The essence of determining market capacity
Note 1
Market capacity is characterized by the size of population demand and the size of product supply and is measured both in physical and monetary terms. Knowing the market capacity is important because it plays a major role in determining the firm's production program.
Renowned experts on market problems under capacity commodity market most often understood:
- the amount of real demand in a certain period with a fixed volume of supply of goods and the level of prices for them.
- the quantity of goods that can be sold on a fixed market for a specific period and under specific conditions.
- the volume of goods that are sold on the market during a certain time.
- volume of production in a given space for a certain period of time.
Methods for calculating market capacity
Exists a whole series methods for calculating this indicator. Generalization and systematization of methods for calculating market capacity in modern scientific literature allow us to identify several groups of methods for determining market capacity, namely:
- comparison method with the previous period;
- sales volume accounting methodology;
- methodology for taking into account the characteristics of a product with reference to the parameters of a well-known enterprise;
- methodology for accounting for consumption and consumption rates;
- methodology for accounting production volumes.
How to calculate market capacity
Thus, the capacity of the national market can be calculated by determining the volume of its consumption using the formula:
Market capacity = size of national production + Import volume – Export volume + Inventories
Note 2
You can also determine the market capacity of a region, economic group, etc.
The simplest way to determine the possible market capacity of a particular type of product is to sum up the expected needs of actual and potential consumers of this product based on the results of market segmentation.
The market capacity does not remain unchanged, it to a certain extent depends on the economic situation (that is, the situation on the market regarding demand, supply, changes in prices and inventories, the state of the main competitors, etc.). When the market situation decreases, market capacity decreases; when it increases, it increases. The market capacity of a particular product depends on various factors. General factors affecting the sale of consumer goods include the price level, number and material well-being population, its level, etc. At the same time, product consumption has its own differences, and the main factors that predetermine it are fashion and other consumption features related to the range of goods, level and availability, etc. The total market capacity of a product can be calculated using the formula:
$Capacity\market = P \cdot K \cdot C$
where P is the number of buyers of a certain product; K is the number of purchases made by the average buyer; P is the average price per unit of product.
To determine the capacity of the territorial market for a product, the method of calculating purchasing power indices (multifactor index) is used. This is described by the formula:
$B_i=aY_i+bR_i+cP_i$
where $B_i$ is the share of region $i$ in the total purchasing power of the population; $Y_i$ is the share of region i in the net (without taxes) personal income of the country’s population; $R_i$ is the share of region $i$ in total sales in the country; $P_i$ is the share of region i in the total population of the country; $a$, $b$ and $c$ are coefficients determined for each group of goods.
Note 3
In the case of calculating a multifactor index, they are respectively 0.5; 0.3 and 0.2, but may vary depending on the type of product.
When planning to introduce a new product to the market and calculating market capacity, it is necessary to take into account the direction of use of the product, durability, frequency of purchases and other characteristics characteristic of a particular product.
Based on this, you can calculate the maximum potential, most probable and minimum market capacity for new products. The size of the market capacity for products that have no analogues is determined only by the size of the probable market capacity. When calculating the most likely market capacity for new products, the availability of analogues/substitutes on the market and the frequency of their purchases are taken into account. For this purpose, they analyze the sales history of substitute products, conduct marketing research, focus groups and other studies.
* The calculations use average data for Russia
Market capacity is one of the key characteristics of any market, and without deep and detailed information about this indicator, “entering it” in pursuit of bold and ambitious plans would be wrong.
I noticed an interesting pattern... Sometimes very important issues, in particular “market capacity”, when developing business plans for investment projects (section “ Marketing plan") are not given due attention. At first glance, this seems absurd, and yet it is so. Is this done intentionally? This is a question for conspiracy theorists. Yes and in classic book on marketing by F. Kotler “Practical Marketing”, as far as I remember, such a term is not even used...
