Page 76 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Unit 4: Project Budgeting

project. Hence, at the formulation stage, appraisal needs to be carried out in order to help Notes
recommend a project strategy to the sanctioning authorities.

Market Appraisal

Secondary information, though useful, often does not provide a comprehensive basis for market
and demand analysis. It needs to be supplemented with primary information gathered through
a market survey, specific to the project being appraised.
The market survey may be a census survey or a sample survey. In a census survey, the entire
population is covered. (The word ‘population’ is used here in a particular sense. It refers to the
totality of all units under consideration in a specific study. Examples: All industries using milling
machines, all readers of the Economic Times). Census surveys are employed principally for
intermediate goods and investment goods when such goods are used by a small number of
firms. In other cases a census survey is prohibitively costly and may also be infeasible. For
example, it would be inordinately expensive in fact almost impossible to cover every user of
Lifebuoy or every person in the income bracket ` 10,000-15,000.
Due to the above mentioned limitations of the census survey, the market survey, in practice, is
typically a sample survey. In such a survey a sample of population is contacted or observed and
relevant information is gathered. On the basis of such information, inferences about the
population may be drawn.

The information sought in a market survey may relate to one or more of the following:
1. Total demand and rate of growth of demand
2. Demand in different segments of the market

3. Income and price elasticities of demand
4. Motives for buying
5. Purchasing plans and intentions
6. Satisfaction with existing products
7. Unsatisfied needs

8. Attitudes toward various products
9. Distributive trade practices and preferences
10. Socio economic characteristics of buyers

Steps in a Sample Survey

Typically, a sample survey consists of the following steps:

Define the Target Population: In defining the target population the important terms should be
carefully and unambiguously defined. The target population may be divided into various
segments which may have differing characteristics. For example, all television owners may be
divided into three to four income brackets.
Select the Sampling Scheme and Sample Size: There are several sampling schemes: simple random
sampling, cluster sampling, sequential sampling, stratified sampling, systematic sampling, and
non probability sampling. Each scheme has its advantages and limitations. The sample size,
other things being equal, has a bearing on the reliability of the estimates – larger the sample
size, the greater the reliability.

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