MARKET POTENTIAL MEASUREMENT

Before making a significant investment of time and money in pursuing a business one should how much revenue your business generate to become successful. Demand forecasting and sale forecasting are important for any marketing Planning. Forecasting helps in identifying and solving marketing and sale problem and they are used for setting performance standard.

Market potential : A forecast of the size of a market in terms of revenue, number of buyers, or other factors. The size of the market is based on the number of buyers who might exists for a particular marketing offer. These buyers have three characteristics.

1.Interest in the product.2.Income to be able to afford the product.3.Access to the product.

Market potential refers to the upper limit of the market demand.

Three keys involved in the market potential measurement.

Market Demand Marketing expenditure by the industry Defined Market environment

Market demand-The market demand is measured in physical and monetary terms The market demand is not fixed. example More income generated in Indian Economy the demand for a product increase and vice versa.

The market demand is the function of industry market expenditure.

STEPS IN ESTIMATING MARKET POTENTIAL Estimating the market potential for a business

requires specific information on the number of people or potential buyers, an average selling price, and an estimate of consumption or usage for a specific period of time.

Key Steps in Estimating Market Potential: 1. Define your target market and market

segments. 2. Define the geographic boundaries of your

market. 3. Derive an average selling price. 4. Determine the average annual consumption.

FORMULA FOR MARKET POTENTIAL Estimating Market Potential:

MP = market potential N = number of possible buyers P = average selling price Q = average annual consumption

MP=N*P*Q

MARKET POTENTIAL MEASUREMENT INCLUDES

Market Research. Segmentation. Marketing Positioning. Developing the Marketing Mix

Strategy. Strategy for distribution intensity. Budgeting the Marketing Strategies.