But F. Kotler is a theory. Practice is also not far behind, though... from a slightly different perspective. For example, a phrase that I heard from the lips of one head of a large food enterprise (invited to lead in Rostov-on-Don from Moscow) struck me with its “non-standardity”. He literally said the following: “The rubber market - as much as we produce, we will sell!” However... it was not possible to sell exactly as much as they produced, and it was sent back to Moscow as it did not live up to the hopes of the business owners.
What is market capacity
And really, how can one say that the market is “rubber”? Any sane person understands that in a “certain territory” it is impossible to sell more than is bought there. It is this sales volume that is the market capacity. If we turn to business terminology, then in the marketing understanding - market capacity is the total effective demand of buyers for a certain product at the current price level. However, there are other definitions that are similar in essence.
For example:
Market capacity- this is the volume of those goods or services that are offered and purchased within the market (market segment). Market capacity is the volume of purchase and sale transactions of goods or services completed in a certain territory (territorial market) or in a separate industry (industrial market).
Market capacitycharacterized by the size of population demand equal to the value product offer. In every at the moment time, the market capacity has quantitative certainty, i.e. The volume of supply and demand is expressed in value and physical indicators of the goods or services sold, and consequently, the goods or services purchased.
However, a mistake has already crept in here... Why only “... by popular demand”? What about enterprises and organizations? Why doesn’t the state buy anything?
Why do you need to know what the market capacity is for a particular product/service or group of goods, and what share the enterprise occupies in the market (as a rule, the market capacity and/or position of the organization in this market is calculated)? First of all, in order to correctly evaluate your opportunities to work in this market, and, accordingly, accept the only and true management decision! A decision that will subsequently affect the viability of this enterprise or the product it produces (sells). Of course, this doesn’t always work out, but nevertheless... you have to try.
In other words, market capacity is one of the key characteristics of any market, and without deep and detailed information about this indicator, “entering it” in pursuit of bold and ambitious plans would not be entirely correct. The market, of course, is not “a river that you cannot step into twice,” no, you can enter! Only with significant costs for the organization.
Key indicators that give an idea of the market capacity:
- How is market capacity measured?
- How to determine (calculate) market capacity?
- How does market capacity change over time?
- How to position a company on the market?
- The influence of third-party factors on market dynamics.
How is market capacity measured?
As a rule, market capacity is measured in physical and/or monetary terms. In this case, you should “outline” the territory (not to be confused with the word “devil”), in which the capacity will be calculated. As a rule, this is a city, district or region, i.e. geographically defined territory. And so on increasingly: the federal district, the country, the world...
The year is usually chosen as the time parameter. Why exactly a year? Because many goods and services have a seasonality factor. For example, ice cream and mineral water in the summer it’s simply swept off the shelves, but in the winter it’s somehow not very popular. But cigarettes... smoking in winter is worse than in summer, the decline is 20-25 percent. It would seem, why? But it turns out that in the summer:
Longer daylight hours.
Thirst - beer - cigarette.
Harvest campaign in rural areas(extended working hours).
This is giggling/huffing for you, but for the manufacturers it means millions in sales and profits, of course!
How to determine (calculate) market capacity
As a rule, analytical articles provide certain figures regarding market capacity, but they are not substantiated in any way. Most eminent Russian and foreign authors and marketers in their monographs quite cleverly avoid specific examples and calculations. I would like to immediately stipulate that the estimated market capacity is an “estimated or predicted value” and nothing more.
Why is this so?
Because this value is calculated based on certain assumptions and generalizations various facts and factors that occurred in the past, but not in the future. Summarizing statistical information and expert opinions. That is why it is not uncommon that calculated and real indicators Market capacities vary.
Mathematically, market capacity can be expressed as follows:
E = M * C;
E - market capacity in physical or monetary terms (units/year, rub./year);
M - quantity of goods sold per year (units);
C - cost of goods (rub.)
