Guide

Market feasibility study: what it is and how to run one.

What Does a Market Feasibility Study Mean?

It means reviewing a specific proposal against evidence from a specific market. Quirk's describes the study as detailed information. That information covers competitor service offerings and market demand. It is used to assess markets for business strategy. The glossary also describes a review of a proposed product, service or expansion. That review uses demand, competition and market conditions. Quirk's glossary

The proposal should therefore be named. The market should be named too. A general industry overview may add evidence. By itself, it does not review a specific expansion in a specific country.

How Do You Conduct a Market Feasibility Study?

One published sequence has seven steps. It comes from ASHA's profession-specific guide. It should not be treated as a universal method for international entry. The guide names this sequence:

1. Conduct a preliminary analysis. ASHA uses this step to screen ideas. This happens before extensive resources are invested. ASHA
2. Prepare a projected income statement. ASHA asks if expected income covers direct costs. It also asks if that income covers indirect costs. ASHA
3. Conduct a market survey. ASHA links this step to a realistic forecast of revenue. ASHA
4. Plan business organization and operations. ASHA uses this work to review technical feasibility. It also reviews the costs of start-up, fixed investment and operations. ASHA
5. Prepare an opening-day balance sheet. ASHA calls for a view of assets and liabilities. This view applies when the venture begins. ASHA
6. Review and analyze all data. ASHA asks if the collected material changes any earlier analysis. ASHA
7. Make a go or no-go decision. ASHA says the prior steps provide data and analysis. They support this decision. ASHA

What Evidence and Components Belong in the Study?

The evidence should link the market question to the financial and operational choice. The two approved sources support these parts:

• Demand, competition and market conditions: Quirk's lists these as factors. They help review a proposed product, service or expansion. Quirk's glossary
• Competitor service offerings and market demand: Quirk's includes both in the detailed information. That information helps assess markets for business strategy. Quirk's glossary
• Projected income, assets and liabilities: ASHA includes a projected income statement. It also includes an opening-day balance sheet. ASHA
• Organization and operations: ASHA includes plans for the organization. It also covers start-up, fixed investment and operations. ASHA
• A decision: ASHA ends its sequence with a go or no-go decision. That choice rests on the prior data and analysis. ASHA

For a related view of market evidence, see market research for international business and the market opportunity analysis guide.

Is There a Universal Four-Type Feasibility List?

The approved sources do not set one universal four-item list. They support separate market, financial and operational questions. These questions sit within a feasibility process. They do not prove that a four-type list has universal acceptance. A four-part list should name the source that proposes it.

What Does Cost Depend On, Without a Universal Price?

The approved sources do not give one universal price for a market feasibility study. ASHA's process shows what the scope can include. It can cover an initial analysis and a market survey. It can cover plans for the organization and its operations. The scope can also include a projected income statement. It can include an opening-day balance sheet and a data review. Last, it can include a go or no-go decision. ASHA

Those are parts of the scope. They are not a fee formula. A useful cost comparison should state which parts are included. It should also name the market or proposal under review. GIA's Market Intelligence Report page describes its own scope and output. This guide does not restate a service price.

How Is Market Research Different From Feasibility?

Market research can be one input to feasibility. It is not a name for the whole process. Quirk's links market feasibility studies to detailed information. This information covers competitor offerings and demand. ASHA places a market survey within a broader process. That process also covers financial, organizational and decision work. Quirk's glossary; ASHA

The difference lies in the question being answered. Market research gives evidence about a market. A feasibility study applies that market evidence to a proposal. It also applies the other questions in its stated scope. The proposal may be a product, service or expansion. See the related guide to market research for international business.

What Can It Not Prove in a Foreign Market?

A paper study cannot prove buyer acceptance. Quirk's supports a review that uses demand, competition and market conditions. ASHA supports a set process. That process ends in a go or no-go decision. Neither source says the final document proves buyer acceptance in a target country. Quirk's glossary; ASHA

The market entry framework places that test within a wider decision path. The market entry strategies guide compares possible routes after the evidence review.

FAQ: Market Feasibility Study

Written by Tileo, operator at Go International Advisory.