Explain.

Notes on the Economic Aspect Demand and Market Analysis $1.$ Effective demand represents the total quantity of a specific product purchased at a given price in a particular market over a given period. A market can be viewed in narrow terms as a set of consumers, existing and potential, or in broad terms, as the consumers plus influences as the government policies obtaining in a particular country or region. $2.$ The first step in project analysis is a detailed estimate of the size, structure and demand characteristics of the product to be manufactured. Sources of information include producers, research on family budgets, personal incomes, buying habits, preferences and market responses, import substitutions, etc. $3.$ The size of demand during the life span of a proposed project is a function of several variable factors such as the composition of the market, the competition from other sources of supply of the same product and substitutes, income and price elasticity of demand, market responses to socio$-$economic patterns, distribution channels, and consumption growth lines. $4.$ The demand and market study should provide the following basic information: a$)$ Size and composition of present demand in a market whose geographical limits should be defined. b$)$ Market segments identified by end use, consumer groups or geographical division c$)$ Demand projection of the overall market and of the segments over a certain period, preferably $5$ to $10$ years of the potential life of the project d$)$ The market penetration ratio that the project is expected to achieve over the projected period in the context of developing competition, domestic and global and changing consumer response. e$)$ The broad pricing structure on the basis of which projections of growth and market penetration are made. f$)$ The conditions of sales promotion and sales organization to be established.