge the increasingly popular Pepsi. After just 79 days of public outcry, Coca-Cola had to bring back the original formula and New Coke was eventually phased out.

Coca-Cola spent two years and millions of dollars on research before the launch. They focused on the physical aspects of the product, overlooking the strong brand that loyal customers had come to associate and identify with. They failed to ask the right questions during the research and as a result, collected irrelevant information. You need to remember that it is not enough just to conduct market assessment. You need to make sure that you are doing it right.