Expert approach to determining market capacity;
Economic and mathematical modeling of market capacity;
A method for calculating market capacity based on statistical data, as well as a number of other methods.
Within the framework of this article, it is not possible to dwell in detail on this or that technique, because each has its own advantages and disadvantages. However, in the author’s opinion, there is no “universal technique or approach”, therefore The methodology for calculating market capacity for a specific product or service must be selected or developed individually.
Ready ideas for your business
The methodology for calculating the capacity of the tobacco products market, developed and tested by the author at the end of 1999, gave the following results: at a dollar exchange rate of 27 rubles. The annual market capacity of Rostov-on-Don and the Rostov region in monetary terms was $64.1 million/year. I repeat that this is a calculated value. What was she actually like? This question could perhaps be answered by Donskaya Tabaka marketers, but, in all likelihood, my calculations in 1999 went unnoticed by them.
By carrying out calculations using different methods, you can obtain results with a fairly large scatter. Especially if you count it in monetary terms. At what prices should we calculate? Wholesale or retail? Marketing methodologists don’t tell us anything about this, so if you calculate something in monetary terms, it is advisable to indicate what prices you are starting from. But...the choice is always up to the specialists who deal with this problem based on the specific task at hand.
How market capacity changes over time
Market capacity may change over time, or it may remain the same. Such changes are called market “dynamics” or market capacity dynamics. The reasons for market changes can be very different. This is discussed in more detail below. The main thing is to take into account the very fact of possible expansion or contraction of the market when developing a business plan. This is extremely important, but market capacity dynamics are usually not given much attention special significance, but in vain!
How to position a company on the market
How to position? Here everything is more or less clear, but it’s easier to show it with an example. Let's say you are called GopStopSelmashVagonStroy LLC and produce combines: 100 combines per year. And the company Krasny Proletary LLC produces combine harvesters “similar in technical characteristics” at a rate of 70 pcs./year.
There is also a company called Blue Dandelion LLC, which imports 30 new combines and 50 used ones a year. What conclusions can be drawn? How to position your serious organization for this market? Statically and dynamically...
Let's start with statics, it's easier. Then you draw a sign:
The table shows that the market capacity per year is 250 units products, while 28% of the market share is imported, and 12% is used imports.We have, as before, a market capacity of 250 units/year.Your share is 40%. So your company has been positioned “for the market”!
What's next? Here are the options. We begin to assume... Another company appeared that began to supply equipment from overseas... What is this probability? In the coming year it will be extremely low. Next time? Maybe. What will be his share? The question is open, but less than what Blue Dandelion LLC had. Although not a fact.
Market dynamics
First of all, you need to force your marketer or other specialist to answer a fairly serious question... How will the capacity of your market change over time? Will the market “fall” or “rise”? By what % to the current state?
Let's say your analyst predicted that market growth will be 10% next year and another 8% the next year after the current one. Moreover, the security service reported that the director of Blue Dandelion LLC was arrested for non-payment of VAT, and this company is in the process of liquidation. What do we have? Let's try to position your products on the “market”, what happens?
Does it turn out beautifully? The market is growing, and your share (albeit calculated) decreases!. A management decision must be made. Although these numbers can be interpreted differently.
The influence of third-party factors on market dynamics
Third-party factors can be very different. These include changes in macroeconomic indicators and purely technical or technological factors. For example, the capacity of the fuel oil market is falling. The reason is purely technological - the conversion of boiler houses to gas. There are other reasons, for example, political...
Let's focus on macroeconomic factors. Market capacity depends on the market need for a given product or service, as well as other factors. These factors include:
the degree of development of this market;
the appearance on the market of similar or other goods with similar properties (characteristics);
elasticity of demand;
price level;
changes in macroeconomic indicators;
product quality;
efficiency of market promotion and advertising costs;
other factors.
How do macroeconomic indicators affect market capacity? Yes, very simple! If there is more money, then the average consumer will switch to higher quality food products. Like today “Anakom”, and tomorrow and always - “Doshirak”.
