The PRE-FEASIBILITY
STUDY
Pre-
Feasibility
-The state of degree of being easily or
conveniently done.
Valiability
-The ability to succeed or make a profit.
The Pre-Feasibility
Study
The ultimate goal of doing the opportunity screening
matrix is to narrow down the many opportunities into
one or two most attractive ones. The next step is to
conduct a pre-feasibilty study to ascertain the viability
of the opportunity. The idea is to focus on a few key
items that could make or break the business concept.
This time, the entrepreneur must go down to the details
and take time to consider the following factors that are
contained in a pre-feasibility study:
• Market potential and prospects
• Availability and appropriateness of technology.
• Project investment and detailed cost estimates.
• Financial forecast and determination of financial
Market Potential and
Prospects
Market potential is based on the estimated number of
possible customers who might avail of the product or
service. It would help to narrow down your estimation to
the relevant population or target costumers in the area
where you want to operate your business (micromarket).
For entrepreneurs who are entering a
business that caters to the basic customer
needs, such as food, clothes, beverages,
furniture, etc., there would usually be
demand and supply statistics available
from government institutions, industry
associations, and research films.
Basic needs tend to be commodities or “commoditized”.
Costumers have the luxury of choosing among basic needs
suppliers. That is why these suppliers try very hard to
differentiate themselves from one another by dividing the huge
market
The into many
costumers costumer
would, segments.
oftentimes, make the final
choice on what to buy according to several
factors such as:
(1.) THEIR PURCHASING POWER or
DISPOSABLE INCOME
(2.) THEIR PROXIMITY or ACCESSIBILITY TO
THE GOODS or SERVICES;
(3.) THEIR INDIVIDUAL DESIRES AND
PREFERENCES.
(5.) THEIR SOCIAL, CULTURAL, or ETHNIC
BACKGROUND.
(6.) THEIR PEER GROUP PREFERENCES.
(7.) GENDER
(8.) THE SEASON OF THE YEAR;
(9.) THEIR PERSONAL IDENTIFICATION WITH
TREND SETTERS;
(10.) THEIR EDUCATIONAL, ATTAINMENT;
(11.) THEIR LIFESTYLE PREFERENCES
(14.) THEIR SUSCEPTIBILITY TO CERTAIN
ADVERTISING AND PROMOTIONAL APPEALS,
AND MANY OTHERS.
Market
Estimation
Is the most difficult task of the entrepreneur
because of the many ways costumers can be
divided and segmented. The most common way
resorted to by most entrepreneurs are through the
use of demographics such as INCOME (Class
A,B,C,D and E), AGE (Infants, toddlers, 6 to 12
years, teenagers, young adults, adults, middle
agers and senior citizens), GENDER (Male, female),
LEVEL OF EDUCATION, and LOCATIONAL
PROXIMITY. In a pre-feasibility study, the
entrepreneur should, at the very least, determine
and quantify the market potential according to
Segmenting the Market
Using a set of demographics (e.g., gender, age, place of
residence, income class, etc.) will be the most basic approach in
determining the target segment. Keep in mind that some
general statistics for these demographics can be found online.
You might have to look into other specific classifications that are
relevant to the market that you are targeting such as the
psychological profiling and lifestylepreferances of the different
customer
In segments.
this regard, the entrepreneur must be
able to do actual field research like
surveys, focus group discussions, in-
depth interviews, observation
techniques, etc.
Assessing Competition
Market potential is also affected by the number of
establishments supplying and serving target costumers.
This process would determine how saturated the market
is in the given area of coverage. The more suppliers and
competitors there are within a confined area, the
greater the level of saturation.
On the one hand, it would be best for the
entrepreneur to keep out of a market
where competition is fierce. On the other
hand, some entrepreneurs prefer to enter
the biggest, richest, and most competitive
markets in order to achieve high visibility
and growth potential.
However, this is a high risk proposition unless the
entrepreneur is very confident that he or she has a
superior product or service that is at par (if not
superior) to others in the marketplace.
In order to assess one’s strength and
weaknesses, there must be a
comparison made with the closest
competitors. Profiling these competitors
will help the entrepreneur gauge their
perspective strengths and weaknesses
and, therefore, enable the entrepreneur
to craft strategy. By doing so, the
entrepreneur would be able to get an
idea of whether he or she can compete
Thank you
