Market capacity is the possible volume of sales of goods or services at a set price. The market capacity indicator is measured in monetary units and characterizes the maximum amount of revenue that a seller can receive in a given market with constant factors such as demand, supply and price.
Instructions
Step 1
The concept of market capacity should not be confused with its volume. The market capacity is rather theoretical in nature, since it is impossible to force all potential buyers to purchase the manufactured product. Market size is the actual sales volume over a given period.
Step 2
Thus, market capacity can be represented as the product of the quantity of goods by the market price. There are several methods for assessing market capacity. One of them - the method of estimating the total capacity - is used to determine the current demand when a new product is introduced to the market or an obsolete product is removed. It can be used to establish, for example, the potential demand for a new type of product.
Step 3
In order to estimate the size of the market, first take data on the total population and its level of income. Then separate from the amount of income the amount that is spent on the purchase of certain types of goods, for example, food. Of these, highlight the costs of convenience foods, and then dumplings, for example. This is how the market capacity for a new product planned for release is calculated.
Step 4
Then determine what the maximum share can be won by the manufacturer. Indeed, the market already has products from competing firms that have a wide range of regular customers. To calculate, you need to have information about the number of consumers of dumplings and the amount of products produced by other participants.
Step 5
This method of determining the market capacity can be represented in the form of the formula: EP = CH x PP x Ch x RP x PG x SC, where EP is the market capacity; CH is the population; PP is the percentage of the population consuming dumplings; H is the average number of purchases made one consumer per year; RP - average one-time consumption of dumplings by one buyer; PG - percentage of consumers purchasing beef dumplings; SC - average market price of one portion of beef dumplings.
