1.6 Market analysis
If the undertaking is one in which a product or service must eventually be sold or leased to customers, there must be some indication of favorable reaction by the potential consumer. An ideal form of the information provided by a market analysis would be asset of curves like those in Fig1.5. With an increase in price, the potential volume of sales decreases until such a high price is reached that no sales can be made. The sales-volume to price relationship affects the size of the plant or process because the unit price if often lower in a large plant. For this reason, the marketing and plant capabilities must be evaluated in conjunction with each other
Because the sales and advertising effort influences the volume of sales for a given price, a family of curves is expected. Since a cost is associated with the sales and advertising effort, and since a continuous increase of this effort results in diminishing improvement in sales. There exists and optimum level of sales and advertising effort. A marketing plan should emerge simultaneously with the technical plans for the undertaking.