market feasibility test

Market Feasibility Study of PALM ISLAND

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NewGate India Hyderabad, Andhra Pradesh- 500038

Website: www.newgate.in

Email: [email protected] Slideshare URL :

http://www.slideshare.net/newgateindia

http://www.newgate.in/

mailto:[email protected]

http://www.slideshare.net/newgateindia

features of Palm island • Unique

• This makes it a resemblance of richness.

• To be related to palm island brings pride to people as its one of its kind.

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Palm island taps various markets…

• Tourism

• Residential

• Entertainment area

• Resorts, hotels and restaurants

• Cruise, boating and other water sports.

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Safety and security • It is more of a backwater than a sea beach.

• It is surrounded by high level boundaries which protects it from high tides.

Quantitative Tools

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Market Feasibility Analysis of Palm Island Alliance University

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Quantitative Tools

1. Forecasting

2. Percent Median Market

3. Control Chart

4. Predictive Gravity Modeling

5. Assignment Model

6. Customer Life Time Value ( CLV )

7. Sensitivity Analysis

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Factors For Testing

1. Tourism Growth 2. Entertainment Clubs 3. Real estate Mapping 4. Footfalls in Malls 5. Resorts possible areas

Forecasting of Tourism Growth

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Definition : The process of analyzing current and historical data to determine future trends.

Step:1 Forecasting

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Year 2005 2006 2007 2008 2009 2010 No of Tourist 18,765 19,867 21,654 22,123 23,778 25,169

1. Regression Analysis 2. Moving Average 3. Extrapolation 4. Trend Analysis

y = 1263.5x - 3E+06 R² = 0.9877

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5,000

10,000

15,000

20,000

25,000

30,000

2004 2005 2006 2007 2008 2009 2010 2011

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Axis Title

No of Tourist

Standard Deviation : 0.12 %

dy/dx = Growth

Step:1 Forecasting

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10,000

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

No of Tourist

Year 2005 2006 2007 2008 2009 2010 2011 2012

No of Tourist 18,765 19,867 21,654 22,123 23,778 25,169 26,741 27,891


2011 Forecast : 26,741

Step:1 Forecasting

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

No of Tourist

Year 2005 2006 2007 2008 2009 2010 2011 2012

No of Tourist 18,765 19,867 21,654 22,123 23,778 25,169 26,741 27,891 The analysis gives an idea about expected figure in Dubai but it does

not show how will it impact specifically palm Island

Step:2 Percent Median Market

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Definition : It defines the percentage distribution across various factor Helps to know

1. Market penetration 2. Potentiality of a particular segment


2011 Forecast : 26,741


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Age Group < 25 25-30 30-40 40-50 50> Total

Will Visit Palm Island

12 24 49 21 9 115

Will Visit Other Place

157 231 369 189 112 1058

Will visit for both Palm Island & Other places

4 9 19 7 3 42

Total 173 264 437 217 124 1215

Tourism


2011 Forecast : 26,741


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Age Group < 25 25-30 30-40 40-50 50> Total


12 24 49 21 9 115


157 231 369 189 112 1058


4 9 19 7 3 42

Total 173 264 437 217 124 1215

Tourism The Percent Median table can be formed based on

1. Customer Survey 2. Customer Feedback 3. Expert Opinion 4. Historical Trends


2011 Forecast : 26,741


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Age Group < 25 25-30 30-40 40-50 50> Total


12 24 49 21 9 115


157 231 369 189 112 1058


4 9 19 7 3 42

Total 173 264 437 217 124 1215

Tourism


2011 Forecast : 26,741

Market Penetration = (115 + 42 ) / 1215 = 12.92 %

Marketing Penetration : 12.92%


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Age Group < 25 25-30 30-40 40-50 50> Total


12 24 49 21 9 115


157 231 369 189 112 1058


4 9 19 7 3 42

Total 173 264 437 217 124 1215

Tourism


2011 Forecast : 26,741



Age Group % share Preference

< 25 14.23868313 5

25-30 21.72839506 2

30-40 35.96707819 1

40-50 17.8600823 3

50> 10.20576132 4

TOTAL 100

Potentiality of customer segments


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Age Group < 25 25-30 30-40 40-50 50> Total


12 24 49 21 9 115


157 231 369 189 112 1058


4 9 19 7 3 42

Total 173 264 437 217 124 1215

Tourism


2011 Forecast : 26,741



Age Group % share Preference

< 25 14.23868313 5

25-30 21.72839506 2

30-40 35.96707819 1

40-50 17.8600823 3

50> 10.20576132 4

TOTAL 100


It gives idea about market penetration & customer segment, but still gives no idea

about the feasibility of project

Step:3 Control Chart

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2011 Forecast : 26,741


Potentiality of customer segments Control charts, also known as process-behavior charts, in statistical process control are tools used to determine whether or not a manufacturing or business process is in a state of statistical control.

