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.