URAL SOCIO-ECONOMIC INSTITUTE

ACADEMIES OF LABOR AND SOCIAL RELATIONS

Department of Management

TEST

Course: MARKETING

Market capacity: concept, factors, calculation methods

Completed by a 2nd year student

FSS-204 groups,

Ivanova Veronika Vladimirovna

Chelyabinsk

Plan

Introduction

1.1 Classification of markets

1.4 Factors affecting market capacity

1.5 Market development model

1.6 Market forecasting

1.7 Methods for calculating market capacity

2. Analysis of the calculation of market capacity at Russian enterprises in 2008

2.1 Method for calculating the capacity of the mass market in 2008

2.2 Calculation of the meat market capacity in 2008

2.3 Calculation of the market capacity of consumer prices in 2008

2.4 Calculation of the size of the footwear market in 2008

2.6 Calculation of the capacity of the foreign currency market in 2008

2.7 The most profitable and efficient banks for 9 months. 2008

Conclusion

Bibliography

Introduction

Marketing is a system for managing market activity. This is the planning, implementation and control of activities for the best development, manufacture, sale of the company's products in accordance with market requirements.

Modern marketing as a philosophy guides the development of the organization, and marketing tools allow this to be successfully implemented. But the greatest effect is achieved if marketing works as a holistic management concept and organization management system.

The specific result of marketing research is the developments that are used in the selection and implementation of the strategy and tactics of the marketing activities of the enterprise.

The most frequently occurring problems in the course of activity of almost all enterprises is determining the possible volume of sales of products or identifying the volume of sales of products on the market in order to determine their market share and develop further development directions. As a market, both a certain geographical area and a set of consumers (market segment) can be considered. The study of sales volumes of products on the market involves the determination of a specific market indicator - market capacity - one of the most important market research.

Object of study in this paper is the definition and concept of market capacity.

Subject of study includes the capacity of the market, which is understood as the possible volume of sales of goods (specific products of the enterprise) at a given level and the ratio of different prices. The market capacity is characterized by the size of the demand of the population and the size of the commodity supply.

The purpose of the control work is to study the market capacity in the most complete way, show the main advantages and try to identify the shortcomings.

The tasks of the control work are:

1. Study the concept of market capacity;

2. Consider functions, factors, methods for calculating the market capacity;

3. To study the analysis of the market capacity at Russian enterprises.

1. Classification of markets, basic concepts and definitions of market capacity

1.1 Classification of markets

In general economic terms, the market is understood as a place where both sellers and buyers, all subjects of the sale of certain goods, gather to commit an act of sale and purchase. In marketing, the market is usually understood as the totality of all potential consumers who are in need of goods in a particular industry and are able to satisfy it.

The market is created around various objects of some value. In this regard, they talk about the consumer goods market, markets, the labor market, the securities market, the capital market, etc. depending on the type of consumers, the following types of markets are distinguished: the consumer market and the markets of organizations or organizational markets. The latter are subdivided into markets for production and technical purposes, markets for resale, markets for state institutions. (1)

Consumer market - a set of individuals and families who buy goods and services for personal consumption. Markets for consumer goods are characterized by the presence of a mass consumer, a variety of competition, and a decentralized structure.

Product market - technical purpose - a set of organizations and individuals who purchase goods and services that are used in the production of other products. The key marketing strategy for industrial products is a system sale, in the implementation of which the buyer makes a system purchase.

System purchase - purchase of a package solution to the problem in order to avoid the purchase of individual components of this problem. For example, the purchase of weapons systems by the government through a general contractor instead of independent purchases of individual components of these systems separately. A system purchase usually also includes a set of services.

resale market - a set of organizations and individual at all levels (from national to local), buying or renting goods and services to perform their functions.

In contrast to the consumer market, the market for industrial and technical products is characterized by a smaller number of buyers, but they buy products in larger quantities. For example, the purchase of tires by automotive companies.

1.2 The concept and definition of market capacity

The main task of market research is to determine the capacity of the market.

Market capacity is the existing or potential volume of sales of a product during a certain period of time.

