Market potential is the total amount of a product that customers will purchase within a specified period at a specific level of industry wide marketing activity. It is therefore a prediction of maximum total market volume under a given set of condition.
Market potential can be stated in terms of dollars or units. A segment’s market potential is affected by economic, sociocultural, and other environmental forces.
Marketers must assume a certain general level of marketing effort in the industry when they estimated market potential.
The total market size represents market potential and is not a sales projection – rarely do produce sales get close to capturing the entire market due to many limitations.
An estimate of the size of the market, combine with information about company’s competitor, will be necessary to calculate the share of the market the company hold, as well as the market shares of the competitors.
Market potential figures are also useful in developing sales forecasts.
What is market potential?
