RAPAT® for Excel 365
Market Needs Help Sheet

Why understanding the market need is important

Before developing a new product or entering a new market it is essential to understand the market demand for the product. If market demand is low, then investment in product development may be a significant commercial risk with little or no return on the investment. By undertaking an analysis of the market drivers, the product buyer's needs will be better understood and can help define requirements for the product such that the product is both desirable and addresses a gap in the market. In addition, the analysis can be used to support development of an appropriate commercial strategy, leveraging market opportunities and avoiding potential pitfalls. An understanding of market need is often required as part of presenting a product business case to support funding or investment applications.

How to use the market needs assessment worksheet

At the top of the RAPAT “Market Needs Assessment” worksheet, the “Market Needs Completion Status” will initially be set to “Not Started”. Use the dropdown list to change this to “In progress” or “Completed” as appropriate.

The market needs assessment is based on understanding the Political, Economic, Social, Technological, Environmental and Legal (PESTEL) market drivers in relation to the potential success of the product. For each driver, a SWOT analysis is undertaken at a macro level to assess the Strengths, Weaknesses, Opportunities and Threats to product success. The analysis is performed using a tabular layout. The rows of the table relate to each of the six PESTEL market drivers and each column considers the four different SWOT characteristics.

For each market driver, the worksheet identifies example relevant factors to consider (e.g. government policy, population growth rate). Populate the table by working across each market driver row by identifying any strengths, weaknesses, opportunities, and threats for each aspect of the PESTEL assessment. See further guidance below on both the PESTEL marke drivers and the SWOT characteristics.

For each SWOT characteristic, use the dropdown list to the right of each PESTEL assessment cell to rank the identified drivers in order of importance, where 1 is the most important driver for that SWOT characteristic and 6 is the least important driver. The dashboard at the top of the worksheet is automatically populated and summarises the 3 dominant drivers for each SWOT characteristic.

PESTEL market drivers

For each of the six PESTEL market drivers there are a number of different factors that may need to be considered as part of the market need assessment.

1. Political: The political market driver examines the degree to which governments intervene and influence the economy or a specific industry. Governments can also have a significant impact on aspects such as infrastructure, education systems, and health and safety regulations. Political factors to consider include government policy, political stability, corruption, foreign trade policies, tax policies, labour laws, environmental laws and trade restrictions.
2. Economic: Economic factors can directly impact the purchasing power of consumers, both in the short and longer term, and may change demand/supply models for the wider economy. This can directly influence pricing models for the product and potential revenue. Factors to consider include economic growth, exchange rates, inflation rates, interest rates,consumer disposable income and unemployment rates.
3. Social: The social market driver considers social demographic characteristics, norms, customs and values of the market population. Factors to consider include population trends such as population growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and cultural barriers.
4. Technological: The technological market driver considers innovations in technology that have the potential to influence/affect relevant industry operations and the impact this has on the market for the product. It will also be important to understand the potential for a specific technology to become obsolete due to disruptive technological advances. Technological factors may influence decisions to enter markets for specific industries, to launch specific products or to outsource production activities overseas. Factors to consider include technology incentives, the level of innovation, automation, research and development (R&D) activity, technological change and the extent of the market technological awareness.
5. Environmental: Environmental considerations have become increasingly important as a result of the increasing scarcity of raw materials, pollution targets and carbon footprint targets set by governments. A growing awareness of the potential impacts of climate change is influencing the way in which companies operate and the products they offer. There has also been an increasing focus on corporate social responsibility (CSR) and sustainability practices. Environmental factors to consider include both ecological aspects and environmental aspects such as weather, pollution, environmental offsets and climate change.
6. Legal: To be able to trade in any country it is essential to understand what is and what is not legal, including ethical aspects and any product specific regulations. For global product markets, there may be different rules and regulations in each country. In addition, it will be important to be aware of any potential future changes in legislation and the impact this may have on product success. Legal factors to consider include specific laws relating to discrimination, antitrust, employment, consumer protection, copyright/patent and health and safety as well as product certification legislation.

SWOT characteristics

1. Strengths: These are current characteristics of the product, company or market driver that give the product an advantage relative to other products - some of these may be referred to as unique selling points (USPs). Examples include bespoke product functionality addressing a gap in the market, design patents, good relationships with clients, client investment in full scale trials as part of product qualification.
2. Weaknesses: These are current characteristics of the product, company or market driver that place the product at a disadvantage relative to other products. Examples include lack of patent protection, poor reputation, small working capital, weak leadership team, inefficient production process.
3. Opportunities: These are future factors that may enhance product success. Examples include increased purchasing power of customers, government subsidies, more favourable international trade policies, population lifestyle changes.
4. Threats: These are future factors that could be detrimental to product success. Examples include new competitors entering the market, availability of substitute products, potential disruptive technologies, increasing unemployment rate, protests from NGOs, reduction in tax incentives, increasing supplier bargaining power.

Updating the market need assessment

The market need assessment will normally be undertaken at an early stage in the product development. However, it may be beneficial to review and update this at key project decision gates and/or investment points.

Using the output from the market need assessment

The output from the market need assessment is used to understand the macro market drivers that can influence the product's success or failure. It feeds into the commercialisation strategy for the product, exploiting identified strengths and opportunities. It supports the commercial risk assessment, highlighting potential weaknesses or threats that need pro-active risk management. It can also assist with understanding product requirements both in relation to defining user requirements and flagging potential product regulatory requirements that need to be addressed.