Under the capacity of the commodity market is understood the possible volume of sales of goods (specific products of the enterprise) at a given level and the ratio of different prices. The market capacity is characterized by the size of the demand of the population and the size of the commodity supply. At each point in time, the market has a quantitative and qualitative certainty, i.e. its volume is expressed in value and natural indicators of the sold, and consequently, bought goods.

To determine the capacity of national commodity markets in the preparation and conduct of expert operations, the concept of “visible” consumption of goods is used, i.e. the country's own production of a good minus exports and adding imports of similar goods.

Op \u003d Vv + Vi - Ve

Op - market size

Vv - production volume

Vi is the volume of imports

Ve - export volume

Market capacity is measured in physical and/or monetary terms.

Two levels of market capacity should be distinguished:

1. potential

2. real.

The real capacity of the market is the first level.

Potential capacity denotes the maximum possible volume of sales in a market situation, when all potential customers purchase goods based on the maximum level of their consumption. Real capacity measured as the achievement of actual or projected sales of the analyzed product.(2)

1.3 Methodology for studying market capacity

The practice of marketing research shows that data on the market capacity of certain goods and the share occupied by individual manufacturers are currently of great interest to the manufacturers themselves. They are necessary both to expand the position of a company that already occupies a stable position in the market, and to enter the market of a new company or brand.

The need for such information has already been formed: today there are many organizations that conduct this kind of marketing research. However, after reading reports and articles on such studies, numerous questions arise both in the methodology of conducting and in writing reports. Therefore, I would like to raise the question of the correctness of using certain methods to study the market capacity and the most common, in our opinion, mistakes. We think that this kind of discussion will be interesting and useful for specialists working in this field.

The study of market capacity or market demand involves determining the volume of sales in a selected market of a particular brand of goods or a set of brands of goods for a specific period of time. (3)

The study of these parameters is usually carried out in five main areas:

1. analysis of secondary information;

2. production and sale of products;

3. costs and consumer behavior;

4. calculation of capacity based on consumption norms of this type of product;

5.determining the capacity based on the "reduction" of sales volumes (when the known market capacity in one region is the basis for calculating the market capacity in another region by adjusting it using reduction factors).

Consider:

1. Analysis of secondary information . It includes the analysis of all documentation that may contain information about the market of interest to us and may be useful in marketing activities: statistical data, data from government bodies, market reviews, specialized magazines and articles, Internet data, etc. However, the information obtained by such way, most often turns out to be incomplete, quite difficult to use in practice and often of questionable degree of reliability. (4)

2. Studying the market from the standpoint of production and sales. Includes a study of manufacturers, wholesalers and retailers. The information obtained from this source makes it possible to determine the actual sales volumes and representation of manufacturers and brands. Given that the number of sellers is smaller than the number of buyers, such research is often faster and cheaper than consumer research. The problem is how accurate the information provided by manufacturers or sellers will be, and how representative of the sample of sellers interviewed will be representative of the general population (the entire mass of retail outlets selling products on the market).

Quite often, when calculating a business plan for a future business, no one remembers that there is such a thing as market capacity. This could be a fatal mistake. Since theoretical calculations based on how many customers are needed to reach the break-even point can break down into the realities of life, there simply may not be enough potential customers in your area. In order for your business to suffer a similar fate, you need to learn how to calculate the market capacity.

Definition

Let's define the terminology. In the simplest terms, the explanation of the concept of "market capacity" can be represented as follows - any product or service cannot be sold more than he or she is ready to buy. In other words, Market capacity is determined by the demand for a particular product or service.

From the above definitions, it is necessary to pre-determine the maximum possible number of potential customers before starting to develop a business strategy. Of course, it is not a fact that all possible customers will become yours, since here you need to decide on both the target audience and your potential competitors.

It is quite logical that the conclusion suggests itself that market capacity is a key characteristic necessary for drawing up a business plan. To build a successful business strategy, it is simply vital to evaluate the number of your potential customers.

Units

Usually, the assessment of the market capacity includes values ​​expressed in monetary or natural terms. At the same time, these values ​​are tied to a certain territory. It should also be noted that a calendar year should be taken as the time period during which this value is estimated, since most goods and services have their seasonal ups and downs. So, the practical majority of goods and services have a decline of 20-25% in the summer months, and with the onset of autumn, demand increases.