However, it should be borne in mind that any calculation of market capacity has its own characteristics and sometimes requires the introduction of certain correction factors and various kinds of “assumptions”, and the above examples are not so complex, but illustrative, and that is why they were chosen as educational material. It remains to add that the choice of methodology and approach when assessing market capacity must be treated with special care and attention.
44 people are studying this business today.
In 30 days, this business was viewed 22,511 times.
Insider and current commercial information about a competitor, or lack thereof, can sometimes lead to serious problems or, conversely, significant business successes. In this article we will talk about intelligence.
One of the main questions that an aspiring entrepreneur needs to answer is: “Are you going to do a “business as a business” or a “business as self-employment”?
Getting a loan from a commercial bank is not an easy task. This procedure takes a lot of time, effort and mental energy. What are the rules of the game, and what are the trump cards and pitfalls in it?
How to write the marketing part of a business plan? Each bank has certain requirements for an investment project, but, be that as it may, in the preparation process I recommend relying on the following tips.
When looking for new business ideas, we are often thrown to extremes, and this is normal. But in answer to the question “what should I do?” you can always start with the same thing.
In a country where everything has been constantly becoming more expensive over the past decades, it is far from easy to understand how prices for business services are formed. What does the cost consist of? investment project?
How relevant is a standard business plan on the topic you are interested in? What information can be taken into account in it? How reliable is it? Let's try to understand these issues.
When we look at price tags in stores or on the Internet, choosing a particular product, sometimes we have a question: why is this or that product more expensive or cheaper than its analogue?
the maximum possible volume of goods, works or services that can be sold on a given market or market segment over a selected period of time, for example, on a national goods market, or the sales market of one company, or a territorial market
Information about the concept of market capacity, definition of market capacity and types of market capacity, including real and potential market capacity, market capacity research, objectives of market capacity research and factors influencing market capacity, market capacity formula and calculation of market capacity, capacity calculation market using various methods, the value of the market capacity indicator for business
Expand contents
Collapse content
Market capacity is the definition
Market capacity is calculated as a result of research or its segment, the real or potential quantity of work or services that is sold on the market or can be sold in the future for the selected price. Market capacity research is necessary for subjects economic activity for and future. To determine market capacity, various methods are usually used; when several methods are used in one study, calculations of this indicator are more accurate.
Market capacity is the size of the market for a particular service or service, expressed in the total volume of goods for the billing period; or general for a category of goods, expressed in the purchasing power of the population. Often, instead of the concept of “market capacity”, its synonyms are used - size and market.
Why do you need to calculate market capacity?
Market capacity is possible volume of sales of a product/service at a certain price level. The market capacity indicator is calculated in (, tugriks, etc.) - i.e. it is the maximum amount that (sellers) can receive in a given market under constant circumstances (volume of supply, level of demand, etc.). Market capacity is the volume of those goods or services that are offered and purchased within the market ().
Market capacity is the volume of purchase and sale transactions of goods or services completed in a certain territory (territorial market) or in a separate one (industry market).
Market capacity is the potential sales volume of a certain product on the market during a given period, depending on the demand for the product, the price level, the general market, and business activity.
About the capacity of the tourism market
Market capacity is the quantity (value) of goods that the market can absorb under certain conditions over a certain period of time. As a rule, market capacity is determined in terms of specific goods and services.
Market capacity is total effective demand for a certain product at the current price level.
Market capacity is the total solvency of buyers for a specific product at the current price level for this product.
Market capacity is possible sales volume of goods certain type or services for a certain period at the existing price level. Market capacity is not a constant value; its change depends on many general and specific variables - the existing demand for a product, the degree of its elasticity, the level of potential, their number, the manufacturing company for advertising, the price level, geographical location and general market conditions.
Market capacity is the maximum sales volume that can be achieved by all markets during a certain period.
