Business Idea Evaluation and Market Study

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Questions and Answers

What is a primary characteristic of a good business idea in terms of competition?

Requires minimal startup capital

Has strong barriers to threaten competition (correct)

Offers high profit margins

Easy to replicate

Which factor is essential for the survival of a business idea over time?

Being trendy

Having a large marketing budget

Solving customer problems (correct)

Focusing solely on profits

What is one of the objectives of a market study?

Establish a pricing policy (correct)

Evaluate the competition's weaknesses

Identify business location

Generate immediate profits

How does a market feasibility study primarily differ from a marketing plan?

It assesses the viability of ideas and identifies potential problems. Signup and view all the answers

What should be the driving force behind starting a business?

Willpower to solve customer problems Signup and view all the answers

Which of the following describes the contents of a market feasibility study?

It examines unsatisfied demand and how to meet it. Signup and view all the answers

What is a critical section of a market feasibility study?

Understanding the demand-supply situation Signup and view all the answers

Which of the following is NOT a purpose of conducting a market study?

Evaluate employee satisfaction within the company Signup and view all the answers

What is the main question customers consider when evaluating a product description?

How is this going to benefit me? Signup and view all the answers

Which component is NOT part of the N-S-P-P-USP model?

Product Evaluation Signup and view all the answers

What type of demand analysis focuses on future projections?

Future Demand Signup and view all the answers

Which of the following best describes the purpose of a product description?

To highlight value and benefits to the customer Signup and view all the answers

What is an example of actual demand?

The current and recent sales figures of a product Signup and view all the answers

Which factor is considered in the evaluation of potential demand?

Maximum demand consumers could buy over time Signup and view all the answers

What is highlighted in a good product description to differentiate from competitors?

Unique Selling Proposition Signup and view all the answers

Which analysis method would best help visualize market trends over time?

Evolution of Demand Signup and view all the answers

What does local production refer to?

Goods produced or services rendered in the local community Signup and view all the answers

Which of the following terms describes the demand for goods and services by individuals and households?

Consumption Signup and view all the answers

What is a reliable indicator of an industry’s overall stability?

The level of employee growth within the industry Signup and view all the answers

Which of the following should NOT be included in the anticipated future market analysis?

Speculative predictions without grounding in industry data Signup and view all the answers

Which analysis method can be used to project future demand based on past performance?

Statistical modeling Signup and view all the answers

What is a critical factor when minimizing risks in business projections?

Studying similar successful businesses Signup and view all the answers

How can one gather information about competitors effectively?

By visiting their websites and reviewing product lines Signup and view all the answers

Which type of demand projection is based on geometrical analysis?

Geometric curve modeling Signup and view all the answers

What is a significant drawback in conducting a supply study?

Non-availability of supply data Signup and view all the answers

What should be the main focus when gathering information on goods produced by competitors?

Major suppliers of similar products Signup and view all the answers

Which question is pivotal in evaluating the historical supply growth pattern?

Is the supply pattern increasing or decreasing? Signup and view all the answers

When forecasting future supply, which data should primarily be considered?

Total historical supply data Signup and view all the answers

How should the predicted values of future supply be presented?

In tabular form with clear descriptions Signup and view all the answers

What is the purpose of the demand-supply analysis?

To answer whether there is a demand or none Signup and view all the answers

What does market share analysis measure?

The proposed project's share in total demand Signup and view all the answers

Which agency is NOT mentioned as a source for supply data?

Bureau of Consumer Affairs Signup and view all the answers

What does the term 'discontinued' imply about a product?

Consumers are no longer demanding the product. Signup and view all the answers

Which strategy can be beneficial when exploring new product ideas?

Studying what big companies like PetSmart are offering. Signup and view all the answers

What should you consider when examining local competition?

The opening hours and business duration of competitors. Signup and view all the answers

Why are press releases considered valuable for market research?

They often explain why companies are changing their strategies. Signup and view all the answers

What is an effective way to identify local competition?

Utilizing a telephone book or online business locator. Signup and view all the answers

When researching national competition, which resource is suggested?

Forbes' list of world's biggest companies. Signup and view all the answers

What can be inferred from observing businesses that have recently gone out of business?

There might be a common reason for their failure. Signup and view all the answers

What can you learn from researching local competitor information?

