General information about market potential. Market potential analysis and sales volume forecasting
Market conditions largely depend on its potential capabilities. Market potential is the expected set of production and consumer capabilities that determine supply and demand. The general potential of the market includes: financial and credit potential, the material and technical base of the sphere of commodity circulation and paid services, as well as economically active labor potential.
The following categories of potential are distinguished: production (possible volumes of production and supply to the market) and consumer (possible volumes of market absorption). The potential of the market for products and services is realized through satisfying consumer demand, attracting the mass of goods and services into the sphere of circulation and their subsequent transition to the sphere of consumption (in the service sector these two processes are not always separated in time, but in the sphere of commodity circulation they are, as a rule, divides time).
The purpose of assessing market potential is to characterize market opportunities at both the macro and micro levels. An assessment of the overall market potential is needed by enterprises to analyze their own capabilities in order to focus on their share in distribution or market conquest. The micropotential of an enterprise is its production or trading capacity - the maximum possible volume of production, sales or turnover.
Schematic diagram for assessing market potential comes down to determining the number of production and consumer units, calculating indicators power density(purchasing power) production and consumption. The market potential formula includes coefficients of elasticity of supply and demand from prices, income and other factors. The numerical value of the potential can be adjusted by indicators that limit or expand the volume of production (consumption).
The general formula for market potential looks like this:
where are the units of production (consumption); )¥.- indicators of unit capacity (production or consumer); Eh- elasticity of demand (supply); other factors and elements of potential; P- number of potential units.
The principal detailed scheme for calculating production potential can be represented by the formula:
where is the enterprise or group of enterprises producing this product or service; IV enterprise capacity (for the group - average); And - degree of utilization of production areas; I - degree of resource provision; E- elasticity of supply depending on the prices of raw materials and finished products; £ - domestic production consumption; C is the predicted volume of output of competitors; P - number of manufacturing enterprises.
The product offering potential of a particular enterprise can be calculated using a simplified formula
where ¿7. - volume of products (services) planned for them manufacturing plant eid r^-O^Yu; P- the number of enterprises with which the contract has been (is expected to be) concluded.
Consumer potential is characterized market capacity. Market capacity is the quantity (value) of goods that the market can absorb under certain conditions and over a certain period of time.
To assess market capacity, multifactor forecast or multiplicative-additive models are used. In particular, the latter can be expressed by the formula
Where E- market volume; 5,- strength th consumer groups; To- consumption level (consumption standard) th consumer groups; E- elasticity of demand from prices and incomes; G- the volume of the normal insurance reserve of goods; market saturation - the volume of goods available in households or means of production in enterprises); AND. physical wear and tear of goods; IT- obsolescence of goods; A - alternative forms of satisfying needs (natural sources of consumption, black market, etc.); C is the volume on the market of competitors' products.
Distinguish actual and potential market capacity. The first characterizes the volume of goods produced or imported into countries, regions, cities over a certain period of time (year, six months, quarter, month, etc.) and consumed by the population of the country, region, city, etc. Potential market capacity is the volume of products that enterprises can produce and which can be consumed in a country, region, or city over a certain period of time.
The saturation indicator plays an independent role in market analysis. Market saturation is the degree to which consumers are provided with goods. It is determined either by expert methods or by a sample survey of households.
One of the main problems of researching the consumer market in transitional conditions is determining the market capacity and the degree of satisfaction of consumer demand. Assessment of the capacity of the regional consumer market as a whole and calculation of market capacity individual species consumer goods are necessary for every enterprise (firm) to analyze its capabilities in a given consumer market. This or that state of the market to a certain extent depends on its potential capabilities. Product supply and demand are forms of functioning of market potential.
Market potential is a forecast set of production and consumer forces that determine supply and demand.
Production potential appears in the form of the ability to produce and present to the market a certain volume of goods (products and services). It is opposed by consumer potential, which manifests itself in the form of the market’s ability to absorb (i.e., buy) a certain amount of products and services. Naturally, assessment and analysis of production potential are part of the buyer’s marketing interests, and assessment and analysis consumer potential First of all, the seller is interested.