Market capacity is the maximum possible quantity of a product that can be sold within a certain market within a certain period of time.
The concept of market capacity
If we turn to business terminology, then in the marketing understanding - market capacity is the total effective demand of buyers for a certain product at the current price level. However, there are other definitions that are similar in essence.
Why do you need to know what market capacity a particular product or group of products has and what share it occupies in the market (as a rule, they calculate the market capacity and/or position of the organization in this market)? First of all, in order to correctly assess the situation and the dynamics of changes in the market and, accordingly, make the only correct management decisions, which in the future will affect the viability of this enterprise or the product it produces (sells). Of course, this doesn’t always work out, but nevertheless... you have to try.
In other words, market capacity is one of the key characteristics of any market, and without deep and detailed information about this indicator, “entering it” in pursuit of bold and ambitious plans would not be entirely correct.
Types of market capacity
In global practice, there are 3 types of market capacity:
Actual;
Potential;
Available.
In kind (in pieces);
In value terms (in rubles);
In volume of goods (in liters, kilograms, etc.).
Let's give brief description each type of market capacity.
Potential market capacity
Potential market capacity is the size of the market based on the maximum level of development of demand for a product or service among consumers. The maximum level of demand means that the culture of using the product has reached its maximum: consumers consume the product as often as possible and constantly use it. Potential market capacity is the maximum possible market volume, which is determined on the basis that all potential consumers know and use the product category.
Potential market capacity is a concept artificially introduced into marketing and has no practical significance, in connection with the definition of the concept of “market capacity”. Instead of this concept, it is correct to use the concept of potential demand or potential supply, possible under certain conditions.
Actual market capacity
Actual or real market capacity is the size of the market based on the current level of development of demand for a product or service among the population. Actual capacity market is determined based on the current level of knowledge, consumption and use of the product among consumers.
Available market capacity
Available market capacity is the size of the market that a company can claim with its existing product and its characteristics (distribution, price, audience) or the level of demand that a company with its available resources can satisfy. In other words, when calculating the available market capacity, the company narrows the actual volume of the market, considering not all market consumers as potential buyers, but only those who meet its target audience criteria.
Market capacity of the country or region
It is determined on a territorial basis, based on production volumes, carryover stocks at the beginning of the year and balances at the end of the year.
Market capacity of a specific product or group of products
It is assessed on a product basis based on the needs for a given product.
Market capacity of the firm, company
It is calculated for a specific enterprise based on available resources and capabilities.
Purpose of market capacity research
Knowing the market size is absolutely necessary for:
Penetration of a new company into the market;
Identification of new niches/segments;
Determining market development trends;
Market development forecast;
Definition of the company's development strategy.
Thus, determining the market capacity and attractiveness (potential opportunities) of each of its segments allows the company to answer questions about the advisability of entering this market and what price niche to occupy.
Calculating market capacity is of decisive importance for business, and the cost of an error when calculating market capacity in monetary terms can be calculated in millions of conventional units. Therefore, a marketer or development director must have adequate methods for calculating market capacity (and use them in practice).
Methodology for studying market capacity
The practice of marketing research shows that data on the market capacity of certain goods and the share occupied by individual manufacturers are currently of great interest to the manufacturers themselves. They are necessary both to expand the position of a company that already has a strong position in the market, and to penetrate the market of a new company or brand.
The need for such information has already been formed: today there are many organizations that conduct this kind of marketing research. However, after reading reports and articles on such studies, numerous questions arise both about conducting and writing reports. Therefore, I would like to raise the question of the correctness of using certain methods to study market capacity and the most common, in our opinion, errors. We think that this kind of discussion will be interesting and useful for those working in this field.
Studying market capacity or market demand involves determining the sales volume in a designated market of a certain brand of product or a set of brands of product for a specific period of time.
