N4 Entrepreneurship & Business Management Module 3 – Market feasibility study


1. Introduction .................................................................................................................................. 42 1.1


Marketing versus marketing feasibility study .................................................................. 42


2. Market feasibility study ................................................................................................................ 43 2.1


Product description ........................................................................................................... 44 2.1.1 Industrial products ............................................................................................. 44 2.1.2 2.1.3


2.2


Consumer products ............................................................................................ 44 Services ............................................................................................................... 44


Market position ................................................................................................................. 45 2.2.1 Identify your target market ............................................................................... 45 2.2.2 2.2.3


2.3


Market segmentation ......................................................................................... 48 Market share ....................................................................................................... 49 2.2.4 Indicators of market growth .............................................................................. 50


Marketing information ...................................................................................................... 51 2.3.1 2.3.2 2.3.3


2.4 2.5


Collecting of data ................................................................................................ 51 Methods of collecting ......................................................................................... 53 Doing a marketing survey .................................................................................. 54 Business SWOT analysis .................................................................................................... 60


The business environment ............................................................................................... 61 2.5.1 2.5.2 2.5.3 2.5.4 2.5.5 2.5.6 2.5.7


Module 4 – Financial feasibility study


1. Introduction .................................................................................................................................. 72 2. Financial terminology ................................................................................................................... 72 2.1 2.2 2.3 2.4 2.5 2.6


Sales ................................................................................................................................... 72 Costs ................................................................................................................................... 73 Selling price ....................................................................................................................... 74 Profit .................................................................................................................................. 75 Gross profit percentage .................................................................................................... 76 Net profit percentage ........................................................................................................ 76


2.7 Weighted average gross profit percentage ..................................................................... 76 2.8 2.9


Mark-up percentage .......................................................................................................... 77


Break-even point ............................................................................................................... 78 2.9.1 2.9.2 2.9.3 2.9.4 2.9.5


Calculating break-even point ............................................................................. 79 Break-even calculation with a profit motive ..................................................... 80 Calculate the break-even point for one product .............................................. 81 Calculating the break-even point for many products ....................................... 82 Graphic representation of the break-even point .............................................. 84


3. Start-up costs ................................................................................................................................ 86 4. Methods of financing your business ............................................................................................ 87 5. Sale forecasting and sale scenarios ............................................................................................. 88


Customers ........................................................................................................... 62 Suppliers ............................................................................................................. 62 Competitors ........................................................................................................ 62 Economy ............................................................................................................. 65 Cultural forces .................................................................................................... 66 Technological forces ........................................................................................... 67 Natural environment .......................................................................................... 68


IV

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