consumption or usage for a specific period of time.

Once this information has been

collected, it can be plugged into the following formula to derive the estimated market
potential.

MP = N*P*Q where
MP = market potential
N

= number of possible buyers

= average selling price

= average annual consumption

Estimating Market Potential Check-List

This check-list will address a number of questions that need to be answered before an
estimate can be calculated.
1.
2.
3.
4.
5.
6.
7.
8.
i.

What type of customer will buy the product or service?

Where are these customers located?
How many potential customers (N) are there?
How often do they consume or use it?
What is the Competition?
What are people paying?
What is the Potential for the Market to Develop?
What is my share of the Market?
Target Market

One of the most important components of estimating the market potential for a
business is to determine its target market. A target market can be thought of as the customers
who are most likely to buy from you and generally are described using demographic variables