It is an
assessment of the overall appeal of the market for the product or service being
proposed. For industry/market feasibility analysis, there are three primary
issues that a proposed business should consider:
i. Industry attractiveness
A primary
determinant of a new venture’s feasibility is the attractiveness of the
industry it chooses.
Industries
vary in terms of their overall attractiveness. In general, the most attractive
industries have the following characteristics-
(1) Are
large and growing;
(2) Are
important to the customer;
(3) Are
fairly young rather than older and more mature;
(4) Have
high, rather than low, operating margins;
(5) Are not
crowded
ii. Target market attractiveness
A target
market is a place within a larger market segment that represents a narrower
group of customers with similar interests. For a new firm, selling to a target
market makes sense for at least two
reasons:
a. It allows
a firm to establish itself within an industry without competing against major
competitors head on.
b. A niche
strategy allows a firm to focus on serving a specialized market very well
instead of trying to be everything to everybody in a broad market, which is
nearly impossible for a new entrant.