The study of these parameters is usually carried out in five main areas:
Analysis of secondary information;
Production and sales of products;
Costs and consumer behavior;
Capacity calculation based on consumption rates of this type goods;
Determining capacity based on “reduction” of sales volumes (when the known market capacity in one region is the basis for calculating market capacity in another region by adjusting it using reduction factors).
Analysis of secondary information
It includes an analysis of all documentation that may contain information about the market we are interested in and can be useful in marketing activities: data from authorities, market reviews, specialized magazines and articles, Internet data, etc. However, information obtained in this way is more often everything turns out to be incomplete, quite difficult to use when practical application and often of dubious reliability.
Market research for production and sales of products
Includes research into manufacturers, wholesalers and... Information obtained from this source allows us to determine real sales volumes and representation of manufacturers and brands. Given that the number of sellers is smaller than the number of buyers, such research is often carried out more quickly and costs less than consumer research. The problem is how accurate the information provided by manufacturers or sellers will be, and how representative the surveyed sample of sellers will be of the general population (the entire mass of retail outlets operating on the market selling products).
Costs and consumer behavior
We study either the costs that consumers made for the products we are interested in over a certain period of time, or the frequency of purchases and volumes of purchased products together with the average retail price sales or consumption rates for a given product. At the same time, the study allows us to raise a wide layer of materials concerning the behavior and motivation of consumers: their attitude towards a particular brand, the volume of a one-time purchase, the frequency of purchasing a product, the expected price of a product, the degree of brand distinctiveness, brand loyalty, motivation for choosing a particular brand goods, etc. The question of the accuracy of such information is how accurately and truthfully buyers will reproduce their consumption data.
Consumption standards for this type of product
This approach is typically used for food products, and consumables. The statistical basis for calculations is the annual consumption rates per capita and the total population. Thus, the final capacity figure is obtained by multiplying the consumption rate per inhabitant by the value of the total population.
Bringing sales volumes
A similar calculation method is used mainly by companies with significant experience in individual geographic markets. The calculations use data on the actual volume of product sales in one region and factors that determine sales. With the help of the latter, the coefficients for converting sales from one region to another are determined (coefficients for adjusting the population, average wages, urbanization, prices, consumption patterns, etc.).
Conducting research on manufacturers and sellers of products in order to obtain market data is quite common for a marketing company, but errors can occur here too.
As experience shows, one of the most common mistakes is failure to ensure representativeness of the sample.
Identification of cause-and-effect relationships in the market under study is carried out on the basis of systematization and analysis of data. Systematization of data consists of constructing grouped and analytical tables, time series of analyzed indicators, graphs, diagrams, etc. This is the preparatory stage of information analysis for its quantitative and qualitative assessment.
Processing and analysis is carried out using known methods, namely grouping, index and graphical methods, construction and analysis of time series. Cause-and-effect relationships and dependencies are established as a result of correlation and regression analysis of time series.
Ultimately, a description of the cause-and-effect relationships caused by the interaction of various factors will make it possible to build a development model in the market and determine its capacity.
Factors influencing market capacity
Market capacity is formed under the influence of many factors, each of which can, in certain situations, both stimulate the market and restrain its development, limiting its capacity. The entire set of factors can be divided into two groups - general and specific.
The common socio-economic factors that determine the market capacity of any product are:
Volume and structure of product supply, including by manufacturing enterprises;
The material basis for the formation of any global commodity market is international division labor, while the national commodity market is based on the social division of labor within the country. The consequence of this is the relative independence of any global commodity market, which is manifested in the peculiarities of the dynamics and structure of development, the presence high level concentration of “unified” customer requirements for a product, conditions of its operation and service.
The main parameter of the world commodity market is its capacity.
The capacity of the world commodity market should be understood as that part of the total market demand of all countries that is satisfied from external sources, that is, imports. The size of world imports of a given product (usually per year) can be approximately taken as the capacity of the world commodity market.