The result of realizing the potential of the market for goods and services is the satisfaction of consumer demand, the involvement of the mass of goods and the mass of services in the sphere of circulation and their subsequent transition to the sphere of consumption (in the service sector these two processes are not always separated in time, whereas in the sphere of commodity circulation they are both usually separates a significant period of time).
The purpose of assessing market potential is to characterize market opportunities both at the macro level and at the micro level of individual firms. To analyze its own capabilities, each company needs an assessment of the overall market potential in order to reasonably decide on the issue of targeting a specific segment (when dividing or conquering the market). Thus, determining the consumer potential of the market is an important link in the system of studying consumer demand. Consumer potential is characterized market capacity. This indicator is close to the volume of demand, but not identical to it.
Market capacity is the quantity (cost) of goods that the market can absorb under certain conditions over a certain period of time.
Analysis of the company's product portfolio
Methods for assessing a company's product portfolio.
ABC analysis.
The idea of the ABC analysis method is based on the Pareto principle: “for the majority possible results A relatively small number of reasons are responsible,” now better known as the “20/80 rule.” This analysis method has received great development due to its versatility and efficiency.
The essence of this analysis lies in the fact that a classification is made of all product items, the inventory data of which is maintained based on the relative importance of these items, and for each selected category, its own inventory management techniques are formed. Usually they resort to a three-stage ranking of product items: into classes A, B and C. It can also be said that for various categories of product items, different levels control over their stocks.
Using this analysis, product groups are broken down according to the degree of influence on the overall result. Moreover, the grouping principle can be the amount of revenue received from a specific group of products, sales volume or some other parameters. Often revenue is more indicative as a grouping criterion. Grouping by sales volume may be adequate if the analyzed product groups are homogeneous in composition and price.
The ABC sales analysis algorithm is based on dividing the analyzed data according to the specific weight of the sales indicator into 3 groups:
^ A – the most valuable customers, with whom the company makes 75% of its sales;
B – intermediate ones, with which the company makes 20% of sales;
C – the least valuable, with which the company makes 5% of sales.
1. Frequent evaluation of the forecast and forecasting method.
Frequent, such as monthly, cyclical inventory counts with tight tolerances. Any significant deviation of the data on inventories recorded in the information system from the data according to the calculation carried out (which can also be called a current inventory) is unacceptable. It makes sense to carry out a traditional full inventory once a year or every six months.
2. Daily update of data in the database. That is, for such item items it is necessary to use a system with continuous updating of inventory data.
Frequent review of demand requirements, lot sizes, and safety stock, usually resulting in relatively small order sizes. It is necessary to carefully monitor all planning parameters and identify real needs for product items. Striving for small sizes batches may be dictated by the possibility of reducing both direct and hidden costs associated with storing products in inventory.
3. Close tracking and reduction of cycle time. The shorter the cycle time, the lower the need for working capital. And since the main share of demand is formed by inventories of class A item items (at least in terms of working capital in inventories of raw materials, work in progress and finished products), then managing the cycle time pays off handsomely for them.
For class B items, the same measures are applied as for class A items, but less frequently and with larger acceptable tolerances.
For Class C positions the following rules are formulated:
· The basic rule: products must be in stock... You can also put it this way: stocks of class C products may be more than necessary, but should not be less than necessary.
· Simple data fixation or no data fixation at all in the database; It is possible to use a periodic inspection (review) procedure to control inventory levels.
· Big sizes batches (orders) and a large safety stock. Large quantities do not entail significant costs associated with storing stocks of class C items, so it makes sense to save primarily on preparatory costs by ordering in large quantities.
· Storage in areas immediately accessible to personnel using these items in the production process. This simplifies the procedure for releasing inventory into production and eliminates unnecessary bureaucratic paperwork, which also entails certain costs.
· Infrequent (rare) counting of inventories (once a year or every six months) with large acceptable tolerances (up to, for example, weighing instead of counting).
