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6_Step_Market_Potential_Evaluation
| 6 Step Market Potential Evaluation
EVALUATING THE MARKET
Criteria for Evaluating Business Opportunities
The following tool provides a quick indication of the market
potential for your business, product or service in your area.
The higher the figure at Step 6., the better the opportunity.
A low score does not mean you should drop your idea altogether.
It does, however, indicate that in its current form, there is
not a large market opportunity for your concept, and to enter
the market in its present state you may be taking a large risk.
Likewise, a high score is not an automatic green light. Proceed
with caution – check your operational and financial feasibility
as well. Get second and third opinions before proceeding.
BEST WISHES WITH YOUR ENDEAVOURS!
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QUICK MARKET EVALUATION
1. Are you selling to individuals, households or businesses?
2. What is the population of these customers in your target
geographical location?
3. How much, in an average year, do customers spend on your
product/service?
4. Find the total potential sales for the region by mulitplying
(2) x (3).
5. How much is currently purchased in the region?
6. Subtract current local spend from total potential sales to
discover if there is room in the market for new players?
NOTES:
2.Population information of individuals and households can be
obtained from the Bureau of Statistics. Population of businesses
might be available from local government, chamber of commerce,
Bureau of Statistics, Yellow Pages or White Pages. 3.Average
spend may be available from the Bureau of Statistics, Industry
groups, Market Researchers (such as Ibisworld –
www.ibisworld.com.au; Euromonitor) or different levels of
government. 5.Regional spend numbers may be more difficult to
obtain. Try local governments, local branches of industry
groups, and chambers of commerce. It may be necessary to stake
out a few similar businesses and watch how much customers spend
and multiply by outlets! Its also amazing how much information
an unsuspecting shop assistant or manager might be happy to pass
on if asked a general question about how business is going! 6.If
less is being spent in your area than the calculated total
potential sales figure, then there is a good chance that there
is a market demand for your business in this area.
About the author:
Cate Deans Smith consults with Diess, a Business and Web
Solutions Company. She has qualifications in Marketing and
Entrepreneurship and Venture Development, and a decade
experience in business planning, management and marketing.
Diess - "Performance through Synergy" Diess helps businesses
avoid the ineffectiveness of disjointed planning and marketing
efforts that limit performance and profitability.
www.diess.com.au www.readyplanning.com
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