Market potential

Estimated maximum quantity of goods that all companies operating within one industry are able to sell over a period of time.

 

Market potential, also known as market capacity, is the number of products that companies have the chance to sell on the market. It depends primarily on factors such as:

 

• the number of buyers on the market

• the amount of substitutable goods on the market before the products concerned are sold

• the efficiency of the goods offered

 

The first factor that will play the most important role in limiting the demand for a given product on the market is the number of potential customers who are ready to buy the offered products. If their number is small, then the demand for a given good will also be small and vice versa.

 

Another issue is the amount of substitutable products that were available on the market before products with similar characteristics were sold. This is important due to the fact that if customers have already had access to a similar type of products, they may not be interested in purchasing more goods with similar properties.

 

The final consideration is product performance. This is related to the market potential, primarily because if the products offered within a given industry serve buyers for a long time, they will not buy them quite often. The situation is different, for example, in the case of everyday goods, such as food or cleaning products, which customers use regularly end up quickly, which in turn forces them to buy again.