Related information.
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2. Determination of the consumer potential of the market. Definition consumer potential market is the answer to the question of how many goods the market can absorb. The consumer potential of the market is determined by consumer demand and is characterized by the indicator market capacity .There are two main approaches to determining market capacity:
Simplified calculation of market capacity. This calculation is based on the fact that market capacity is equal to sales volume, calculated using the balance formula:
V =
Q +
Z +
E
+
I ,
Where V
- market volume;
Q– production of goods;
Z– balance of inventory;
E– export;
I– import.
However, this is an oversimplified formula. Its main inaccuracy is based on the fact that the market capacity here is again determined through the volume of supply (production). In other words, what is actually determined is not the market capacity, but the quantity of goods that can be offered to the market.
Calculation of market capacity based on determining the average level of consumption. The essence of this approach is simple and is based on the answer to the question: “How many people will be able to buy this product?”
A. Calculation of production consumption capacity. This calculation is based on production consumption standards, i.e. the use of raw materials, materials, equipment per unit of production for the manufacture of the i-th product. In addition, it is necessary to take into account possible changes technological equipment, increasing labor productivity, saving materials, using substitutes, etc. Then the general formula for calculating production consumption capacity will be as follows:
E etc.
=
?
(N i
Q i
W i
K NTP ) –
?
Z j - P j - WITH
Where E etc- market volume i-th industrial product;
N i– the number of production or other enterprises consuming (using) i-th industrial product;
Q i– quantity of manufactured i- products (scope of activity) for which it is necessary j-th product;
W i– specific consumption standard j-th product for production i-th unit of product;
TO NTP– correction factor for technological changes;
? Z j – average change in inventory j-th product;
P i – losses j-th product within the standard;
C – part of the market falling to the share of a competitor, including an importer.
Example:
The plant produces 1200 machines per year; According to the standards, the metal consumption of this type of machine is 850 kg/unit. Metal losses decreased by 7% per 1 kg. New technology allows to reduce metal consumption by 22%. Metal reserves increased by 12 tons. The plant will need:Epr = (1200×850×0.78×0.93) – 12000 = 727908 kg = 728 t.
B. Calculation of the capacity of the consumer market. The calculation of the capacity of the consumer market should be differentiated for each social or age group of consumers: this is due to the differentiation and characteristics of demand in these groups. Are these differences determined through special research? panel studies or state budget statistics households.
IN general view the volume of consumption depends on the number of consumers: than larger number consumers, especially with other equal conditions the volume of consumption is greater, and, consequently, the market capacity is greater. The expanded formula for consumer market capacity is as follows:
E consumption = ? (S i P i [ T etc. prices E i R ] X [ T ave. income E i d ])+ D steam –(N–I f -AND m )–A–C
Where E consumption . ? consumer market capacity;
S i? number of consumers i-th social or age group;
P i? per capita consumption i-th group of consumers in the base period;
T etc. prices and T other income? growth rates of prices and incomes, respectively;
E i p ? elasticity of demand i-th population group from price changes;
E i d? elasticity of demand i-th group of the population from changes in income;
D steam . ? artificially stimulated increase in demand, in particular through the sale of goods in installments;
N? market saturation (availability of goods among consumers);
AND f and I m? physical and moral wear and tear of the goods;
A? alternative non-market forms of consumption (for example, production of own products), as well as consumption of substitute goods;
WITH? part of the market captured by competitors, including importers;
n? number i-x groups of consumers.
Interesting indicator N– market saturation, i.e. availability of these goods among consumers. This indicator should not be confused with the concept of trade saturation as the availability of goods in trade for free sale. Determining this indicator is quite difficult. To do this, use data from special panel studies household. To calculate durable goods, the balance formula is usually used:
N To = N n + P?IN,
Where N To And N n
? availability of goods at the end and beginning of the period, respectively;
P? receipt of goods for the period;
IN? disposal for the period is calculated according to the standards for the average service life of the product.
