3.2 Market Analysis

Objectives:

A market analysis is a crucial part of the situational analysis for any response, not just CVA. Humanitarian responses must be designed within the consideration of key market systems, or they risk damaging livelihoods, jobs, and businesses, and undermining livelihood rehabilitation, which can prolong dependence on assistance. CARE responses should DO NO HARM to consumers or markets and should make use of market systems when and where they are functional.

A market analysis will inform the preparedness plan and feasibility risk assessment (FRA), and will identify key market indicators to monitor during the response. If a pre-crisis market analysis cannot be done as part of preparedness, a full market analysis must be implemented as soon as possible after the shock, to avoid delays in program implementation.

Market analysis can answer questions related to:

  • The capacity of market systems to cover the volume and diversity of the population’s needs during an identified crisis;
  • People’s access to markets during the crisis especially women’s;
  • The impact of CARE’s intended humanitarian response on markets;
  • The delivery modality to be chosen to deliver CARE’s response.

Interventions aim to link responses with medium- to longer-term market development. In doing this, markets can be both a means for achieving the goals of short-term humanitarian responses and a way to help support longer-term access to basic needs and livelihoods, so that they may better withstand shocks.

Market analyses can also improve understanding of:

  • How to ensure market system recovery in emergency settings;
  • How to best facilitate improving market access following a crisis;
  • How implementing disaster risk reduction measures before a crisis can improve access to market systems and/or protect and strengthen these systems to make them less vulnerable to shocks.

Tools:

Every market analysis should meet the following minimum requirements:

  • Market assessments enable appropriate program decisions and are based on identified needs;
  • Market analysis data informs key program-related decisions and contributes to the selection of appropriate modalities to achieve objectives while doing no harm;
  • Collection of data is undertaken by competent and knowledgeable teams;
  • Data collection systems, procedures, and information sources utilized in the market assessment are appropriate and of sufficient quality to allow for the capturing of the dynamic nature of markets;
  • Monitoring activities provide a check against initial assessment findings and enable decision-making for potential adaptation of interventions (See Section 5.b Monitoring the market).

The most common tools for market assessments include:

Multi-sector market analysis:

Rapid market assessments:

Market systems tools and analysis:

A summary of all these tools and their relative strengths/weaknesses can be found in the CaLP at http://www.cashlearning.org/markets/humanitarian-market-analysis-tools

These tools can be used by non-market experts, but they require training and confidence in using them. Furthermore, they can be used in sectors (shelter, WASH, food security and livelihood, etc.) and are based on two different approaches:

  • Analyzing a limited number of critical market system chains: EMMA, PCMMA, MAG. These market analyses are stand-alone exercises, integrated into the situational analysis. On average, they take 10 days and cost $15-20,000 (USD).
  • Assessing the overall market capacity in a certain geographical area: RAM, 48h tools. These tools can be used within the frame of a broader multi-sectoral needs assessment.

 

The choice between these two approaches should be defined on a case-by-case basis, based on:

  • Size of the assessed market. If analyzing a market place where many commodities are exchanged, an approach based on critical market system chains is recommended. If the analysis is meant to cover a smaller market, consider assessment objectives.
  • Size of the intended response compared to the local market.
    • If the response is expected to target more than 25% of the population in urban areas and more than 10% in rural areas, a more in-depth assessment should be undertaken.
  • The quality of existing secondary information.
    • What information can be used from organizations like WFP, FAO, FEWSNET, national ministries, private consulting companies, and NGOs?
    • The stronger the existing data, the lighter the data collection in the field will need to be.
  • Assessment objectives. The questions you want to answer through the market analysis can help you choose the approach.
    • Market capacity assessment may be enough for choosing an emergency response to cover multiple needs or for selecting the best delivery modality to implement in early phases of response.
    • You may need an analysis of specific market system chains to design an early recovery livelihood intervention or a large-scale intervention.

 

It is possible to combine a broader needs assessment with specific critical market systems assessments. Needs assessments can also inform the selection of critical market systems to analyze, such as those that have or could have a major role in meeting the essential needs of the target population.