Market Assessment
What this domain tests
The exam tests how to size and understand a market: demand, segments, customers, competitors and the evidence used to assess them.
Core rules
- Market assessment estimates who will buy, how many, at what price and why.
- Steps include defining the market, segmenting customers, estimating demand, analysing competitors, assessing the environment through SWOT or PESTEL, and testing assumptions.
- Primary data come from surveys, interviews and observation; secondary data come from reports, government statistics and industry bodies.
- Demand estimate = number of potential buyers × likely purchase rate × average purchase frequency.
- A target market is the specific segment a small venture can serve profitably, not the whole population.
Worked example
A college has 1,200 students. A survey finds 30% would buy a tiffin at ₹60, and likely buyers would order 20 days a month. Estimated monthly demand = 1,200 × 0.30 × 20 = 7,200 tiffins. If the venture can supply only 2,000, the target market is the achievable share, not 7,200. Reasoning: demand is an estimate, and capacity limits the served market.
Traps
Do not confuse total market with target market. Do not generalise from a biased sample. Do not treat secondary data as automatically current. Do not ignore competitors' prices.