Market Analysis

Private (For Profit) Projects

Market Analysis
The Market Analysis of a Project must focus into four

main pillars which are detailed:

1. Demand Analysis
2. Supply Analysis
3. Price Sensibility
4. Selling/Distribution networks

Market Analysis
We must differentiate regarding the information of a

new product versus a product that is already in

the market.
Quantitative versus Qualitative Information

Market Analysis
Primary Information

Consist in new information obtained from a sample

(group of people) threw an individual survey.
Secondary Information

Data already being gathered from different sources

(Government Statistics, Previous Income and
Balance Statements from a company)

Market Analysis
Types of Products

No Perishable:
Electronic and Car parts, furniture, tools, hardware
Perishable
Require storage facilities (fresh vegetable or milk
products)

Market Analysis
Demand Analysis

Consist in the quantity of goods and services that the

market requires in order to fulfill a need based on a
specific price

Market Analysis
Demand Analysis

In order to obtain the potential demand, we have two

numerical methods which will help to forecast
(predict) demand
1. Linear Regression
2. Moving Average Medias

Market Analysis
Linear Regression

Attempts to model or explain a relationship between

two variables by fitting a linear equation:

Market Analysis
Y = a + bX,
Dependent Variable:
Y
Independent Variable: X or known as
explanatory
Single (one) variable model

Market Analysis
Linear Regression

Regarding the use of Regression model, we consider these types

of variables:
Y (dependent variable) = Sales / Revenues
X (independent Variable) = Time period (years)

In order to develop a good Regression Model, the

Correlation Analysis between variables must be closer to 1

Market Analysis
Moving Average Media

Mostly used when the information series varies or is

totally scattered, means there is no clear tendency of
information.

Market Analysis
Supply Analysis
Amount of goods and services that a company or
organization are willing to sale in the market.
Types of Supply Markets
1. Free Market Supply
2. Oligopoly Supply
3. Monopoly Supply

Market Analysis
Free Market Supply

There is a considerable amount of producers in the

market who produce the same article and the market
share is determined quality, price and post sales
service.

Market Analysis
Oligopoly Supply

Market is dominated by a selected group of

producers.
Example:

Car producers or makers

Toyota, Mitsubishi, Ford

Market Analysis
Monopoly Supply

One producer dominates the whole market of a

product imposing price, quantity and quality, mostly
95% percent of market share.

Market Analysis
Analyze Supply Information

During this section we will focus in obtaining

secondary information in order to forecast the
amount of products that need to be produced.
Qualitative and Quantitative information

Market Analysis
Supply Information criteria

Number of Producers

Localization

Installed and Used Capacity

Price

Expansion Plans

Investment required and amount of workers

needed

Market Analysis
Unsatisfied Demand

The objective of using Market Research in developing a

project is to create a prediction based in two criteria:
1. Unsatisfied demand or customers who will buy our new

product
2. Amount of units needed for production in order to fulfill

demand

Market Analysis
Definitely it is very difficult to obtain market information

(primary) from a new product that will be launch, the

option that we have is to obtain
Market Trends of Prices and Units Produced from
historical and similar products.

Market Analysis
Price Sensibility

When Supply and Demand are in equilibrium, the price

consist when consumers are willing to buy and the producers
to sell.
Determining Price

If company off shores (externalize) production, the price

must consider the cost they must pay to the external company.
If a company has an internal production process (internalize),

price is calculated by pro ratting direct labor cost, fuel,

electricity, maintenance in relation with the amount of units
produced during the process.

Market Analysis
Exercise

A company requires to forecast the demand of

electronic game place for teenagers in order to
construct a new center
The company has gather historical information
regarding Sales (Revenues), Children and Stores
(number of places).

Market Analysis
Historical Data comparing Revenues, amount of
children who use the park and the Stores (around the
city)
Number of
Stores
1
2
3
4
5
6
7
8
9
10
11
12

Children
14.78
22.93
16.65
35.99
32.48
38.77
10.03
24.26
52.46
36.8
17.34
43.69

Revenues
3845
5450
5099
8890
6681
9678
4542
4557
13289
10506
5134
9066

Market Analysis
First of all, we must define variables

Dependent Variable ?
(variable we want to forecast)
Independent Variable ?
(variable that will help to forecast).

Market Analysis
After we define variables, second of all is necessary

to obtain the Variable Trend

Excel Spreadsheet
Plot Graphic

Market Analysis

Market Analysis
Data Analysis

The Dependent Variable is Revenues (Sales) variable

we want to forecast versus the Number of Children
as Independent Variable
With the Regression Analysis, we are able to predict
the amount of revenues

Market Analysis
Forecast
Number
of Store Children (X)
1
14.78
2
22.93
3
16.65
4
35.99
5
32.48
6
38.77
7
10.03
8
24.26
9
52.46
10
36.8
11
17.34
12
43.69

Revenues (Y)
3845
5450
5099
8890
6681
9678
4542
4557
13289
10506
5134
9066

y = 1107.5 + 212.17(x)
4243.37
5972.56
4640.13
8743.50
7998.78
9333.33
3235.57
6254.74
12237.94
8915.36
4786.53
10377.21

Market Analysis
Moving Average
Quantity
1
2
3
4
5
6
7
8
9
10
11
12

Children (X) Revenues (Y)

14.78
3845
22.93
5450
16.65
5099
35.99
8890
32.48
6681
38.77
9678
10.03
4542
24.26
4557
52.46
13289
36.8
10506
17.34
5134
43.69
9066

Moving Average of
Revenues

5821
6530
7587
7447.75
6364.5
8016.5
8223.5
8371.5
9498.75

Market Analysis
Moving Average of revenues is the forecast of the

new Sales Levels which are obtained from historical

information
To obtain the Average Revenue for Year 4 (5821)
we divide (3845+5450+5099+8890)/4 = $ 5821

Market Analysis
Develop a Trend and Regression Analysis that will

help to forecast sales based on the information given

Ao
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Ventas
178454
135620
141909
173528
206030
198215
221893
216631
260026
295313
280666
348912
389992
443806