Market assessment is based on demand and supply position, cost of the product, innovation, etc. as discussed below:

(i)    Demand of product or Service. The demand assessment will be based on the size of market being targeted. t mat be local market. market at state level or national/international market. It will also involve a study of the target groups of consumer, their preferences, tastes and other related variables like age, level of income, etc.

(ii)    Supply Position and Extent of Competition in the Market. By supply position we mean the total of quantities of the product made available in the market by all the existing players. The entrepreneur should also take into account future supplies from possible entrants in the field. If demand for a particular product or service is seasonal, suppliers will normally work on temporary increase in demand. Such changes in demand-supply have to be taken into consideration. All he suppliers constitute competitors to the entrepreneur. SO their manufacturing capacity, chances of increase of decrease in supplies, their financial position etc. need to be examined closely.

(iii)    Cost of Production. The cost of producing a product plays an important role in the choice of product by the entrepreneur. It is the cost of production that will determine the price of the product and its comparison with available products in the market. Cost variables of competitors in terms of transportation delays, wastage, storage, etc. have also to reanalyzed to find out cost advantage, if any.

(iv)    Technological Innovation and Change. The entrepreneur must make a forecast of technological innovations and change in the concerned field to visualize changes in product quality and cost of production.

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