What does total market potential mean? How can it be estimated?

Expert Solution

The total market size of a product in terms of sales or number of unit sold at particular time in a specified area is called the market potential.
It can be estimated by
1. The total market size/share.: the total market share of all the competitors of the goods and services can give a good idea about market potential. If it's a new technological product then market size of the substitute products of the technology can be used to determine market potential.

2. Growth: The market potential can be estimated based on the historical growth of the products and services in competing industries. future growth can be estimated and market potential can be determined.

3. Government incentives: Tax cuts and other government incentives also play a role in estimating market potential. Example the thrust on pollution free environment and encouragement of renewable source of energy increases the potential for Solar power, Tidal Power , electric cars ,etc.

4. Profitability: Higher the profit margin, return on asset, return on investment and other financial ratio higher is the market potential in that particular industry or sector.

Best of Luck.God Bless

jeff jeffy answered 2 years ago

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