Lecture 5 market aspects

1. Lecture 5 market aspects Matakuliah : J0464 / Business Feasibility Study Tahun : 2007 Versi : Revisi 3

2. 05 MATERIAL ▓Understanding Market ▓Supply and Demand ▓Market Types ▓Measuring and forecasting demand ▓Markov’s Chain Analysis

3. 05 READING BOOK : • Husnan, Suad, dan Suwarsono.(2000).Studi Kelayakan Proyek. UPP. AMP. YKPN, Yogyakarta Bab. 3 hal 29 – 38 • Umar, Husein (2003),Studi Kelayakan Bisnispenerbit PT Gramedia Pustaka Utama, Jakarta Bab 2 hal 34 - 50 ONLINE READING : http://www.nakertrans.go.id/b_penting/PJM_Bidang_Ekonomi.pdf

4. 05 Understanding Market Market,is a meeting place between sellers and buyers, or a place where power sellers and buyers meet to form a price.

5. 05 B. Understanding Supply And Demand Supplymeans a quantity of goods that are needed by consumer and have the capability to buy it at a number of price level.

6. 05 Ceteris Paribus Assumption : Law of demand that happens when a price of a good rises, then the quantity of the goods demanded will decrease, the same goes if the price of the goods decrease, therefore the quantity of the goods demanded would rise.

7. 05  Supplymeans, various quantity goods that are supplied in the market at a various price level. A few factor that influences supply : Other goods’ price  Production cost  Company goals  Level of Technology

8. 05  C. Types of Market Types of Market can be seen from the seller side and the consumer side. Types of market from the seller side :  Perfect Competitive Market In perfect competitive market type, competitive activities cannot be seen because there are no limitation to the amount of seller and therefore consumer could get a competitive market price. Monopoly Market  Monopoly market is a type of market that is controlled only by one seller. In this matter, there are no subsidized goods and there are problems for new competitors from outside.

9. 05 Oligopoly Market Oligopoly market is a larger scale of monopoly market. In deciding the price and product quantity, because there’s a big influence from other competitor. Monopolistic Market Competition This market is a type of mix between perfect competition and monopoly. It is said to be similar to perfect competition market because there’s a freedom for goods to enter and leave market and the goods that are sold isn’t homogeny. However it is similar to monopoly market because the heterogenic goods is owned only in some big companies.

10. 05 There could be a number of reason how monopolization of market could happen. For example because of owning the raw material, acquired the technical ability of a particular production, patent rights, and naturally because the scale of market isn’t huge.

11. 05 Types of market from the consumer side :  Consumer Market : Market where goods and services are bought or rent by individuals or family for private use. Pasar Industri Market where goods and services are bought or rent back to be used in producing other type of goods or services (For further process).

12. 05  Reseller Market This market is also called as a mid-level trader that consists of dealers, distributors, grosser, agent, and retailer. All this traders sells back in order to gain profit  Government Market Market consists of government units that buys or rent goods and services to do government activities, for example in the sector of education, network, health, etc.

13. 05 D.Measuring and Forecasting Demand 1. Measuring market demand right now There are three practical methods to estimate demandl they are : Estimating total market demand Total market demand of a product is the total volume that are bought by a group of particular consumer in a particular geographical area within a particular time period in a particular marketing area. Equalities : Q = n . p . q Where :Q = total market demand n = amount of buyers in the market p = average price of each unit q = average amount bought by consumer annually

14. 05  Estimating Market Demand Area In choosing the best area, also to optimalize allocation of marketing budget, it can be done with two methods, they are : a. Market Build Up Used mainly by industry companies to identify all potential buyers in every market and estimating its potential buying. b. Market Factor Index Used by consumption goods company, to identify market factors that correlates with the potential and joins into a scaled index.

15. 05  Estimating Actual selling and Market Share Companies can identify competitors and estimate their sales, by analyzing the data that are collected associations or research organizations.

16. 05 2. Forecasting Future Demands Buying potential survey Ask them with a hope that they’d answer objectively. The opinions of the seller worker Company asks their employees to estimate sales of every product in their own territories. The opinions of specialists The opinion that are resulted from a full set of data and analysis and scientifically is better than any academics nor practitioners (Use Delphi Technique).

17. 05 Regretion Analysis Statistic Proceduresto find real factors that affects sales. Rule : Y = a + b X Where:Y= Fixed variable X = Free variable a= Constant b= Regression coefficient Price a can be calculated with the rule : ∑Y (∑X2) - ∑X - ∑XY a=---------------------------- n∑X2 – (∑X)2 Price b can be calculated with the rule : n∑XY – ∑X ∑Y b =--------------------- n∑X2 – (∑X)2

18. 05 Time Analysis Analysis that uses quantitative data in the past where data is summarised into trend components, cycles, season and residue that uses statistic procedure. One of them uses the least square method, with the equality of : Yt = a + bt Prices of a and b is defined by the rule: Y Ty a = ----- dan b = ------ n t2 Where: Y = data values from forecasting result n = amount of data in time t = particular time in code terms

19. 05 Markov’s Chain Analysis To forecast market share at this time and in the future.

20. 05 E. Implication on BFS The benefits of analysis in doing business feasibility study (BFS) from market aspects, should : 1. Be able to decide a product or services that would be a benchmark for the design of a product/service that are to be sold. 2.Able to decide types of market to be chosen, whether from a seller point of view or the consumer’s. • Able to do analysis in order to be able to decide change in consumer demand of a product that are to be sold along with the change of the ability each seller in its supply in the market, whether for now or the future. 4.Other than the PLC (Product Life Cycle), analysis should be able to contain information about the market share of similar type of products that are considered good competitor at this time or in the future.

21. 05 Characteristics of market aspects in developed countries  National demand for the particular product or service isn’t too great Existence of a dividing line that can be clearly seen from the available market segments.  Many of the products made is a substitute product of import products For some products, oftentimes there are a lot of government intervention in influencing the market mechanism  Existence of a project that are decided upon a politic decision

22. 05 Question for market aspects from project idea and the datas that are needed for its answers Question Datas that are needed 1. How much potential market is available in the future? 2. How much market share could be absorbed by that particular project from the whole of potential market? 3. How is the growth of the particular market share? 4. What marketing strategy is used to achieve the market share that has been defined? 1. The consumption in the past and present, and its variables2. Production demand in the past and present along with the prediction in the future3. Import and export that has been done for the suggested product 4. Competition structure5. Personality, motivation, habits, and consumer preference 6. Choosing marketing efforts that are done and choosing the priority scale from marketing mix

23. 05 Evaluation from secondary data. Here are secondary data resources Secondary data evaluation Secondary source and data 1.Who finds the secondary data and what is the intention? 2.When was the data found and publicised, and is it reliable to be used as an analysis in investment? 3.Secondary population data, what is the procedure in retrieving sample? Is it reliable enough? 4.How does data gathering being done? 5.How does the editing process, tabling, and analysis being done? • Indonesian population census report • Indonesian planning report • Indonesian statistic book • Bulletins that exists in each and every departments. • Bulletins that are publicized by bankers • Bulletins that are publicized by profession association • Seminar report, and other similar ones

24. 05 Market potential and Demand market graph Potential Market Potential market Forecasting potential market Industry’s demand Marketing effort industry Total marketing effort industry

25. 06 Thank You,…See you on lecture number