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Analyse the market

Build your knowledge of suppliers through market analysis.

Market analysis is the study of the characteristics, capacity and capability of the supply market. During an analysis, you review the supply and demand features of the market.

The information you find will help you understand how the market can meet your organisation’s buying needs. It also helps you develop a strategy to approach the market.


Plan a market analysis 


A market analysis can take many forms and how you do it depends on:

  • the nature of the procurement
  • the scope of your project
  • the risks involved

Completing a market analysis involves looking at:

  • suppliers and the supply chain
  • demand and how it affects the market
  • current prices, and factors that may affect the price
  • market trends and technological developments
  • present and future market behaviours that could affect price and availability
  • competition within the market

For more information about market analysis in construction, read:

Ministerial Direction and  Instruction 3.1

Guide to market analysis in construction procurement 3.1

Market analysis and review for goods and services 

Market analysis and review follows the complexity assessment in one of these ways:

  • at a category level
  • at an individual level when a category isn’t identified
  • when the procurement is critical or high risk

Policy 3 outlines how you should complete your market analysis and review.

The policy outlines that an organisation should:

  • determine if the complexity assessment outcome completed at the category level is a good base to approach the market
  • assess complexity at an individual level if the category analysis didn’t determine the best approach to market
  • identify whether the market is able and available to supply
  • use the market analysis to reassess the procurement requirement
  • prepare a business case that justifies the need to buy and outlines a strategy to engage with suppliers

Find useful information 


To get more information about the market:

  • use your own experience and prior knowledge
  • do online research
  • draw on experiences of other similar projects

You can also talk to potential suppliers, professional or industry organisations. It may also be useful to engage a market analysis consultant.

Consider how difficult the research phase may be so you can plan around it.


Conduct a market analysis 

Your market analysis will involve researching all elements of the market. These elements include:

  • market characteristics that are important to your project
  • market structure, size and the key suppliers
  • competition among suppliers and how that affects price, quality and delivery
  • barriers to entry and exit
  • the product life cycle

This information will help achieve the goal of value for money.


Understand a supply chain 

A supply chain is the order of processes it takes to deliver a product from the supplier to you.

Having a thorough understanding of the supply chain is important to your planning. Not all supply chains are the same. Knowing how goods, works and services are delivered can help you to:

  • get value for money
  • assess and manage risks that could affect delivery
  • identify strategies to meet other government objectives


Aggregated demand 

Aggregated purchasing demand is grouping together demand for commonly purchased goods and services to harness greater economies of scale when procuring from the marketplace.

Under the VGPB market analysis and review policy, an aggregated purchasing arrangement may take the form of a state purchase contract (SPC) or a sole entity purchase contract (SEPC).

The market analysis and review policy details the mandatory requirements for establishing, managing and operating aggregated arrangements. SPCs and SEPCs must detail the rules of use for buyers intending to purchase under the arrangement.


Uniforms and personal protective equipment (PPE) 


The Victorian Government has made a commitment to create and keep local jobs. Buying locally manufactured uniforms and personal protective equipment is an important part of this.

If your organisation needs to buy uniforms or personal protective equipment, you need to follow the Guide to procuring Uniforms and  Personal Protective Equipment (PPE) . Contractors do not need to follow this policy.

Paper products and printing supplies 


If you’re buying paper from a state purchase contract, you should follow the paper procurement guide. The Victorian Government is committed to environmental sustainability.

Paper products and printing supplies can be bought from these state purchase contracts:

Stationery and workplace consumables

Print management services

Paper bought through these contracts follow standards. If you do source paper elsewhere, these standards should still be met. Under these standards, paper you buy should:

  • prioritise value for money
  • come from locally manufacturers where it will meet requirements
  • be Forest Stewardship Council (FSC) certified or have Programme for the Endorsement of Forest Certification (PEFC)

Preference is also given to:

  • mixed source paper (high recycled paper content)
  • manufacturers and suppliers that prioritise environmental sustainability
  • paper that is elementary chlorine free (ECF), processed chlorine free (PCF), or totally chlorine free (TCF)

Social procurement 

Social purchasing takes advantage of the buying power of the Victorian Government to make a positive impact on the community. Adding a social component to your procurement not only fulfils your organisation’s needs and helps the community, but it also creates value.

This means buyers and suppliers can achieve positive social, economic and environmental outcomes. Social procurement supports:

  • local job creation
  • social enterprise
  • aboriginal business
  • equal opportunity in the workplace
  • environmental sustainability

Your organisation may have a social procurement strategy. Check with your procurement governance unit.

Read more about social procurement


Reviewed 30 October 2018