Assessing the market volume and capacity is necessary for both existing companies and startups. Such analysis allows obtaining specific figures that can be relied upon when choosing a strategy, making key decisions, assessing the feasibility of launching a project, the rate of return on investment and the size of future profits.

 

Market size reflects the current level of market demand for a product or service. Based on this indicator, you can predict the size of the custome laos telegram data r base, the scale of production and sales, calculate the share that the company occupies, etc.

Market capacity assessment helps to determine the maximum possible volume of consumption. This indicator helps to identify the potential of the niche in which the company operates or is going to operate, to assess the opportunities for growth and scaling.

How to calculate market size

 

Market volume is an indicator that reflectsfunctions of ecommerce: gateway to online business success  the real state of affairs and characterizes the volume of goods sold or services rendered in kind or in monetary terms over a certain period in a certain territory.

What data is needed to calculate the volume

 

• Calculation period. Most often, the market volume is calculated for a year, but for products that depend on seasonal fluctuations in demand, it is more appropriate to choose shorter periods of time, such as a quarter or half a year.
• Territory. The scale of the territory may influence the choice of volume estimation method. In addition, regional characteristics affect purchasing power, age composition of the population and may determine consumer preferences.

 

• The size of the target audience and its characteristics. The market volume is calculated based on the number of buyers who already consume goods or services.
• Product characteristics. To conduct the assessment, it is necessary to determine the average cost of the product and the average volume of packaging.
• Statistical data. For a more accurate analysis of the market niche, it is worth using statistics on production and sales volumes for the studied and previous periods.

Market size estimation methods can be classified based on the data used

 

• Structural characteristics. A calculation method based on statistical data on production volumes and the amount of imported goods minus products exported. This is a fairly simple calculation method that allows you to evaluate the market on a national or large regional scale.

 

• Production volumes. A method that is effective for assessing a market that is formed by a small number of local producers. In this case, it is assumed that the production volume is equal to the consumption volume.
• Consumption volumes. When using this method, additional studies are conducted aimed at studying consumer behavior, determining the frequency of consumption and volumes of purchases.

 

• Sales volumes. This method is suitable for determining the volumes of the expensive durable goods market. It involves both the use of statistical data from major players and conducting surveys of trading companies.
• Standard consumption volumes. alb directory  In this case, official data on the product consumption standards per person are used, which are multiplied by the number of consumers.

 

Knowing the market size, a company can determine its current market position and the share of other players. This information is necessary for forming a strategy, defining long-term and short-term goals. It allows developing measures aimed at increasing the competitiveness of the business, which may include introducing new items into the range, adjusting the pricing policy, changing the marketing strategy, etc.

How to estimate market capacity

 

Market capacity is the potential volume of consumption in the long term under the best conditions. Unlike the volume indicator, which reflects actual events that have already occurred, capacity is a theoretical predicted value that is calculated based on certain assumptions and generalizations of various facts. Therefore, most often, the calculated capacity indicators differ from the real ones and largely depend on the calculation methods used and the accuracy of the forecasts. To increase the reliability of the data obtained and reduce the likelihood of errors in calculations, it is better to combine several methods.

Capacity assessment is carried out using two main methods:

• Top-down. In this case, the calculations are based on the total sales of all market players, and when determining capacity, not only actual sales are taken into account, but also the predicted dynamics of demand in future periods. Typically, data is collected for several leading companies, which occupy a share of about 80%.

 

• Bottom-up: According to this method, market capacity is calculated from the demand side and is determined by the sum of all projected purchases of products by target customers.

Typically . Three main types of market capacity are distinguished

 

• Potential. This is the possible volume of consumption of a product or service that is theoretically possible if all consumers use the manufactured product. For example . When calculating the potential market capacity of high-priced school backpacks in a small town . It is necessary to determine the number of children of the age the product is intended for. Let’s assume that there are 1,000 such children living in the area. The potential market capacity will also be equal to 1,000.
• Actual. This is an indicator of market capacity . TYking into account the characteristics of the product and the target audience.
• Taking into account the seasonal demand for school backpacks . The market capacity will reach its maximum value only in the second half of summer .
• The rest of the time the demand will be low. In addition, in a small city with low purchasing power of the population, only 25% of consumers will be able to buy expensive backpacks. As a result, the actual market capacity will be 250 backpacks, and it will be distributed between competing companies.
• Available. This is the demand that the company can satisfy given its existing production capacity and resources, development plans, and anticipated changes in competition in the market. If the company can currently only produce 100 backpack . Yis figure would reflect its available market capacity.

Factors Affecting Market Capacity

 

Market capacity is a variable value. It is subject to fluctuations under the influence of various factors, which can, under certain conditions . Either stimulate the market or restrain its development . Limiting capacity. Factors influencing market capacity include:

• Market demand and its fluctuations. Total market demand may change due to changes in the solvency of buyers, their tastes and preferences .
• Expectations regarding future needs . Growth or decline in prices and incomes. In addition, the reduction and increase in market capacity may be associated with changes in the social structure of the population with the prevalence of a particular age group . Behavior patterns and values ​​of buyers . The emergence of substitute goods, etc.

 

• Seasonal and economic fluctuations. The capacity of the seasonal goods market changes throughout the year. Periods of increased demand and decreased consumer interest in products may depend on weather conditions, changing seasons, and holidays.
• changes in consumption dynamics must be taken into account when assessing capacity, otherwise the indicator will be incorrect. Also .B The potential market volume depends on economic activity, which is characterized by periods of declines and rises. Economic fluctuations affect changes in employment, inflation . Solvency and creditworthiness of the population.