Solution:

Market Potential:

• The market potential is an estimate of the maximum possible sales opportunities. present in a particular market segment and open to all sellers of a good or service during a stated future period.

• Thus, an estimate of the maximum number of low-priced pocket cameras that might be sold in Haryana, during the calendar year 2001 by all sellers is the market potential. low priced “pocket cameras.

• A market potential indicates how much of a particular product can be sold to a particular market segment over some future period, assuming the application of appropriate marketing methods.

• The following steps are to be undertaken for measuring -the market potential of a particular product.

(a) Market Identification:

• The first step in measuring a product’s market potential is to identify its market.

• In some companies answers to these questions are found in internal records; but in most companies, especially those that use long marketing channels, meaningful answers are obtained only through field research.

• In consumer goods marketing, buyers, users, and prospects are identified and classified according to such characteristics as age, sex, education, income, and social class.

• In industrial-goods marketing, buyers, users, and prospects are identified and classified by such characteristics as size of the firm, geographical location, and type of industry.

• Market identification studies reveal the characteristics that differentiate the market segments making up the product’s total market potential.

• Frequently they uncover unexploited market segments whose patronage’ might be obtained through redirecting personal-selling efforts or changing promotional strategy.

• Sometimes, market identification studies provide, as a side result, customer data on such factors as purchase frequency, searching time expended, a unit of purchase, and seasonal buying habits.

• When these data are assembled and analyzed, they help estimate market potential.

(b) Measuring Market Potential:

• Having identified the potential buyers and their buying behavior, the the third step is to measure the market potential.

• Generally, market potential cannot be measured directly, so analysis requires the use of market factors (a market the factor is a market feature or characteristic related to the product’s demand).

• For instance, the number of males reaching shaving age each year is one market factor influencing the demand for men’s electric shavers.

• But not every male reaching shaving age is a prospective buyer of an electric shaver some will be late in starting to shave, others will adopt other shaving methods, and some will not have the money to buy a shaver or will prefer to use that money for something else, and. still, others will use borrowed shavers or, perhaps, simply will grow beards.

• Thus, using market factors in measuring market potential is a two-step process:

  • Select the market factors most associated with the product’s demand.

  • Eliminate those market segments that for one reason or another do not contain prospective buyers of the product.