Market Size Market size is determined by current and potential sales of an organization through information from: a) Government data – for example inflation rates and the consumer basket surveys done by Zanzibar Statistics provide with information about how high or low is the inflation and the poverty datum line helps to determine the likely buying patterns of consumers. B) Trade Associations- for example an organization can analyses information from CZ which Is a lobby group which takes the concerns of Industries through the Ministry of Industry and Commerce.
For the example Issues of capacity utilization, a lot of companies are operating below 30% due to high operational expenses for electricity ND raw materials. An analysis if such information will give a guide on market size. C) Financial data from major players – for example an organization can do an analysis of the financial statements of major players in a particular industry which are published in the newspaper.
For example organizations like National Foods, CB Bank, Incisor amongst others publish their financial statements, therefore an organization in the same industry will analyses these financial in order to determine profit or loses which will give a guideline on the market size. ) Customer Surveys – Organizations can carry out market research to come up with Information on how their customers perceive the organization as well as their brand. Such information should be critically analyses and used to enhance an organization’s competitive advantage and determine the market size. . Market Growth Rate Market growth rate should be ascertained by the organization and there are various market growth drivers which includes; demographic patterns, growth of sales in complementary products, income level, changing lifestyle of consumers, changing customer’s taste and preferences among others. A product diffusion curve is usually used to estimate the growth of a market. It Is based on the study of characteristics of adoption rate of similar products or service In the past. This Information helps the organization to reach the level of maturity.
Indicators of the decline phase In a product diffusion curve Include price competition, decline In brand loyalty, the availability of new substitutes and market saturation amongst others. Levels of profit in an organization are market dependent and differ in different market situations, which depends on 5 competitive forces according to Porter. ) Bargaining power of buyers- The higher the bargaining power of buyers the lower the levels of profit. For example GUM is a monopolistic organization which buys maize from farmers.
Because of their sole ability to buy in large quantities, they also determine the price of the maize which in turn lowers the levels of profits to the seller. B) Bargaining power of suppliers – when there are very few suppliers it makes the products expensive thereby lowering the levels of profit for an organization and market . C) Entry barriers – where there is easy entry to the market it makes the market looted by certain products and an organization will be forced to lower its prices and this lowers profit levels.
In these instances supply will be higher than demand. D) Availability of substitutes – Some substitutes are of better quality or cheaper than the core product itself. Many consumers would opt to buy the substitute and profit levels for the core product will be low. For example butter can be substituted by margarine which is way cheaper and can withstand high temperatures than butter which easily melts. E) Rivalry – With a degree of rivalry there will be more competitors in the market. Price competition increases and levels of profit in the market declines. . Industry cost structure Industry cost structure is important if an industry is able to add value to products and / or services without changing the cost or even reducing the cost while increasing customer satisfaction. Porter’s value chain concept is used here. For example a mealier-meal producer can purchase a machine which receives mealier- meal from the mill, weigh it, pack it and seal in an efficient and more hygienic way compared to having many people to manually do the processes at each stage.
This will help the organization in cutting costs of employing many people, achieve high standards of hygiene and at the same time add value to the product for the satisfaction of consumers. 5. Distribution channels Distribution channels facilitate in reaching the products to the consumers. An organization needs to understand: a) The existing distribution channels to understand how direct the products reach to channels can enhance the organization’s competitive advantage. C) Power structure of channels – understanding the power structure of channels is an important aspect f market analysis.
Organizations with equity can weaken the channels of power as they dictate their terms. For example manufacturers of bread can come together and dictate that bread should sell for one dollar all over Zanzibar. Coca-cola beverages also dictate that their beverage should be sold for fifty cents across Zanzibar and no distributor is allowed to sell above that price. 6. Market trends Fluctuations in the market can be industry specific or general. Industry specific market trends influence organizations in that particular industry and general market rends affect all organizations from all industries.
These trends may be in terms of price sensitivity, nature of demand or regional trends. For example an increase in fuel will affect all industries and a decrease in demand for example maize seed will affect industries which use maize as an input or output. 7. Key Success Factors These are the factors which help the organization to achieve its objectives. These include: a) Accessibility to essential and unique resources b) Competence to reach economies of scale c) Accessibility to channels of distribution d) Accessibility to new and modern technology
