The term market or industry potentially refers to what important marketing factor? Market potential is the total number of people who are likely to buy your product or service. You can measure market potential by analyzing demographics and other data, such as data from the United States Census Bureau. Or you can use primary data to analyze market size by conducting telephone surveys or randomly selecting households. But what is market potential?
To measure market size and potential, you must first determine the product’s market size. The potential market size is a measure of how much money a product or service could sell for a particular time period. However, market size and potential can increase or decrease over time due to various economic and environmental factors. For example, higher interest rates may reduce demand for big ticket items. A change in tax rates can suppress spending because less money is available for discretionary purchases. However, a decline in interest rates, wage increases, or tax rates may increase market potential.
A company can achieve maximum market size and profit by segmenting its target audience. This process involves five steps, which include identifying a target group. Then, the manager multiplies the total number of prospective buyers in each geographical area. Once this process is complete, the manager estimates the proportion of total market size based on the number of planned marketing activities. This process involves identifying a target group and segmenting them by specific needs.
In order to make the right decision, it is critical to evaluate both existing markets and new market segments. Most companies will initially seek opportunities in their existing markets. This is known as market penetration. However, market development is the key to success for many organizations. In addition to market penetration, many firms have realized that market development is a vital factor in attracting new customers. So, it is crucial to assess both types of potential market size.