Formula for calculation

I would like to immediately draw attention to the fact that the determination of the market capacity, made according to the formulas, is nothing more than a predicted or, in other words, a calculated value. Respectively, the data obtained should be correlated with economic and demographic data.

All calculations by formulas and the values ​​used in them are based on past data and it is not a fact that the situation will remain unchanged in the next six months or a year. Therefore, one should not be surprised when these theoretical data do not quite coincide with the real ones.

The formula for market capacity is as follows:

E \u003d M * C;

E - market capacity in monetary or physical terms (unit/year, rub./year);

M - the amount of goods sold in the selected time period (units);

C - the cost of goods (rubles).

Calculation methods

There are different methods and approaches to how to calculate the market capacity. Here are just a few:

• capacity modeling based on economic and mathematical approach;
• an expert approach;
• statistical technique.

Using calculations based on different methods, we can get results that will be very different from each other. Each of the above methods has its advantages and disadvantages, so it makes no sense to dwell on any of them in detail. The application of this or that technique occurs individually, depending on the situation and the goals pursued.

Read also: What is debt restructuring

Dynamics of market capacity

Over time, market capacity may decrease or increase, or it may remain unchanged. Therefore, when calculating the market capacity in marketing, it is desirable to take into account possible future changes in the market, both downward and upward.

Before proceeding with the calculations, it is necessary to think about how the market dynamics can change, at least in the short term.

While predicting market changes, it is worth paying attention to even such seemingly insignificant factors as, for example, troubles with the tax of your direct competitors. Yes, and again, yes! Even such “insignificant” little things can “twist” the market in your favor, especially if the competitor is large.

Of course, the market itself and its pricing can be influenced by more significant factors. For example, it could be:

• political situation;
• appearance of similar goods or services;
• market development;
• pricing policy in the market;
• consumer properties of the goods;
• macroeconomic fluctuations;
• change in demand;
• advertising costs;
• many other factors.

How can all these factors affect your future business? And it's very simple. Let's look at a fairly simple example. Let's say you're going into a gardening business in a city of 800,000 people. Before you start calculating market capacity, you need to sit down and think about these things:

• how many potential consumers of your product in your area;
• your potential competitors;
• solvency of your clients;
• How developed is this segment in your region?
• how you can attract unreached customers.

In addition, such nuances as seasonality will be very important factors in promoting your products. It's no secret that the peak of sales of garden products falls on the spring and early summer. It should also be taken into account that if the majority of the population in your city works at several enterprises that are city-forming, then if these enterprises begin to have difficulties and there will be layoffs of workers, then your business may suffer significantly.

As you can see, there are a lot of nuances that should be taken into account and most of them are based on assumptions. After all no one can accurately predict the future. One can only make assumptions based on previous statistics.

Market types

There are several types of market: actual, available and potential. Let's take a closer look at each of these types.

The actual market is the segment of the market that is currently available to your company. It includes paying consumers who use your services or buy your products.

The available market is the segment of the market that you can conquer if you lure your competitors' customers to you. That is, in fact, if you become better than your competitors, their customers will go to you.

The article provides complete visual information about how and why the market capacity is calculated, contains theoretical and practical information for self-calculation.

A bit of theory

Not all entrepreneurs, unfortunately, are aware that the development of any business requires a careful and targeted strategic approach. Making decisions blindly can lead to significant financial losses, excess production or lost profits, reduced competitiveness, and, as an extreme option, the ruin of the company. One of the main tools for making managerial decisions is knowledge about the structure and conjuncture of the market, its capacity. Let's give examples.

Let's say you sell goods for 200,000 rubles / month, and together with your competitors - for 800,000 rubles. But you know that the market can consume goods worth 950,000 rubles, how will you behave in this case? Surely you will start an aggressive marketing policy towards other players in order to win back the remaining market share?

Another example: your sales are 450,000 rubles / month, along with competitors, similar products are sold for 600,000 rubles / month. while the market can purchase a similar product for 1,000,000 rubles. What will you do with this information? Of course, to expand production.

Or the third situation: your sales are 900,000 rubles / month, together with your competitors you sell for 980,000 rubles / month, and the maximum purchasing power of the market is 1,000,000 rubles / month. What does this state of affairs say to the manager? - the need to invest a stable income from sales in the development of a new product or even a business.

