How to determine market capacity
Market capacity is an indicator determined bythe volume of goods or services that were sold on it for a certain time period. To measure the capacity of the market can be used as a value, and a natural expression. In theory, market capacity is equated to the sum of national production and the volume of imports minus the volume of exported products (this is true if the inventories are unchanged). It is worth noting that in practice this formula, because of its difficult use, is practically not used.
Know the capacity of the market is very important when planningbusiness development. The volume of the market depends on the indicators on which the company's plans are based, and also evaluates the results of its activities in this segment of the market.
In the absence of knowledge of market capacitythe company's definition of the market share owned by it is impossible. This, in turn, leads to the impossibility of monitoring the dynamics with which competition is being waged.
Among other things, knowledge of the volume of the market makespossible awareness of the meaning of doing business in the future. Based on this important economic indicator, it is possible to analyze the possibility and necessity of producing new products for each particular market segment. In the event that the potential market capacity is not large enough, the company's expenses for creating new products and launching them into production will not pay off.
To date, various methods have been developedmarket capacity assessments, involving both field and desk studies. One of the methods, including both field and desk studies - is a method of chain relations. This method is widely used because of its suitability for estimating the market's capacity, both in the sphere of production goods and in the sphere of consumer goods.
How to determine the capacity of the market by the method of chain relations.
Initially, a working hypothesis is constructed, assuming the dependence of market capacity on a variety of market factors. In this process, it is assumed that this dependence has this form:
E = K1K2K3Kn
K1, K2, and so on. in this dependence are the coefficients that reflect the influence of all market factors on the volume of the market. For each next (from left to right), the coefficient is assigned the task of clarifying the result, which was obtained after the introduction of the previous coefficient. For example, K1 is the total population in the study area, K2 is the proportion of the male population, KZ is the proportion of males aged 18 to 25 in the total male population, etc .;
Through the conduct of desk or field studies, the numerical values of all coefficients (from K1 to Kn) are elucidated;
Based on the coefficients, the market capacity is calculated.
For the most complete understanding of the method of chainLet's give a simple example. We calculate the capacity of the market for CDs with movies that are sold through online stores that deliver CDs in the region.
In order to construct a formula, it is necessary to clarify each coefficient in turn specifying the previous one, and entering the chain.
К1 - the number of people living in the region;
K2 - the proportion of people who use the Internet in the population of the region;
K3 - income, on average, received by Internet users residing in the region;
K4 - the share of funds allocated by Internet users in the region to purchase CDs in the average monthly income;
K5 - the share of revenue that is spent on the purchase of CDs in online stores (from the total amount spent for the purchase of CD-ROMs);
K6 - the proportion of funds that are spent on the purchase of CDs with movies.
As a result, the formula that allows you to calculate market capacity, will look like this:
E = K1K2K3K4K5K6.