Two more coefficients are also interesting: AND f And AND m . AND f calculated according to technological standards. However, it should be noted that this indicator also depends on the standard of living of the relevant population groups. Thus, low-income segments of the population strive to completely “exhaust” the resource of the product. It is interpreted as the cessation of use of a product that is still suitable for use due to its going out of fashion, the appearance of a new, more advanced one, etc., and also depends on the level and lifestyle of the corresponding group of consumers.
Example
10
:
It is necessary to determine the total market capacity of the productX according to the following conditional data (Table 11.1).
Table 11.1
Market Capacity Factors
| Social group by income
| Number of households, families, thousand | Average per capita consumption in the base period, units/sem. | Price elasticity coefficient, % | Elasticity coefficient of income, %
| Availability of goods from consumers, thousand units | Physical wear and tear (as a percentage of availability)
| Obsolescence (as a percentage of availability) | Natural consumption as a percentage of total |
| I. Highly endowed | 100 | 8,2 | -0,8 | +1,4 | 90 | 12 | 120 | 5 |
| II. Middle-income | 400 | 3,4 | -1,2 | +2,2 | 24 | 8 | 15 | 15 |
| III. Low-income | 500 | 1,5 | -4,0 | +3,6 | 16 | 7 | 10 | 30 |
According to the forecast, prices may rise by 15%. It is assumed that incomes (per family) for the high-income population will increase by 25%, for the average-income population by 15%, and for the low-income population by 4%.
We will recalculate the basic per capita consumption into the current one. It depends on changes in prices and income, i.e. on the elasticity (response) of consumption.
I group: 8.2 units/sem. – (8.2H0.15H0.008) + (8.2H0.25H0.014) = 8.1303 units/sem.
II group: 3.4 units/sem. – (3.4×0.15×0.012) + (3.4×0.15×0.022) = 3.4106 units/sem.
III group: 1.5 units/sem. – (1.5×0.15×0.04) + (1.5×0.04×0.036) = 1.493 units/sem.
“–“ before the first bracket means a negative elasticity coefficient, i.e. fall in consumption due to rising prices.
“+” before the second bracket is associated with a positive coefficient of elasticity of consumption from income, i.e. The higher the income, the more money is spent on consumption.
Let us now make a full calculation for consumer groups:
I group: (100Х8.1303)–90+ (90Х0.12+90Х0.2) – (100Ч8.1303Ч0.05) = 712.45 = 700 thousand units.
II group: (400Х3.4106)–24+(24Х0.08+24Х0.15) – (400Х3.4106Ч0.15) = 1141.124 = 1100 thousand units.
III group: (500Ch1.493)–16 + (16Ch0.07+16Ch0.10) – (500Ch1.493Ch0.3) = 508.27 = 500 thousand units.
The “+” before the second bracket in this formula means that the wear and tear of goods always increases consumption, while the availability of goods, as well as alternative consumption, reduce it.
Total:E
= 700 + 1100 + 500 + 2300 thousand units. You can also calculate the share of each consumer group in the total market capacity:I
group:
30,5%,
II
group:
47,8%,
III
group:
21,7%.
Calculating the shares of consumer groups is necessary for a more accurate selection of a market segment.
VERY IMPORTANT!: Differentiation based on a number of characteristics may require resorting to two or more step calculation procedures.
However, you can resort to more simplified calculation formula, abandoning differentiation by consumer groups. In this case, it is necessary to calculate the average consumption for all categories of consumers, and the market capacity - according to the formula:
E consumption
= (?
S i ) P Wed
I– (N – I f - AND m ) - A,
Where
S i– total number of consumers (population, families, etc.);
P i– average consumption per capita (per family, etc.), extrapolated to the current period.
The importance of analyzing the size and potential of the market. Based on an analysis of the scale and potential of the market, it is possible to construct a map of the market space and various portfolio matrices ( McKinsey
,
BCG
), reflecting the strategic position of the enterprise in the market (more precisely, to determine the position of the enterprise by one characteristic of the market (abscissa)). In other words, this characteristic of the market according to the level of competition allows, firstly, to solve the problem of segmentation, and, secondly, to choose a competitive strategy.