To summarize: market capacity is the amount of a product that can actually be sold in a well-defined market in a specific period of time. Capacity may be temporary

• daily (how much bread can one region buy per day?),
• monthly or quarterly (how many hairdressing services will the city buy in a month?),
• annual (how many tons of confectionery products will a particular area eat in a year?).

And on a territorial basis, respectively, local and niche. Also, the market capacity can be potential (the most probable here and now), actual (total sales volumes of all operators) and available (that part of the market that your company can conquer).

Now let's figure out how to get this valuable information and calculate the market capacity.

What data is needed to calculate the market capacity

Input Information	Explanations
market definition and audience size (KA - number of audience)	Here we determine the territory in which the sale of goods takes place, the number of actual or probable consumers and the form of accounting. For example, such goods as bread, cable TV, toilet paper, TVs are purchased not individually, but per family, so the market is calculated in households. Individual consumer goods - cosmetics, clothing, piece products and items (bottled beer, cakes, toothbrushes, etc.) are calculated per person. Quantitative indicators can be obtained from free statistical sources.
degree of intensity of consumption and frequency of purchases (NP - frequency of consumption)	The second incoming figure for analysis is the frequency of purchases of goods in a certain period of time (or, alternatively, the rate of consumption of goods per person). For example: cable TV is paid once a month (monthly purchase), bread - daily, toilet paper - every 2-3 weeks (packing for the family), TVs - once every 5-7 years. This kind of information can be obtained based on a consumer survey, generally accepted norms (for example, it is recommended to change a toothbrush every six months), or on an expert assessment.
average bill - the average cost of the product in rubles. (SP - average price)	Not only your product is taken as a basis, but also the entire competitive line. You can calculate the average cost yourself by getting the price lists of all competitors. Customer surveys are also very effective (at what price do you usually buy this product?).
average volume and product type (O - volume)	For example, if it's about: bread: loaf, loaf or half a loaf; cable TV - the number of channels (package volume); toilet paper - roll or package; TVs - diagonal; carbonated drinks - bottle size, etc. This indicator may not be used in the calculations. but it is a kind of criterion of consumption volumes.

Calculation technique

Step 1: calculate the maximum potential capacity

To calculate the total potential market capacity of your product in a particular region, use the formula:

Total potential market capacity = KA*SP*SP

Let's look at the example of a cable TV provider. Input data:

Considered time interval: quarter;

Considered territorial market: city N with a population of 320,000 people;

Number of audience: 106,000 households (if there is no information on the number of households in your region, you can use Russian population statistics, according to which an average of 3 people live in one house).

Consumption frequency: 1 time per month (subscription fee), respectively, 3 purchases per quarter (if your product is bought less often, then the frequency may not be expressed in integers: an annual subscription to a solarium in terms of a quarterly period will have a frequency of 0.25).

average price: 180 rubles

Average volume and product type: basic package for 120 channels.

Let's calculate: 106,000 consumers * 3 purchases per quarter * 180 rubles. = 57,240,000 rubles. - we got the potential market capacity. i.e., such an amount can be earned by all cable TV providers, provided that absolutely all apartments and houses in the city are connected. Now it is necessary to bring these figures closer to commercial realities.

Step 2: Determine the audience using the product

We continue to analyze using the example of the capacity of the cable television services market in a particular city. We determine the target audience of cable TV services (survey, statistics, observations) and bring it to a certain size.

Let's say, according to the results of the survey, you see that 45% of all respondents living in your coverage area (city N with 106,000 households) use or want to use cable TV: (106,000/100)*45= 47,700 households - a quantitative indicator of your market, in which all your competitors operate.

Step 3: determine the purchase period

In the case of our example, this period is a month (monthly fee). If you have consumer goods or services, then you should again proceed from the results of a survey of city residents or the norms for the consumption of goods.

For example, the norm of bakery products per person per day is 300 grams, respectively, per month - 9 kg. Bread is usually bought for a family, so one household has an average of 0.7-1 loaf per day (not everyone has lunch and dinner at home).

If we talk about cosmetics, then this is an individual product. Eg. day face cream usually comes in 30 ml. Single use is 0.3-0.5 ml. those. A jar of cream is enough for a woman for 2-3 months.