What has previously succeeded or failed in the market. Signup and view all the answers

Study Notes

Business Idea Evaluation Criteria

Profitability: A good business idea should be profitable and have a high chance of attracting investors.
Replicability: A good business idea needs strong barriers to entry to discourage competition and ensure long-term success.
Scalability: A good business idea should be scalable, meaning it can grow and generate more revenue over time. Avoid chasing trends that fade quickly.
Passion: The owner's passion and commitment to solving customer problems are crucial for long-term success.

Market Study Objectives

Industry Trends: Analyze trends in the industry to understand its future potential.
Product Demand: Evaluate the size, nature, and growth of the market for the product.
Product Description: Define the product's features, benefits, and price.
Competitive Landscape: Analyze the existing supply of the product and the nature of competition.
Market Factors: Identify factors affecting the demand for the product.
Pricing Policy: Determine an appropriate pricing strategy for the product.
Marketing Program: Develop a marketing strategy to reach target customers.

Market Feasibility (Market Study)

Unsatisfied Demand: Examines unmet demand for the product and how the project will address it.
Demand-Supply Analysis: Analyzes the relationship between demand and supply.

Market Feasibility vs. Marketing Plan

Feasibility Study: Assesses the viability of an idea, campaign, product, or business. Focuses on identifying potential problems.
Marketing Plan: A detailed strategy for promoting and selling a product or service.

Importance of a Product Description

Highlight Value: Explain the benefits to the customer to convince them to buy.
Describe Benefits: Emphasize the benefits that each feature offers to make your product more desirable.
Unique Selling Proposition: Clearly communicate what makes your product stand out to differentiate it from competitors.

N-S-P-P-USP Model for Product Description

Helps make detailed product descriptions by focusing on Need, Situation, Person, Product Description, and Unique Selling Proposition.

Demand Analysis

Potential Demand: Maximum demand consumers could potentially buy in a given period.
Actual Demand: Current and past demand for the product/service. Use national or regional sales data if specific data is not available.
Future Demand: Projections of demand for upcoming years.
Evolution of Demand: Analyze past sales to understand market trends and product life cycle phases.

Assessing Past Demand

Consumption: Demand for goods and services by individuals and households.
Importations: Goods produced outside the country and sold locally.
Local Production: Goods produced or services rendered within the local community.

Forecasting Future Demand

**Projected Demand Based on ** Past Demand
- Arithmetical: Straight line, Geometric curve
- Statistical: Straight line, Geometric curve or semi-log, Parabolic

Analyzing the Current Market

Evidence of Demand: Show evidence of a market for your product or service, especially if it is unique or in a specialized niche.
Industry Stability Indicators: Track employee growth and industry revenue growth to identify industries with potential for growth.
Employment Trends: Look for positive employment trends within the industry as a sign of demand.

Anticipated Future Market (Based on Industry Trends)

Narrative Description: Provide a written explanation of anticipated future market growth.
Supporting Data: Include spreadsheets, graphs, or tables showcasing trends, statistics, and projections.

Predicting Future Market Growth

Industry Research: Study successful businesses in your industry to understand their strategies and track records.
Competitor Websites: Analyze competitors' websites to identify product lines, discontinued items, and high-priced items.
Large Company Strategies: Analyze large companies' new product lines and services to gain insights into industry trends.
Press Releases: Examine press releases from businesses in your industry to understand their strategies and new offerings.

Competition Analysis

Local Competition: Identify all competitors within a 50-mile radius, focusing on those within 15 miles.
National Competition: Analyze competition on a larger scale for businesses that plan to expand through franchising or internet sales.

Evaluating the Supply Growth Pattern

Increasing or Decreasing Supply: Determine if supply is expanding or shrinking.
Consistent Growth Rate: Analyze if the percentage increase in supply remains constant.
Government Projects: Assess the influence of government projects on supply growth.
New Suppliers: Identify emerging competitors entering the market.
Private Sector Influence: Determine the impact of private sector initiatives on supply.

Forecasting Future Supply

Prediction for the Next 3-5 Years: Estimate total supply for the future based on historical data.

Evaluating Supply Forecasts

Adjustments: Account for external elements that might influence the supply pattern.
Presentation: Organize forecasts in tabular form with clear and concise descriptions.

Demand-Supply Analysis

Answering the Demand Question: Use the results of demand and supply studies to determine if there is a market for your product.

Market Share: The proposed project's share in the total demand for the product.

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Description

This quiz covers the essential criteria for evaluating business ideas, focusing on profitability, replicability, scalability, and passion. Additionally, it explores the objectives of market study, including industry trends, product demand, competitive landscape, and market factors. Assess your understanding of these fundamental concepts integral to business success.