Market capacity is the potential volume of consumption in the long term under the best conditions. Unlike the volume indicator. Therefore, most often, the calculated capacity indicators differ from the real one and largely depend on the calculation methods used and the accuracy of the forecasts. To increase the reliability of the data obtained and reduce the likelihood of errors in calculations. It is better to combine several methods.
Capacity assedsment is carried out using two main methods:
- Top-down. In this case, the calculations are based on the total sales of all market players, and when determining capacity. Which chinese overseas australia data occupy a share of about 80%.
- Bottom-up: According to this method. Market capacity is calculated from the demand side and is determined by the sum of all projected product purchased by target customers.
Typically, three main types of market capacity are distinguished:
- Potential. This is the possible volume of consumption of a product or service that is theoretically possible if all consumers use the manufactured product. For example, when calculating the potential market capacity of high-priced school backpacks in a small town, it is necessary to determine the number of children of the age the product is intended for. Let’s assume that there are 1,000 such children living in the area. The potential market capacity will also be equal to 1,000.
- Actual. This is an indicator of market capacity. Taking into account the characteristics of the product and the target audience. Taking into account the seasonal demand for school backpacks, the market capacity will reach its maximum value only in the second half of summer, the rest of the time the demand will be low. In addition, in a small city with low purchasing power of the population, only 25% of how to estimate market consumers will be able to buy expensive backpacks.
- Available. This is the demand that the company can satisfy given its existing production capacity and resources, development plans, and anticipated changes in competition in the market. If the company can currently only produce 100 backpacks, this figure would reflect its available market capacity.
Factors Affecting Market Capacity
Market capacity is a variable value. It is subject to fluctuations under the influence of various factors, which can, under certain conditions. Either stimulate the market or restrain its development, limiting capacity. Factors influencing market capacity include:
- Market demand and its fluctuations. Total market demand may change due to changes in the solvency of buyers, their tastes and preferences, expectations regarding future needs, growth or decline in prices and incomed. In addition, the key components of the 2025 business and marketing plan how to estimate market reduction and increase in market capacity may be associated with changes in the social structure of the population with the prevalence of a particular age group, behavior patterns and values of buyers. The emergence of substitute goods, etc.
- Seasonal and economic fluctuations. The capacity of the seasonal goods market changes throughout the year. Periods of increased demand and decreased consumer interest in products may depend on weather conditions. Changing seasons, and holidays. Also, the potential market volume depends on economic activity. Economic fluctuations affect changes in employment, inflation, solvency and creditworthiness of the population.
- The impact of competition on market capacity. Market capacity may be larger or smaller depending on the quality characteristics and price of the product. Since these parameters largely determine whether consumers are willing to buy the product or prefer a similar product from a competitor .
- The role of technology and innovation in changing market capacity. New technologied have a dual effect on market capacity. On the one hand, they can have a global impact on the market structure, completely changing demand. Devaluing how to estimate market previous experience and investments. Aand creating new consumer needs. On the other hand, the use of innovations in production allows companies to reduce the cost of production and sell it at a lower price, which helps increase capacity in kind. But in some cases can reduce it in monetary terms. For example, technological development has reduced prices for laptops, while it has contributed to the formation of a tablet market, which has attracted some consumers who previously used laptops.
Methods for assessing market volume and capacity
All methods for assessing the capacity and volume of a market can be divided into qualitative and quantitative:
- Qualitative methods. They involve the analysis of primary data — information that was collected by the company specifically to b2c fax calculate the necedsary indicators. Qualitative methods include competitor analysis, surveys, and expert how to edtimate market assessments. The too broad geography of coverage, or the difficulty in finding experts who would be able to provide reasonable assessments.