The capacity of a national commodity market is the volume of goods sold on it during a certain period (usually a year). It is calculated based on industrial and foreign trade statistics in physical units or by value:
The import capacity of the national market for a specific product for the year is measured by the size of direct and indirect imports, to which is added (or subtracted) the difference in the available imported goods from consumers or importers in comparison with the previous year.
Sources of information about market capacity are statistical, industry and company directories, industry and general economic journals.
Capacity of the global financial market
Market capacity financial services and the share of the financial organization are determined within the identified product and geographical boundaries of the financial services market, the composition of clients (consumers) and competitors.
The capacity of the financial market can be defined as the sum of the volume (turnover) of financial services provided by all financial organizations for a certain period:
To determine the financial resources of the market, the capacity of the financial services market can be defined as the amount of (fixed capital) financial organizations operating in a specific market.
This figure in to a greater extent applicable to a market with an identical institutional composition of financial institutions. For example, such an indicator is applicable to the banking services market, where only credit institutions operate, to the insurance services market, if the majority of existing insurers can be comparable in terms of the amount of assets (fixed capital), etc.
When determining the capacity of the regional financial services market, one should take into account the volume of financial services provided by financial organizations registered in the region under consideration (taking into account the volume of financial services of their branches, branches, representative offices, operating cash desks, additional offices, etc., located in this region) , and the volume of financial services of branches (branches, representative offices, operating cash desks, additional offices, etc.) of organizations located in another region.
In the absence of data on branches (branches, representative offices, operational cash desks, additional offices, etc.) of financial organizations, the capacity of the regional market can be calculated using the formula:
World capacity foreign exchange market
In the world of international finance, a situation currently exists where it is the largest among all financial markets in the world. The capital of the foreign exchange market at the moment is London, which accounts for 36.7% of global .
It is believed that the daily turnover in the Forex market was:
Market capacity shows the saturation of the market with financial instruments and its participants.
marketing.spb.ru - information site about marketing
memosales.ru - website about marketing and business
marketingnews.ru - information and news site about marketing
center-yf.ru - website Financial Management Center
marketing-ua.com - site with articles about marketing
uchebnikionline.com - site with materials for students
treko.ru - website Consulting and training in St. Petersburg
brif.kz - blog about marketing research
financial-lawyer.ru - information site about business and economics
studme.org - website with educational materials in different subjects
bookwu.net - online electronic library with textbooks
base.consultant.ru - official website of the company "Consultant Plus"
rae.ru - website Russian Academy natural sciences
vestifinance.ru - information and news site Vesti Ekonomika
creativeconomy.ru - website of the publishing house Creative Economy
ereport.ru - website with macroeconomic data on the world economy
Links to Internet services
forexaw.com - information and analytical portal on financial markets
Ru - the largest search engine in the world
video.google.com - search for videos on the Internet using Google
translate.google.ru - translator from the Google Inc. search engine.
Ru is the largest search engine in Russia
wordstat.yandex.ru - a service from Yandex that allows you to analyze search queries
video.yandex.ru - search for videos on the Internet via Yandex
images.yandex.ru - image search through the Yandex service
Article creator
Com/profile.php?id=1849770813 - profile of the author of the article on Facebook
odnoklassniki.ru/profile513850852201 - profile of the author of this article in Odnoklassniki
plus.Google.com/114249854655731943816 - profile of the author of the material on Google+
Attention!
The VVS company provides exclusively analytical services and does not consult on theoretical issues of marketing fundamentals(calculation of capacity, pricing methods, etc.)
This article is for informational purposes only!
WITH full list You can familiarize yourself with our services.
Classmates
Effective trade on a national scale or in a particular region would be impossible without effective management risks. The most important quantity characterizing the level of demand for a product or service in a selected niche, determined by the nature of the product, target audience and geographical boundaries, is called market capacity. This concept occupies an important place in the planning and forecasting procedures of a company. Correct calculation of market capacity will help to model the situation regarding the degree of probable influence of the enterprise in its segment of economic relations and formulate a business plan. This is a key concept for both the marketing department and the entire organization as a whole. Data on the value of this indicator are widely used when making management decisions of the company, help determine the strategy of action, and also play a vital role in increasing the scale of activity.
