Market potential analysis is a strategic tool to identify market opportunities and invest resources where they will have

the greatest return in the long run. Market potential analysis is not used for short-term forecasting, but can help to target markets with high growth potential in the future. Market potential analysis enables companies to: Categorize countries as lead markets, break-out markets or emerging markets. Quantify market potential for a given product by country, region or globally, now and in the future. Identify growth drivers and barriers in those markets. Understand how to exploit growth markets by tailoring marketing, product development and production strategies to meet customer demands and overcome market barriers.

MARKET POTENTIAL INFLUENCERS Many forces influence market potential, but there are two broad sets of factors that are key: demand drivers and inhibitors. Demand Drivers Demand drivers are the factors that affect the size, readiness or exploitability of markets. Three are especially important. The first is the size and wealth of a market. This determines the number of households, companies, government agencies and other organizations that can actually afford to buy a product. This is not a simple calculation, and average figures such as total population and GDP per capita offer only a starting point. Other factors include household income distribution and the structure of the business sector. Much of the value of market potential analysis comes in calculating accurately the number of potential customers there are for a given product. The second is the utility of a product in a particular market. This varies according to the nature of the product and the characteristics of the market. For instance, if you are selling an English-only online service, the number of people who speak English in a given market will determine the value of the service. Similarly, if you are selling PCs for small businesses, the value of the systems will depend on how easily they can be networked and communicate internally. The third demand driver is the supporting infrastructure for a product. Frozen foods require refrigerators, and refrigerators require electricity, so the demand for frozen foods is dependent on the presence of reliable, affordable electrical power. For information and communication products, the necessary infrastructure can include telephone lines, satellite uplinks, and human resources such as skilled programmers, technicians and

users. The quality of infrastructure generally corresponds to national wealth, but there are significant differences among countries at similar levels of wealth. Demand Inhibitors Market potential in a given country can appear to be high, but actual demand remains low. This is usually due to the presence of demand inhibitors that either raise the cost or lower the utility of a product. An obvious example is a tax or tariff, which increases the price to final customers. Quotas and other trade barriers have the same effect. Some inhibitors such as tariffs are explicit and can be quantified, while others are less visible and can only be identified through indepth knowledge of a country. For example, the business model of companies, management culture, and labor environment (e.g., lifetime employment, strong unions) can inhibit demand.

3 MARKET POTENTIAL A THEORETICAL ASPECT

It is detailed study of market potential performance to detect strengths and weaknesses. The gathering .classifying, comparing & studying of companys sales data, strictly speaking, gathering of sales data is not a part of analytical effort s but it substantially and vitally affects the quality of market potential.

NATURE

Market potential provides additional information. For example that the increased sales volume came from product carrying a lower than average gross margin. Through sales analysis, management seeks insight on strong and weak territories, high volume, low volume products and type of customers providing satisfactory and unsatisfactory sales volume. It uncovers details that otherwise lie hidden in the sales record. It provides information that management needs to allocate sales efforts effectively. If sales management rely on the raw data, the result may be misleading. It depends solely on summary of the sales data. It has no way to evaluate the effectivity of its own activities and those of the sales force if we say that sales have gone up by 5% over previous years with 1% decline profit.

Market potential provides the management with additional information. Make an indepth study of why the margin is insufficient though sales management seeks insight on the sales territories with the most satisfactory and the least satisfactory sales volume .Market potential will then uncover significant details why it is so. It provides necessary information, management need in order to allocate future sales effort effectively.

The role of sales manager in market potential is to make a detailed analysis of the available data and use them properly to initiate action.

How market potential is estimated?

Data for market potential: Market potential is nothing but to collect, classify. Study the company sales data. Collection of data is not part of analytical part, but it vitally affects the quality of the sales analysis. Market potential is generally based on data already in existence. It is called secondary data. Secondary data may be gathered either from internal sources such as invoice or shipping records, or from external sources such as marketing research agencies, government agencies, trade association and trade journals. Secondary data are often readily available but their use should be with caution. The sales management has to rearrange them according to their needs. Some companies maintain their internal sales records in some detailed manner showing individuals sales, sales by products, by classes of customers, by size of order and other pertinent break downs of sales data. Data are sometimes especially collected for the purpose of finding the market potential. This may be called primary data and may be collected under the control of sales management according to its needs. The main purpose of market potential is to convert raw sales data into actionable information for sales manager. The process involving editing, tabulating and cross tabulating and also breaking them down into various ways to make them comparable. A number of comparisons are possible such as:

1. Current data can be compared with the past result measuring trend over the years. 2. Current results of different territories, product or class of customers can be compared with each other.

3. Internal performance data can be used for compared with each other .Different ratio and percentages or variances can be used for comparison purposes. The final step in the analysis process is interpretation or drawing conclusion from the compiled data. When the sales planning is done, the sales manager finds out the potential market. Sales manager collects the information and analyses it and then compare the actual one with standards. An evaluation program review both the nature and extend of sales force efforts and influence of external variables, once the degree of influence of controllable and uncontrollable factors are determined. Sales management can decide whether to corrective action or to revise the sales plan or both.

Market Potential Analysis

This is an important aspect of marketing since one has to do market research related to their industry product which can be business to consumer or business to business. Market potential is basically carried out to know the strength in the industry also to allocate the target to the sales force based on optimum market research which normally includes the customer requirement, there expansion plans, investment etc. With optimum information sales manager knows the amount of investment a company is going to make for the coming years. Based on this authentic information a company can take steps. Before going for market potential analysis you need to initially know on which products you are carrying out market potential and then go for it. Market potential is carried out by visiting to your customer or consumer site asking them questions about your products. Most important thing to note is market potential is very essential for the company, so it should be carried out seriously and effectively. Now biggest question arises that what you will be asking. You know market potential basically gives company position in the market by finding how many players are there in the milk (Pouch Milk) market and finding who all are there customers. Now to know about company's future position u need to ask what are your future plans , investment, expansion plans, and accordingly u need to arrange data and handed over to marketing department they will be deciding about allocating the targets to sales force .