Market potential value is an estimate of the total amount of money that could potentially be spent by consumers in a particular market. It assesses the size of the overall market available to all companies. A company can use this estimate to determine the market share it will need to achieve certain revenues. In some cases, a company can determine whether a potential market is big enough to justify entering it.
Estimating Market Potential Value
To estimate the market potential value for a product, you need to know your target demographic. For example, if you operate a printing service that caters to college students, then your demographic might be local people enrolled in a college program. Assume, for example, that there are 3,000 people that meet this demographic. Knowing this, you then need to research how much your demographic spends on products like yours. For instance, if you know that college students spend an average of $100 per year on printing services, then the total market potential value is $300,000.