Why do companies calculate market capacity?
To capture a new market segment, at the first stages of business planning, an organization needs to calculate its capacity. With its help, you can easily assess the degree of benefit that an organization can acquire by engaging in a particular business activity.
The essence of this calculation is to determine the projected sales value. As a rule, information for 12 months is taken for calculation. In order to carry out such analytics correctly, it is necessary to take into account the number of companies already operating in a given segment in a specific area, as well as the degree of satisfaction of demand for a similar product or service in the market niche. Without taking into account these indicators, for any organization, the production of a new product will obviously become unprofitable.
In the process of analyzing market capacity, you can determine both the existing value and the possible one. In this case, the second indicator must be greater than the first. As a rule, the calculation of possible sales volumes is made in rubles or tons.
When the value of the existing market capacity is established, the scale of production, procurement and sales is calculated, the size of the customer base, penetration indicators, etc. are determined. For this analysis, one should refer to statistical data, marketing research your organization, information from open sources, reporting, as well as insider information when analyzing competitors. The probable market capacity is a prognostic category, the value of which is determined by the methods of extrapolation and expert assessment.
The value of the possible sales volume has enormous weight in the process of making a management decision about the penetration of an organization into a certain niche of economic relations. As a rule, when calculating the probable market capacity, indicators of its existing size and the potential of the company in its segment are summed up.
A large difference between possible and actual data indicates the potential profitability of working in a particular niche. On the contrary, if during the calculation it was established that this discrepancy is small, then the market is in a state of stagnation. Most likely, in conditions of fierce competition, effective activity in this segment will be impossible, or the resources spent on this project will be incomparable with the profit that it can bring.
Calculating market capacity has the following positive consequences.
By calculating the value of the existing market capacity at a given time, an organization can with a high probability determine its place in the system of economic relations, as well as the relative share of sales occupied by competitors. Moreover, studying the position of rivals is no less important than clarifying your market positions.
By analyzing trends in capacity changes, it becomes possible to relatively accurately plan sales and, as a result, formulate an up-to-date marketing strategy enterprises.
By using mechanisms for calculating market capacity, the organization increases the degree of accuracy of forecasts regarding future sales volumes of goods and services, as well as the level of effectiveness of advertising campaigns.
Calculation of market capacity and its types
As a rule, three types of market capacity are calculated.
Actual
Existing market capacity is a value characterized by the volume of real demand for a product or service, as well as the purchasing power of the target audience of this product. The determination of this indicator is based on existing information.
Available
Calculating the market capacity of this type is a narrowing of the number of potential buyers to those who would be satisfied with the terms of the transaction with our company and truly interested in our unique selling proposition. When determining this indicator, an important factor is the availability of resources and working capital in an organization to cover the demand for a given product or service.
With this calculation of market capacity, the company limits its sales volumes to the value of the target audience, while cutting off buyers who do not meet certain criteria.
Potential
Probable market capacity – characterizes the share in common system implementation that an organization can take with the highest degree of effort regarding product promotion and high customer demand for a given product or service. The concept of potential market capacity refers to the maximum value that can realistically be achieved using all available resources of the organization.
This is an indicator that characterizes the situation in which an enterprise occupying a certain niche is most likely to use its marketing capabilities in such a way that consumers know and buy goods and purchase services of that particular brand or brand.
Types of market capacity are calculated in rubles, pieces, kilograms, etc. Regardless of the unit of measurement, this indicator is one of the fundamental ones in determining the degree of actual and potential influence of a company in the overall system of economic relations.
Classmates
© VladVneshServis LLC 2009-2019. All rights reserved.