11.1.3. Analysis of market balance. The most important sign of market conditions is its main proportion: the ratio of supply and demand. The balance or imbalance of supply and demand determines the type of market (seller's market when demand exceeds supply and buyer's market when supply matches demand or exceeds demand). Since both supply and demand are subject to marketing influence and regulation, determining their relationship is the most important task of marketing analysis.
Analysis of the degree of market balance is carried out using various methods.
Balance sheet method for determining the relationship between supply and demand. The essence of this method is as follows: the volume of commodity supply is determined (based on data on the production of goods or actual data on the sale of goods for the previous period with the necessary additional calculations) and the purchasing funds of the population (income adjusted for the increase in savings minus mandatory payments), which make up the aggregate demand of the population.
Supply-demand balance
| Offer | Demand |
|
|
| TOTAL | TOTAL |
| Inventory reduction | Inventory growth |
| BALANCE | BALANCE |
| DEFICIT (P | DEFICIT (P > S) |
The disadvantage of this method is that such a calculation can only be carried out within the boundaries of the entire commodity market as a whole. It is impossible to do this for a local market or an individual company. The fact is that demand is a potential category that exists only in the minds of the buyer and in his wallet, and it is impossible to quantify it on the local market for a product (the exception is exchange markets, where supply and demand are registered). Therefore, this method is more often used in macromarketing.
Method of correlation of dynamics indicators. You can apply the method of calculating production and consumer potential (See paragraph 11.1.2.). But it is easier to use an indirect method of monitoring changes in inventory. Inventories are sensitive to changes in the relationship between supply and demand. An excess of demand over supply causes a reduction in inventories, and an excess of supply over demand (or their qualitative discrepancy) is accompanied by overstocking. You can use an absolute measure of inventory volume, but a relative measure of inventory turnover (in days) would be more accurate.
In formalized form, these proportions will be expressed as follows:
Where I h– inventory index;
P- offer;
WITH- demand;
T h– inventory;
R– implementation.
Respectively,
I h= 1 – market is balanced;
I h> 1 – supply exceeds demand;
I h
Analysis of market balance based on market indicators. Another method for qualitatively assessing market balance is to analyze the ratio market indicators and business activity indices.
Market indicators are introduced on the basis of special opportunistic sociological surveys. main feature These indicators are based on the opinions of stakeholders: consumers, on the one hand, and producers and sellers, on the other. The methodology for developing indicators is mixed, i.e. The indicators themselves are based on the techniques of sociological surveys, and their construction uses marketing methods.
A. Order portfolio fill rate. This is an indicator that is calculated based on entrepreneurs’ responses about the level and trends of portfolio occupancy. The balance of positive and negative assessments is used as an indicator. If, during surveys, positive assessments exceed negative ones, then we can talk about a seller’s market, if on the contrary, then about a buyer’s market. The assessment of business prospects is presented in table. 11.2.
Table 11.2
Business prospects assessment table.
| Share of those who gave assessments in the total number of respondents who responded, % |
|||
| about economic situation enterprises in given time
| about trends in the economic situation in the future |
||
| characteristic | grade, % | character | grade, % |
| 1) favorable | 1) improved | ||
| 2) satisfactory | 2) no change | ||
| 3) unfavorable | 3) worsened | ||
| Balance of grades | Balance of grades | ||
Based on the positive balance of assessments, one can estimate degree of positive prospects as the ratio of positive assessments of the current period to positive assessments of the future period.
This analysis can be supplemented with a retrospective block of assessment for the previous period. In this case, you can have three characteristics of the phenomenon being studied - for the past period, for the current period and for the future period. Based on them, you can calculate well-being coefficient enterprises as a simple arithmetic mean of these three indicators.
