How to estimate market size

Market volume, or market capacity, is the amount of goods and services sold or consumed in a particular territory over a period of time. Typically, the market volume is determined in a significant area (city, region, country) for a sufficiently long time (month, year, quarter).

Instruction manual

1

You can calculate the market capacity both in physical terms (pieces, tons, liters, etc.), and in cash. Mathematically, the market volume can be determined as follows:

E = M x C, where

M - the amount of goods sold in physical terms;

C is the unit price of the goods sold.

2

But you must remember that there are different types of markets, which means that approaches to determining their capacity will be different. The most common is the method of general assessment of market capacity. With its help calculate the maximum demand for the product. In doing so, first take data on the total population and average income per person. The volume calculated in this way is gradually reduced. First, select from the received volume that part of the income that goes to purchase food products, from it that part that goes to purchase semi-finished products, of which - to vegetable semi-finished products, and then - potato semi-finished products.

3

At the second stage of the research, find out what maximum share of the existing potential market can be developed by the company. In doing so, use data on the market segment - the number of consumers of semi-finished potato products and the volume of products produced by competitors. Based on this, draw a conclusion about the maximum possible volume of sales of goods. Remember that its excess threatens the company with unrealized inventory.

4

You can calculate the total market volume as follows (for example, the market for dumplings with beef):

E = N × PP x K x SP x PG x C, where

H - population aged 5 years and older;

ПП - percentage of inhabitants consuming dumplings;

K is the average amount of consumption by one consumer per year;

SP - the average consumption of dumplings by one consumer at a time;

GHG - percentage of consumers who prefer dumplings with beef;

C - the average price of a portion of dumplings with beef.