Carrying out a market study is always complex, but at the same time it makes it easier to identify your potential market to know what audience or segment you want to reach with your product or service; To achieve the objective you must analyze different factors in order to achieve the growth of a business.
A correct analysis of the potential market through a offers many benefits in the commercial part of your company, from giving you a clearer idea of where you are going and how far you could go with your venture, anticipating any type of unforeseen event, keeping in mind your needs and, even, even the possibility of evaluating your competition.
Knowing the potential market for your product or service, before it is key to better understand your potential customers as well as to have a clearer goal. It may not guarantee success, but it will certainly bring you closer to that goal and, in addition, you will have that valuable information that can be the difference between rapidly growing your business or wasting your investment without advancing as much as you would like.
What is a potential market?
A potential market is an approximation of maximum sales or customers of a good or service, it is also correct to consider it as the potential public that at the moment does not consume your products, but with the appropriate marketing and a good market study could reach do it if they knew it or were offered it.
Many times, the potential market can be a customer of your competition with the added bonus of being open to changing brands and becoming your customers in the future if there is a better option, but before doing so, it is key to identify different aspects to determine if it is feasible. go or not for those potential customers.
According to the author Laura Fisher, the concept of the potential market as: the real and potential consumers of a product or service”, where there are three important elements:
- First: one or more individuals and desires to satisfy.
- Second: a product that can meet those needs.
- Third: people who make the products available to individuals.
A good potential market analysis offers you an estimate of how far your business can go in a commercial aspect, from guiding you how much you can invest, what kind of needs you manage to satisfy, in what areas you can compete, anticipate changes due to people change, the profile of your customers and even knowing how big your business can become.
Characteristics of a potential market
It is key to understand the characteristics of a potential market, since its study is fundamental to differentiate the multiple options that it offers to achieve optimal results. Here are some features:
- Estimates of the potential market are not always real.
- It helps you find potential customers.
- Consider the highest figures of future sales.
- It offers a clearer vision of what you are looking for.
- Discover new sources of untapped resources.
Estimates of the potential market are not always real
The figures obtained from the result of a potential market study are usually not always real, but are an estimate to give you an idea of the possible value of the total sales of the goods or services that you offer.
Therefore, do not get overwhelmed when you see these statistics, but take them as learning and a guide to promote your business more clearly.
Helps you find potential customers
As its name implies, the potential market is intended to help you find potential potential customers in order to adapt your products or marketing in the direction of these consumers and, thus, convince them that you are the best option.
Consider the highest figures of your future sales
As I mentioned before, the potential market is an approximation of figures that serve as a guide and therefore will always give you the highest values of your next sales of your goods or services, in addition to a study that anticipates the demand for said products throughout the market so that you are alert.
Offers a clearer vision of what you are looking for
By working with a larger organization, having a potential market gives you the possibility of having a clearer idea of where you want to take your business, the steps you must take to achieve it and even the obstacles you may encounter along the way and thanks to this, it will be easier to reap the fruits of this labor.
Discover new sources of untapped resources
Another great reason to carry out a potential market study is the opportunity to discover where there could be more untapped resources and make the most of them, you can combine this with design management and marketing campaigns, such as ads on Facebook or Instagram, that are directed to a specific market.
Types of potential market
There are different types of potential market, each of them differ from each other by the intention of consumers, their segments and, in turn, they are part of each one to complement each other because they function as an extension of themselves.
These are the types into which the market is divided:
- Available
- Cash
- Goal
available market
This is the first that emerges from the potential market and is formed by a group of customers with the need to acquire a good or service, generally they are willing and have the ability to acquire said products with specific characteristics from the moment of their purchase. production and when they are released for sale.
cash market
The effective market is part of the available market and is made up of a number of consumers with the need to buy an even more specific product than the available market and with the intention of acquiring said goods or services from the new venture.
Target market (also called objective)
Lastly, the most important market, since, as its name indicates, this is the objective that the business considers to be the main goal in a given time. Therefore, to reach this market, the company puts all its efforts and budget into successfully capturing the largest number of this type of consumer.
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How to calculate your potential market?
Usually, calculating the potential market is part of a complete market study to better understand the profile of your clients and sometimes this requires an unforeseen investment in the budget. However, there is an easy way to calculate your potential market using a formula that will help you make better decisions and identify different factors that will determine whether or not an investment will be worth it for your business.
Among these factors to take into account within the company is the growth rate, profitability, competition and its size, since if it is very large you run the possible risk of reducing the price of your products in order to avoid this obstacle.
With the latter in mind, to calculate your potential market, the most efficient way to do it is through the following formula: Q= nxpxq
In this formula, each letter represents the following elements:
- Q:potential market
- n: number of buyers
- p: average price of the product/service
- q: consumption per capita
Likewise, it is important to emphasize that depending on the service or product offered, the figures will be more or less close to the real ones and therefore, it is necessary to be aware of the quantities and their variations.
Potential market: example that can help you
I will give you an example that will help you better understand the role of a potential market in a business and its benefits.
Let’s assume that you will open a restaurant specialized in hamburgers, you have enough competition around you but you trust the specialties that you will offer to the clients, in addition to an impeccable customer service.
Your competitors are restaurants with more time in the hamburger business and therefore have more experience, however their food no longer tastes the same as before and because of that, their regular customers are automatically open to a new option. , they become your potential market.
This happens because these customers consume a product similar to yours but currently they do not consume you, however they want to try better hamburgers and if they find a better place, it is likely that in the future they will come to your restaurant to consume your products.
Taking into account the formula to calculate your potential market, this would be the situation:
If the idea is to convince the customers of your main competitor of the hamburger restaurant and according to your research they have 500 regular customers, so this would be your number of buyers (n).
After this you must set the paverage price of your product or service (p)so according to your study and analysis of your competitor, the cost of your hamburgers will be $85 MXN.
Finally, you must investigate what is the average consumption per capita in the market (q), and through your research you found that it is of 2 burgers per person on your main competitor.
With all this data collected through your market study, you will take these figures and apply them with the formula to obtain an estimate of your potential market, which in this case would be the following:
- Q (potential market)
- n (number of buyers) : 500 regular customers
- p (average price of the product/service) : $85 MXN
- q (per capita consumption) : 2 burgers per person
Q= nxpxq >> Q= 500 x 85 x 2 = 85,000 MXN
In summary, this amount would be your potential market and the result of it will depend on a good marketing job, the sales area, a study of possible consumers and together it will be easier for you to determine if it is worth the investment, the production and commercialization.
conclusion
If you want your new venture or your already established business to prosper or, in any case, to continue to grow, it is important to take into account what a correct analysis of the potential market offers you by having a goal and seeking to reach it.
Through this study it is feasible to achieve a sustainable business and achieve the stability of any company selling products or services.
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