It has : USL : Upper Specification Limit LSL : Lower Specification Limit

Step:3 Control Chart

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2011 Forecast : 26,741



No of tourist

• Over capacity • Risks

• Under Utilization • No ROI

LSL USL

Expected Tourism in 2011 = ( 26,741 X 0.1292 ) = 3208.92

3000 3500

Control Chart

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2011 Forecast : 26,741



No of tourist

• Over capacity • Risks

• Under Utilization • No ROI

LSL USL

Expected Tourism in 2011 = ( 26,741 X 0.1292 ) = 3208.92

3000 3500 3208

Feasible

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LSL USL LSL USL

LSL USL

Feasible No Risk

Not Feasible

Feasible but Risky

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20 Tourism at Palm Island is Feasible

But feasibility may differ on territory level

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21 Tourism at Palm Island is Feasible

But feasibility may differ on territory level

Weak territories

Strong territories

Step:4 Predictive Gravity Modeling

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Potentiality of customer segments Forecast the total potential sales available from each neighborhood in the trade area

The model should be designed to mesh with the data that will be used when the model is implemented. In GIS analysis and most other large data analyses, the characteristics of individuals are summarized into the neighborhood's demographic or psychographic profile

Input variables V1 V2 V3

F ( X )

Output ( Graphic user Interface )


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OUTPUT

Market Penetration


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OUTPUT

Case: Opening a shopping Mall

Criteria : In a area where market penetration is between above 50%

Market Penetration

Feasible

Not Feasible


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OUTPUT

Case: Opening a shopping Mall

Criteria : In a area where market penetration is between above 50%

Market Penetration

Feasible

Not Feasible

It gives an idea about feasibility but how to decide which territory is best feasible ?

Step:5 Assignment Model

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To find most best feasible solution

Area 1 Area 2 Area 3 Area 4 Area 5

Shopping Mall 1 5 2 3 4


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Restaurant 2 4 3 1 5

Resort 5 2 1 3 4

Club 4 1 2 5 3 residential Area 5 2 3 4 1

Applying Assignment Model

BEST

Shopping Mall Area 1

Restaurant Area 4

Resort Area 3

Club Area 2

Residential Area Area 5

BEST FEASIBLE


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Restaurant 2 4 3 1 5

Resort 5 2 1 3 4

Club 4 1 2 5 3 residential Area 5 2 3 4 1

Applying Assignment Model

BEST

Shopping Mall Area 1

Restaurant Area 4

Resort Area 3

Club Area 2

Residential Area Area 5

BEST FEASIBLE

How much value would customers add to you?

STEP : 6 Customer Lifetime Value ( CLV )

In marketing, customer lifetime value (CLV), lifetime customer value (LCV), or lifetime value (LTV) is the net present value of the cash flows attributed to the relationship with a customer

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CLV = 𝑃𝐶𝑘 𝑛𝑘=0

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CLV: Customer Lifetime Value PC : Profit Contribution d : Discount Rate n : Number of years k : Time unit

STEP : 6 Customer Lifetime Value ( CLV )

In marketing, customer lifetime value (CLV), lifetime customer value (LCV), or lifetime value (LTV) is the net present value of the cash flows attributed to the relationship with a customer

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CLV = 𝑃𝐶𝑘 𝑛𝑘=0

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k

CLV: Customer Lifetime Value PC : Profit Contribution d : Discount Rate n : Number of years k : Time unit

Risks ?

STEP : 7 Sensitivity Analysis

Sensitivity analysis (SA) is the study of how the variation (uncertainty) in the output of a mathematical model can be apportioned, qualitatively or quantitatively, to different sources of variation in the input of the model.

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I ( X ) O ( X, Y) I ( Y )

If f ( x ) is altered, than to what degree O ( X,Y ) would change.

STEP : 7 Sensitivity Analysis

Sensitivity analysis (SA) is the study of how the variation (uncertainty) in the output of a mathematical model can be apportioned, qualitatively or quantitatively, to different sources of variation in the input of the model.

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I ( X ) O ( X, Y) I ( Y )

If f ( x ) is altered, than to what degree O ( X,Y ) would change.

Based on sensitivity analysis we have to decide contingency level

Qualitative Tools

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Quantitative Tools

1. Concept Testing

2. Delphi Techniques

3. Focus Group Advice

4. Nominal technique

5. Alpha Testing

6. Beta Testing

7. Test Marketing

8. Market Simulation

9. Competitive Advantage Analysis

10. Sustainability Test

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Concept Testing

• People’s reaction to a basic idea of the product

• Usually done before a product is marketed.

• Ensures the selection of the most favorable concept

• Reduces research, development and marketing cost

• Lays a foundation for Benchmarking in future

• Forecasts and analyses the demand and ensures the right time of launching

Focus Groups?

• It's dangerous to take "customers" for granted

• To collect qualitative data

• To determine feelings, perceptions and manner of thinking of participants regarding products, services, programs or opportunities

• To promote self-disclosure among participants

Test Marketing

To test a new product or a new marketing plan under realistic market conditions to measure sales or profit potential.

Done based on the following

1. Population size

2. Demographic composition

3. Lifestyle considerations

4. Competitive situation

5. Media

Test Marketing

WHY

1. To identify and correct weakness in the plan

2. To estimate the outcomes

OUTPUT

1. Reduced cost

2. Increased secrecy from competitors

Alpha Testing

• Acceptance testing

• Done in front of client or customer for their acceptance.

• The Product is developed according to the customers requirement and Specification.

• Generally termed as internal testing

Beta Testing

• Done after Alpha testing

• Termed as External user acceptance testing

• Open to limited people

• Based on their feed backs the flaws are corrected

Competitive Advantage

“A project’s profit potential is largely determined by the intensity of competitive rivalry within that Project”

Competitive Advantage

• Variety of health spas, fitness centres and residents' clubs

• Outstanding facilities at 30 luxury five-star or boutique hotels

• Wide selection of restaurants offering the finest cuisine from all over the world

• Tax-free, designer brand shopping on the Golden Mile and in Palm Mall

• Safe, gated communities and top security in all apartment residences

• Miles of beautiful, golden beaches with spectacular ocean views

• Incredible range of attractions and events, as well as theatres, cinemas and nightclubs

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market feasibility test

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