Demand and Market Appraisal of Project Dr. Raghu Bista & Mr. Pramod Niroula NASC,

Appraisal Project appraisal involves critically examining the basic data, assumptions and methodology used in project preparation to assure project’s viability, profitability, sustainability. In case of Market Appraisal, the demand/needs of the project is examined.

Project Appraisal: Market Aspects A market appraisal reviews the project ‘s demand, number of local beneficiaries, prices of services or products, distribution mechanism, future market growth to ensure it will generate profits or it will able to recover costs. The study is to assure marketability of the project.

Marketing as a Matching Process A matching process to ensure that marketing mix and internal policies are appropriate to the market forces. Wants, needs and demands Vs supply? Potential Vs Penetrated Demand?

Marketing Marketing is the business function that identifies an organisation’s customer needs and wants, determines which target markets it can serve best, and designs appropriate products, services, and programs to serve these markets. (sources: Kotler, P. and Armstrong, G, 1994. Principles of marketing, Prentice hall International)

Review of Market and Demand Study Is the demand expressed a real need or only demanded for particular benefits of certain group? Market and demand appraisal reviews how the demand size, demand growth, number of populations/ organisations that have demand for the product/service How much is the unfulfilled demand? What sources of data were used in analyzing market.

Review of Market and Demand Study Cont.. What price of product/service will be charged? How it was analyzed? Analysis of competitors, their strength, weakness Distribution mechanism etc.

Free Services and Market Study Free services also have demand. Free services also compete in the market. Production units including public schools, roads, hospital without having any market price must not be interpreted to mean that there is no demand, no competition, no substitute.

Process of Appraisal Review size of demand in multiple years Reliability of sources of data Objective and methods of market survey to find market related data Examine assumptions, and methodology Examine analysis of product, price, promotion related data Assure Sufficiency of analysis Conduct further study and analysis

Demand Forecasting Methods Survey Method (Simple and for short term, more qualitative in nature) Expert Opinion Pool Market Experiment Method Delphi Method Statistical Method (Complex and Long term, quantitative nature) - Trend Projection Method Barometric Method Econometric Method Index Number Method Decision Tree Method

Collection of Market Information Review the Data sources: primary and secondary The important secondary sources are national census, national survey, economic survey, reports of export promotion centre, reports of respected ministry Market Survey Is the collected data sufficient and reliable?

Market survey Secondary information may not provide sufficient information. In that case, further information can be collected by market survey

Objectives of Market Survey How much is the total demand? At what rate the market is growing? What are the size of different segments? What needs they want to fulfill? Existing supplier/ Possible market entrants Are they dissatisfied with the present products? How many of them are dissatisfied? What quality is desirable to satisfy them? How much they can spend? What quality is acceptable? etc

Market Segmentation Dividing a market into distinct groups (segments) of buyers with different needs, characteristics or behaviors who might require separate services or marketing mix

Undifferentiated Marketing Marketing Mix Undifferentiated Market Company Customer Undifferentiated marketing

Differentiated Marketing Marketing Mix 1 Marketing Mix 2 Marketing Mix 3 Marketing Mix 4 Marketing Mix 5 Segment Segment 2 Segment 3 Segment 4 Segment 5 Company Customers Differentiated marketing

Concentrated Marketing Marketing Mix Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Company Customers Concentrated marketing

Concentrated Marketing Approach A concentrated marketing approach where organisations target one specific segment out of the identified different segments. Selecting specific groups of people (poor and volnurable) and designing service mix accordingly.

Evaluating market segments Segment size and growth Segment attractiveness (for example if already served by many competitors, it may be less attractive). Particular segment is less attractive if there is less entry barrier, substitutes limit the potential price, if targeted customer can bargain price. Organisation’s objectives and resources

Marketing mix decision Product quality, design, packaging, service, warranty etc. Price Pricing strategy Promotion Advertising Personal sale Public relations Sales promotion Place Channel of distribution Transport Warehouse

Pricing How much to price for goods/services of the project so that product will be accepted in the market ? Is the data related to pricing is scientifically collected and analysed?

Distribution Examination of different distribution process of the selected segments. Evaluating different distribution process Assuring Suitable distribution strategy

Promotion Evaluating alternative ways of promotion Choosing suitable ways

Competitive Strategy Differentiation Strategy (by product features, quality etc.) Low cost Strategy (offering product or service of same quality at lower price in a sustainable manner) Focus strategy (Serving particular segment with higher quality)

Marketing Mix of Service Price Product Promotion Place People Physical Evidence Process

People in service Delivery Production and consumption of service simultaneously. Employees behaviors like courtesy, friendliness, responsiveness affect perceived service quality. Service reliability (quality of consultant) is within the control of person

Process Service production and delivery involves performing a process besides utilizing materials, equipment, and personnel. Customer participates in service deliver process. So the process is very important in the success of service operations. The process constitutes the service itself.

Physical Evidence Physical evidence is defined as the environment in which the service is delivered and in which the firm and customer interact, and any tangible commodities that facilitate performance or communication of the service

Marketing Plan Is marketing plan suitable? Is it sufficient? Is it implementable? Revising plan

Assurance of Market Viability and Marketing Plan Is project viable? Will it be successful considering the demand and market? Is the demand/market study sufficient? Is marketing plan sufficient?

Thank You