Step 4: calculate the average purchase price

To do this, you need to make a price and assortment cut of your competitors.

For example:

We bring the price per ml to our reference jar of 30 ml and see that its average market value is 30 * 2.25 = 67.5 rubles.

Step 5: determine the share of competitors

To do this, it is necessary to conduct a serious study of the representation of competitors, their sales volumes. If we collect information for consumer goods, it will be sufficient to conduct an inventory of competitors' points of sale in the city. If these are services, calculate the average flow of customers (observation, survey, purchase of data from employees, control visit). Based on practice, we can say that the simplest and most effective method of obtaining information is guerrilla marketing, or, more simply, asking competitors' employees.

For example, a cosmetics manufacturer may ask its supervisors to measure the presence of leftovers of competitors' products on the shelves or request this information from stores. In the case of cable TV, a test call will go well: posing as a mono subscriber, ask directly about how many people use the provider's services.

Of course, the figures will be very approximate, but this is not a problem, i.e. marker values ​​are needed for calculation.

Step 6: calculate the market capacity

To make the description clear, we return to our cable TV. We have potential capacity, we calculated it by multiplying all households in the provider's coverage area by the average cost of the package, and received 57,240,000 rubles or 106,000 subscribers.

Recall that this is the absolute maximum of the market, more than which it will not be able to develop under the current conditions. Now we calculate the actual capacity:

(own sales volume + shares of all competitors).

For example:

• the cable TV provider has 14,000 subscribers in the database (47% of the total),
• competitor A - 8,000 subscribers (27%),
• competitor B - 7,000 subscribers (23%),
• small networks - 1,000 subscribers (3%).

Total 30,000 subscribers * average price 180 rubles = 5,400,000 rubles - monthly covered market capacity.

Now consider the survey data, which shows that 47,700 households seek or use cable TV. 47,700 * 180 rubles (average price) = 8,586,000 rubles. - This full actual (real) market capacity.

We consider: the total actual capacity of 47,700 - the covered capacity of 30,000 = 17,700 subscribers (or 3,186,000 rubles, or 37.1%) - this is the uncovered part that must be fought for.

Step 7: calculate the available market capacity

Here we need information about the share of each competitor. Consider:

In a realistic forecast of the available market share, it is natural to assume. that its distribution will roughly correspond to the same picture that is observed among competitors, i.e. percentage plus or minus will remain, which means that cable TV providers can count on:

• your company - 8319 subscribers (47% of the total),
• competitor A - 4749 subscribers (27%),
• competitor B - 4071 subscribers (23%),
• small networks - 531 subscribers (3%).

8319 * 180 rubles / month = 1,497,420 rubles / month - this is available market share, although you can always strive to conquer all 100% of the uncovered part.

Under capacity market is understood as the aggregate demand for products in a certain territory and at the prevailing price level. The concept of market capacity is strongly correlated with the concept of "" (you can read about market share in this article -) - the capacity indicator is a divisor when determining market share, to be more precise.

It is these two indicators that make it possible to assess the dynamics of ongoing changes and the current situation on the market. It is important to understand that they only work in pairs: share without capacity will give an incorrect (or incomplete) picture, and capacity without share is an indicator that is irrelevant to a particular organization.

How is market capacity measured?

Possible cost and natural measurement of the indicator. In the first case, the result is expressed in units of goods, in the second - in rubles. It is the second option that is considered more preferable, since the first does not allow estimating the company's profit. The billing period is most often a year, because many products (for example, ice cream) are characterized by a seasonality factor - the sales schedule for such goods, when calculated, for example, by quarters, will take the form of a sinusoid, therefore, it will be problematic to determine the forward movement up or down.

Calculation technique

Market capacity is divided into two types:

Potential capacity is more of a theoretical indicator and is calculated based on the assumption that the level of consumption is maximum. Real capacity takes into account actual consumption and is used in forecasting. Some sources also speak of accessible capacity - the part that the company has not yet won, but can win.

Capacity calculation is carried out in the following steps:

• The total potential profit is determined. For this, the formula is used:

where KA is the number of audience, PR is the frequency of consumption, SP is the average price.

Consider the cable TV example.