B. Customer satisfaction. This indicator is associated with solving the main marketing task - assessing customer satisfaction. The analysis is carried out as a ratio of the results of surveys of entrepreneurs and consumers. The result of the final assessment of each survey - both entrepreneurs and consumers - is expressed in the proportion of positive responses, considered as an index of customer satisfaction.
The survey of entrepreneurs involves a preliminary analysis of intra-company statistical indicators of sales and balances of goods, prices and assortment. Then the actual survey of entrepreneurs is carried out. The general market assessment is carried out as the arithmetic average of 4 partial assessments according to the following headings: market saturation and range of goods, quality of goods offered, price of goods, level of service. The customer satisfaction model using this method is presented in Table. 11.3.
Table 11.3
Customer satisfaction model.
| Customer satisfaction indicators | Trends | Proportion of “yes” answers according to satisfaction assessment | Proportion of “yes” answers according to trend assessment |
| Market saturation and product range |
| ||
| Quality of products offered |
| ||
| Price of goods |
| ||
| Service level |
|
The customer satisfaction index obtained from a survey of entrepreneurs is compared with the satisfaction index obtained from a survey of customers themselves. The ratio of these indices gives Customer Satisfaction Ratio.
B. Opportunity test. The market test is carried out on the basis of conducting trend surveys among various groups of market participants: producers, sellers and consumers. The opportunistic test is arithmetic mean possible assessments of the main market parameters, each of which is assigned a corresponding score. After conducting a survey and obtaining estimates of the main market parameters, the arithmetic average is calculated, and then their point estimates are calculated. Each parameter is assigned an expert score in accordance with this characteristic ( B i) and weight ( W i), which reflects the role i-parameter in the formation of the market situation. Then a weighted average assessment of each parameter is calculated, which serves as an integrated assessment of the state and development of the market. Integral market assessment by i-th parameter is called a strategic index or market situation index:
Where? average score (generalized, multidimensional) characteristic of the market state;
B i? score characterizing the state of the market according to i–th parameter (factor);
W i? weight (rank) reflecting the role i-th parameter (factor) in the formation of the market situation (determined by expert means);
n– number of parameters (factors).
Depending on which scoring system was used, a market situation scale is constructed. The larger the strategic index, the more favorable the situation, the more promising the market.
Gradeproportionalitytrade turnover.
The importance of market balance analysis. Based on the analysis of market balance, portfolio matrices are constructed (more precisely, to determine the state of the market (ordinate)), the market situation as a whole is assessed, and the prospects for the position of the enterprise are determined. Based on this analysis, the method can be applied SOPD analysis, SPASE-analysis and define the firm's strategic outlook.
VERY IMPORTANT!:It should be borne in mind that consumer demand is a potential category and cannot be directly assessed. Therefore, market analysis of market balance, despite the applied quantitative methods and assessments will always need to be conditional.
11.1.4. Analysis of trends and stability of market conditions
A. Analysis of market trends. Market analysis involves studying market dynamics, i.e. trends in changes in its main characteristics.
Market development trends are determined based on an analysis of changes in basic characteristics (supply, sales, prices, inventory). For each of the characteristics, time series are constructed, reflecting the change in this characteristic over time. Determined vector, rate of change And rate of change (growth or reduction) these characteristics (relative to the base period). For example, statistics on changes in inventory, prices, production volumes, number of transactions, etc.
The difficulty lies in the fact that to analyze trends, accumulated arrays of statistical information are needed. In cases where the market phenomenon under study is a complex aggregated value (for example, trade turnover consisting of a set of heterogeneous goods), characterization of the dynamics of quantitative indicators is achieved using aggregated or average indexes, in particular the index of physical volume of trade turnover and the general price index: 
Where q i 0 And q i 1 ? quantity sold i -th product, respectively, in the base and current periods;
p i 0
? price i-th product in the base period.
