Example of calculating market capacity

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As an example, let's consider the situation with the launch of a company providing Internet services to the population of a city. The number of residents is 300,000 people, forming 100,000 households. If we take the average value, it is considered that one family consists of three people. Users pay for the services provided, which are precisely the product, once a month. The price, for example, is 250 rubles.

The calculations follow.

100,000 households * 250 rubles = 25,000,000 rubles.

That is, the obtained value will be the israel business email list potential capacity of the market. This is the amount received monthly by all existing providers in a given locality. Multiplying it by the number of months in a year, we get the annual revenue indicator. Of course, we need to realize that such figures will only be obtained if all 100,000 households use the services of our provider company. We understand that this cannot be, so we will use data closer to reality.

According to the results of the survey of city residents, only 65% ​​of the entire population use and would like to use Internet services. That is, 100,000 / 100 * 65 = 65,000 households. We received the value of the market capacity in which all Internet service providers operate in the city.

Now we move on to analyzing competitors and studying the capacity and market share that our company has.

For example, a company has a client base of 15,000 subscribers, while its competitors have the following figures:

Competitor No. 1 - 7,000 subscribers.

Competitor #2 - 5,000 subscribers.

Competitor #3 (or other small companies providing Internet services) - 1,000 subscribers.

The total number of their subscribers is 28,000 people. We multiply this figure by the monthly subscription fee (250 rubles) and get 7,000,000 rubles — the actual market capacity. Then we can calculate the market share that our company can get: 65,000 - 28,000 = 37,000 subscribers, which is 56.92%, in monetary terms equal to 9,250,000 rubles. This amount of revenue can be brought by the uncovered part of the total number of potential subscribers. This is the direction that the company's marketers should work in, increasing the market capacity by attracting the city's population with profitable promotions and interesting offers.

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For a better understanding, let's look at another example. But now we will sell not a service, but a product - beef.

If we look at the statistics, the average Russian consumes 50 kg of meat per year. The company sells meat in a large city with a population of 1,000,000 people. Accordingly, the market capacity will be 50,000,000 kg of meat per year, of which 30% is beef, 40% is pork, 25% is poultry, and 5% is other types of meat.

That is, the city consumes 15,000,000 kg of beef annually. If we convert this into a monetary equivalent at a cost of 150 rubles/kg, we get a figure equal to 2,250,000,000 rubles/year. This will be the market capacity in this city.

Conclusion: using statistical data, simple mathematical calculations and analysis, we calculated the actual market capacity for specific types of goods and services in a specific locality.

This parameter is extremely important for making sales plans, and therefore, for successful business management in general. With its help, you can plan current deliveries, assess the demand for certain goods and services in a specific region.

When making calculations, it is worth using several methods of market volume research - this way you can get more accurate indicators. This happens because the basis is various data and factors that business entities cannot influence.