The document discusses factors to consider when analyzing market potential. It defines market potential as the entire size of the market for a product at a specific time, representing the upper limits of sales. It then lists 5 key factors: 1) Market size, 2) Market growth rate, 3) Profitability, 4) Competition, and 5) Product and consumer type. Considering these factors, like whether the product is repeat-buying or a one-time purchase, and understanding the market size, growth trends, and competitive landscape, can help determine a product's market potential. High competition or barriers to entry may limit potential, while growing markets and repeat-buying products provide more opportunities.

1. A publication of
Dr. Rajesh K Satpathy
Strategic
Product
Management
Market Potential
/PGDM/KIAMS/2021

2. Analysis of Market Potential

3. Market potential is the
entire size of the market
for a product at a
specific time.
It represents the upper
limits of the market for a
product. Market potential is
usually measured either by
sales value or sales
volume.
Market Potential

4. Market Potential is the potential
money making capability of a firm
if it capitalizes all advantages and
everything goes its way.
It is usually measured in sales
units/sales volume or the potential
revenue.
Market Potential
INDIA ELECTRIC CAR MARKET, BY END-USER,
UNITS (2013-2025)

5. 1) Market Size
The first and most important factor to consider
while determining market potential is the
market size of your product. Market size is the
total market sales potential of all companies
put together.
So if you from Marico planned on launching a
new Soap or Shampoo, then all the different
companies such as HUL, ITC, Patanjali and
P&G are my competitors and the combined
sales of soaps, including branded and non
branded products is my complete market size.
Market Potential

6. 2) Market Growth Rate
The PC market as compared to the
laptop market or the smartphone
market is declining.
So if you are a company which makes
PC’s, then you have to be aware that
you are entering an declining market.
Instead, if you have the potential, why
not enter the Laptop market or the
Smartphone market.
Market Potential

7. 3) Profitability
Determining
and forecasting your profitability is
important to understand the market
potential.
If the business is going to give low
profitability, then the volumes need to be
high (eg. – FMCG products) or if the
business is going to give low volumes,
then the profit needs to be higher (eg. –
Industrial Goods).
Market Potential

8. Many small businesses have a
mixed feedback for
E-commerce businesses…
Some say that the market is
huge and there is a lot of
potential. But others say that
they have suffered huge losses
because of the amount of
packaging and the transport
costs involved for shipping
across country.
Market Potential

9. 4) Competition
You need to know and understand the
competition in an industry to determine
the market potential for the product you
are going to launch.
If the industry has high competition, the
entry barriers are going to be high and
at the same time, establishing yourself
will require deep pockets…
Market Potential

10. 5) Product and Consumer
type
Is your product a repeat buying
product or one time sale only?
In the above examples, Soap
and shampoo is a repeat
buying product. But what about
a Fridge ??
So in your whole lifetime, you
will buy 5-6 refrigerators at the
max. But what about Soap ??
Market Potential

11. When analyzing a market, these high-funda questions come into
play…
1. What is the market size?
2. How quickly is the market expanding or contracting?
3. How many buyers are there?
4. What are the barriers to entry?
5. What is the bargaining power of suppliers?
6. What is the industry value chain?
7. What is the intensity of the competition?
8. Is there a threat of new entrants or substitute products or services?
Market Potential

12. Thank You !!