Example
11
:
The table shows sales and price data for three products over two periods.
| Product | Base period | Current period | Quantity of the current period in base prices, thousand rubles. |
||||
| If quality, T.
| price, rub. for 1 kg. | Tovaro turnover, thousand rubles
| If quality, etc.
| price, rub. for 1 kg. | Tovaro turnover, thousand rubles
|
||
| Qio | Pio | QioPio | Qi1 | Pi1 | Qi1Pi1 | Qi1Pio |
|
| A | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 1st | 500 | 12 | 6000 | 300 | 24 | 7200 | 3600 |
| 2nd | 200 | 10 | 2000 | 200 | 10 | 2000 | 2000 |
| 3rd | 300 | 25 | 7500 | 600 | 15 | 9000 | 1500 |
Trade turnover index in actual prices calculated as the ratio of gr.6 to gr.3:
I trade turnover = 18 200: 15 500 = 1,174 ,
those. cash revenue increased by 17.4%.
Index of physical volume of trade turnover is calculated as the ratio gr. 7 to the total of group 3:
I
f.o.t. = 20 600: 15 500 = 1,329 ,
those. the volume of sales of goods increased by 32.9%.
Market demand - the total volume of sales in relation to the market for a product in a given place and during a given period for a population of competing firms.
Demand company products(brand demand) - part of market demand corresponding to the market share held by a firm or brand in the underlying market for a product.
The demand described by the first part of the curve is called expandable, because the level of primary demand can easily be influenced by changes in the volume or intensity of overall marketing activity.
At the top of the reaction curve, demand becomes inelastic and the corresponding market is called non-extensible. Further growth in marketing intensity does not affect the size of the market, which has reached the maturity stage. Thus, in the case of a non-expandable market, its size is fixed. Any increase in sales in favor of one company necessarily means an increase in its market share.
Concept current market potential graphically represented by the curve in Fig. its implementation depends on the level of marketing pressure exerted by competitors.
Absolute market potential corresponds to the maximum level of demand, assuming that potential consumers consume efficiently. When calculating absolute market potential, three assumptions are made.
Every potential user of a product is a real user.
Each user uses the product at every opportunity to use it.
Each time the product is used, it is used to the optimum extent.
Potential market: A population of buyers who express an interest in a particular product or service: If one in 10 people responds that they want an exercise machine, the exercise equipment manufacturer can estimate that the potential market is 10% of the total population.
Available market: A population of buyers who have an interest in a particular product or service and have income and access to that product or service. Only 2% of respondents will buy a simulator costing 30,000 rubles.
Qualified Market: a population of buyers who have an interest in a particular product or service, have income and access, and rights of use in relation to that product or service. – Exercise machines for people over 12 years old, as monotonous exercises can harm their health.
Target market: part of a qualified market to which a firm has decided to target its activities. You can sell exercise equipment in the North of the country, where there are few sunny days when you can exercise outside.
Developed market: A collection of customers who have already purchased a particular product or service.
Determining overall demand and market capacity
Various valuation methods are based essentially on two factors: the number of consuming units (n) and the quantity of a good consumed by a unit (q). In general
Q= n * q,
Q – total demand in pieces
n- number of consuming units, coverage level
q is the quantity of goods consumed by a unit
In monetary terms:
R = n * q * p
R – capacity in monetary terms
p – average price per unit of goods
Non-durable fast moving consumer goods (FMCG):
Q=n*q*
- penetration level - the number of goods per use
Durable goods
Q= Qfirst + Qdeputy
Vfirst - primary demand, the number of new consuming units
Vreplacement is the demand for replacement.
Qdl=Qfirst+Qpark*
- average replacement rate = 1/Tsl
There are three sources of information to determine market capacity:
Trade
Qi=Nend -Nstart +P-V
Qmarket = Qi, i
Nbeg – inventory at the beginning of the period
P - supply of goods
B – return of goods
Nend – inventory at the end of the period.
Qi is the volume of sales by the i-th seller of goods or product groups
Manufacturers
general industrial statistics including exports
CSB publications (bulletin)
publications of the Association of Entrepreneurs
trade magazines
Q= P + I - E
P - volume of sales of goods by a local manufacturer
I – volume of imports into the market territory (import)
E – volume of export from the market territory (export)
If production data for a product is not available, the “apparent consumption” method is used.
