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The exercise of project appraisal often begins with an estimation of the size of the market. Before a detailed study of a project is undertaken, it is necessary to know, at least roughly, the size of the market because the viability of the project depends critically on whether the anticipated level of sales exceeds a certain volume. Many a project has been abandoned because preliminary appraisal revealed a market of inadequate size.


  • Market and demand analysis is carried out to identify the aggregate demand for a product or service and the market share a project under consideration is expected deliver.

  • Companies perform market demand analysis to comprehend how much consumer demand exists in the market for a product or service.

  • This analysis helps management conclude if they can successfully enter a market and generate enough profits to grow their business operations.

In order to get a “feel” of the relationship between the product and its market, the project analyst may informally talk to customers, competitors, middlemen, and others in the industry. Wherever possible, the analyst may look at the experience of the company to learn about the preferences and purchasing power of customers, actions and strategies of competitors, and practices of the middlemen.

The information required for demand and market analysis is usually obtained partly from secondary sources and partly through a market survey. In marketing research, a distinction is usually made between primary information and secondary information. Primary information refers to information which is collected for the first time to meet the specific purpose on hand; secondary information, in contrast, is information which is in existence and which has been gathered in some other context. Secondary information provides the base and the starting point for market and demand analysis. It indicates what is known and often provides leads and cues for further investigation.

Secondary information is information that has been gathered in some other context and is readily available. It provides the base and the starting point for the market and demand analysis.  It indicates what is known and often provides leads and cues for gathering primary information required for further analysis.

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