In the traditional sense, the term ‘market’ refers to the place where buyers and sellers gather to enter into transactions involving the exchange of goods and services. A market is a medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. Based on the information gathered from the second any sources through the market survey, the market for the product or service may be described in terms of the following:-
- Effective demand in the past and present: To gauge the effective demand in the past and present, the starting point typically is apparent consumption which is defined as:
Production + Imports – Exports – Changes in stock level.
- Break down of demand: To get a deeper insight into the nature of demand, the aggregate market demand may be broken down into demand for different segments of the market. Market segments may be defined by –
(i) Nature of the product;
(iii) Geographical division.
- Price: Price statistics must be gathered along with statistics pertaining to physical quantities.
- Methods of distribution and sales promotion: The method of distribution may vary with the nature of the product. Capital goods, industrial raw materials, or intermediates and consumers products tend to have different distribution channels.
- Consumers: Consumers may be characterized along two dimensions as follows:
- Supply and competition: It is necessary to know the existing sources of supply and whether they are foreign or domestic.
- Government policy: The role of the government in influencing the demand and market for a product may be significant. Governmental plans, policies, and legislation, which have a hearing on the market and demand for the product under examination, should be spelled out.