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Step one: Assessing general demand

20 November, 2015 - 15:21

(1 ) Potential need (physically determined) Climate; natural resources; land use; population (demography); occupational breakdown; life expectancy; topography; overall level of wealth Key question: Is there a potential need?

(2) Felt need (culturally determined) Existence of linking products and services; values and institutions (class structure, influence on elite, lifestyle); market exposure (means of communication and transport, literacy, mobility, urbanization) Key question: What effort (cost) is required to transform a potential need into a felt need of significant intensity and aggregate size to be attractive (profitable)?

(3) Potential demand (economically determined) Disposable income level; income distribution; consumption as a function of income; family budget; traditional trading patterns (external and internal) Key question: Are there economic and organizational factors beyond the firm's influence that will block the development of a felt need into a potential demand?

(4) Effective demand (politically determined) "Buy national" restrictions; foreign exchange restrictions; import duties; import quotas; imposition of national law regarding public health, sanitation, safety, security, pollution; conflict with locally owned rights (patents, copyrights, trademarks); taxation; rationing; subsidy programs; price and wage controls; special external trade relations (such as bilateral trade treaties) ; effectiveness of commercial law; extent of law and order; relative importance of the government sector in total consumption; government control over communications; state planning Key questions: To what extent are market factors permitted to operate? To what extent can the firm circumvent or change politically imposed restraints?

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