Market Potential Analysis
Do you know how successfully your newly developed product will sell on the market?
Planning, development and introduction of new products is always associated with uncertainty. Specific
knowledge regarding potential target consumers and their probable spending on the new product
provides you with more certainty concerning the market success of new product developments. We
can offer you precise and reliable information in this area after conducting a market potential analysis.
Definition and Goals
Market potential describes the maximum capacity of a defined market for a specific product / a service
within a defined time period. In this context market refers to the total of all potential consumers with a
certain need or desire who are willing or able to satisfy this need or this desire through the purchase of
products / services. The sales potential can then be derived from the results of the market potential
analysis. Market potential consists of the upper limit of total demand which would theoretically be
converged on at (infinite) rise of marketing expenditures of all relevant providers (see figure).
Total demand
(per time period)
Market potential
Market minimum
Marketing expenditures of
the entire industry
Applications
Market potential analyses are especially used for growth or unsaturated markets for which “market
size” cannot simply be estimated through the actual market volume. Market potential analysis offers
decision support for specific questions for which such as:
Exploration of potential (target) markets
Determination of company locations
Evaluation of ideas (screening)
Designation of sales areas
Market Potential Analysis Procedure at aproxima
Specification of
model assumptions
Development of
assumptions regarding
the cause-effect
relationships between
factors used
Data
collection
Analyses of secondary
information or specially
conducted survey
Specification of
the number of
consumers
Often from secondary
statistical sources
Estimation of
purchasing rates
Determination of
average consumer
spending through
random sample
analysis
Calculation of
market potential
Multiplication of specified
number of potential
consumers with
determined average
purchasing rates