Consumers
Parameters used:
Segment size (number of people ready to make a purchase) – Nп
Average income in the segment – Di
% of funds allocated by the buyer for relevant goods and services.
Average consumption per consumer
Calculate the market capacity for a fast-moving non-durable product.
Calculate the market capacity for a fast-moving product related to a durable product.
Calculate the market capacity for a durable good.
Calculate the market capacity for a consumer service.
calculate the market capacity for any industrial product.
calculate the market capacity for a product using the source of information - consumption.
calculate the market capacity for a product using the source of information - production.
calculate the market capacity for a product using a source of information - trade..
Demand Forecasting Methods
Expert judgment
Managers' judgments
Sales staff ratings
Studying buyer intent
Sample Purchase Intention Questionnaire
Extrapolation methods
Relationship Chain Method
It is the maximum sales volume that can be achieved by all companies in an industry within a given period of time given the level of marketing effort and environmental conditions.
The total market potential is usually calculated using the following formula:
О = nqp, where Q is the total market potential;
n is the number of buyers of a specific product (in a specific market) under given conditions; q - average number of buyers per year; p is the price of the average purchase unit. Example
Let's say that 100 million people in the country buy books every year and each of them buys an average of three books a year. If the average price of a book is 20 rubles, the total market potential will be 6 billion rubles. (100 million -6-20 rubles). The most complex component in the formula is n - the number of buyers of a particular product (in a particular market). You can always take the total population of the country as a starting point, say, 261 million people. At the first stage, groups are identified that most likely will not purchase the product. Let's assume that illiterate people and children under 12 never buy books. They make up 20% of the population. Consequently, only 80% of the population, approximately 209 million people, are classified as possible buyers. In subsequent analysis, we find that people with low income and education do not read books (30% of possible buyers). As a result, excluding them, we get a category of estimated book buyers equal to approximately 146.3 million people. It is this number of potential buyers that will be used to calculate the total market potential.
The company is faced with the task of selecting the most profitable territories from the point of view of selling products and optimally distributing the marketing budget between them. To do this, an assessment of the market potential of various cities, regions and countries is usually carried out.
There are two main methods for assessing the market potential of a region:
market formation method, which is used mainly to evaluate the market of enterprises and organizations,
multifactor index method used to analyze consumer goods markets.
The market shaping method is designed to identify promising buyers in each market and assess their purchasing power. If you have a list of buyers and reliable information about consumer preferences, it allows you to make accurate calculations.
Like enterprises that produce industrial products, firms that operate in consumer goods markets must also assess the region's market potential. However, there are too many buyers of consumer goods to list by name.
Therefore, in consumer goods markets, the index method is used. For example, a pharmaceutical company assumes that drug market potential is directly related to population size. If 2.28% of the country's total population lives in a given region, then the firm assumes that this region will account for 2.28% of all drugs sold.
However, a single factor is not an accurate indicator of sales opportunities. The volume of drug sales in the region is influenced by per capita income and the number of doctors per 10 thousand people. Therefore, it is advisable to develop an index that takes into account multiple values of q. Consider the following purchasing power index:
Bi=0.5yi+0.3r + 0.2r.,
where B is the purchasing power of residents of region i, % of the national one; y, is the disposable income of residents of region i, % of the national income; g. - sales volume in the field retail in region i, % of the national total; p; - population aged 18 years and older living in region i, % Of the total population aged 18 years and older.
The weights assigned to each variable in a given index are largely arbitrary. If possible, they are assigned to other, more exact values. Moreover, the manufacturer may consider it advisable to consider such factors as the presence of competitors, costs associated with promotion in the local market, seasonal fluctuations and other features of the regional market when determining market potential.
More on the topic Overall market potential:
- 3.2.1 Tasks of the department of market conditions, demand and product advertising
- 6.4 MARKET POTENTIAL AND INDUSTRY SECTOR ANALYSIS INDICES
- Marketing research of the international market (segmentation, product and sales policy)
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