Territory of consumption - cityN, where 999 thousand people live. There is a small product-specific aspect here: they connect one cable TV per household, so we need to calculate the number of households. If there is no information on this indicator (which is quite possible), the average Russian indicator is taken - 3 people in the household. Consequently, there are 333 thousand households. This will be the meaning of KA. Frequency of purchase - 1 time per month (the user pays a monthly fee). If we calculate the annual capacity, it turns out that NP = 12. Let's take the average price of the service as 150 rubles.

How to interpret this figure? Quite simply: if every household decides to install cable TV, all providers offering services in the city of N will be able to earn 600 million rubles per year. Naturally, such a situation is impossible - first of all, because not every consumer needs cable channels.

• Determined real audience. There are several methods for determining it - this will be discussed below. One of the methods is a banal survey. Let's accept the condition for the problem under consideration, that according to the results of the survey, it was determined that 50% of the respondents use or want to use cable television. Thus, the potential audience is 167,000 households.

• The purchase period is determined. With our example, this is easy to do, because a person pays for cable channels once a month. Much more difficult is the calculation for bread or, for example, hand cream. In the first case, one has to refer to the norm for the consumption of bakery products (there is one - it is 9 kg per month per person), in the second - for packaging and one-time consumption.

• The average check is considered. At this stage, a price cut of competitors is made. Consider this table:

Conclusion: the average cost of the service is 150 rubles per month. Our example is again quite simple to calculate - in the case, for example, with creams, you have to calculate the average cost of a milligram, since the container can be heterogeneous in capacity.

• The shares of competitors are determined. There are a huge number of methods for obtaining information on sales of competitors. One of the most effective is considered partisan, that is, interviewing directly the employees of a competitor company, however, for this method, you need to find an approach to employees who, as a rule, are aware that their actions can be interpreted as opportunistic behavior and even betrayal. In the case of cable television, it is possible to use a test call, that is, pretending to be a potential subscriber at a crossroads of choice, try to find out by phone how many people use the provider's services. Of course, all sources other than the income statement of the company will give only very approximate information, however, obtaining accurate data is not the goal of this stage.

• We calculate the real capacity. Let's say we got the following data:

It turns out only 95,000 subscribers. Given that the average price of the service is 150 rubles, the covered capacity is 14,250,000 rubles. The total market capacity is defined as the product of the average price and the number of households that have expressed an interest in connecting cable TV. That is, 150 * 167000 = 25050000 is the real capacity. We can conclude that 10800000 rubles (the difference between the real and the covered capacity) is the uncovered part, which is still available for capture.

• Calculate available market share. To obtain information about what share of the uncovered part the analyzed company can still capture, it is necessary to determine the share of the company's current subscribers in the total capacity. When determining the available share, we proceed from the assumption that the distribution pattern will approximately remain the same. Let's define the share of active subscribers: 30,000 / 95,000 = 32%. We consider the available share: 10800000 * 0.32 = 3456000.

So, the available share is about 3.5 million rubles, although nothing prevents the company from striving to completely conquer the uncovered part.

This video briefly describes how to calculate the market capacity:

Methods for determining the real audience

As mentioned earlier, before moving from calculating the potential market capacity to calculating the real one, it is necessary to draw a conclusion about what part of potential consumers are really interested in purchasing a product (or already using it). Already here, at the very beginning of the calculations, the company may experience difficulties, which in the future will force it to abandon the idea of ​​conducting an analysis in general. You can calculate the real audience using one of the following methods:

1. Polls and Questionnaires. This is cheap and cheerful, but not always effective, as the company risks receiving false information twice. Both the respondent himself and the employee conducting the survey can lie, having incorrectly recorded the response of the respondent.

1. Social media. This method is effective only for certain product groups, such as mobile phones or Internet service packages. It is necessary to proceed from the fact that mainly young people have pages on social networks. Research, for example, the bakery market using this method will be incorrect, since bread is consumed by everyone from old to young.

1. Respondent testing. This method involves the selection of consumers (respondents) according to various criteria - family income, age - and fixing their purchases. It is possible to use special scanner cards: the respondent presents such a card upon purchase, after which the receipt data appears in the company's database.

Of the methods described above, the third one is the most accurate, however, its use is possible only in those countries where trading automation (the presence of pin pads) is at a very high level.

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