Calculation of market capacity

Calculating market capacity helps companies solve the following problems:

• - launching new products/services onto the market;
• - searching for opportunities to increase sales;
• - identifying new niches and segments;
• - determination of current market trends;
• - forecasting market development and developing effective development strategies.

Comprehensive market analysis and calculation of its main indicators includes:

• - assessment of market capacity
• - assessment of indicators of attractiveness and saturation of the market/segment (in case of entering a new market);
• - assessment of the market share occupied by the target company;
• - calculation of shares of all other participants;
• - forecasting demand for new products;
• - assessment of the level of penetration;
• - calculation of the capacity of consumer market segments;
• - compiling a review of key characteristics.

There are more than ten methods for assessing market volume. This or that method is selected based on the characteristics of the market, the presence of substitutes and competitors, market openness and many other factors. The most commonly used methods are the consumer method (based on a consumer survey), the competitive method (the performance of competitors is analyzed) and the general market method (suitable for developed markets).

BCGroup is one of the few companies that implements its own developments in marketing research. In the process of analyzing the market volume and assessing its capacity, BCGroup analysts use a unique matrix to determine the attractiveness of the segment of interest.

Marketing research provides key information for making the right decisions. Knowing the market capacity allows you to avoid risks when releasing a new product or service, saving tens, hundreds of thousands or even millions.

The study will open up new perspectives and show in which direction the company should develop. The data collected during the analysis process helps in making the right management and investment decisions.

Capacity is the turnover (volume) of a certain market. The indicator is calculated in physical and financial indicators. Market capacity assessment is carried out for a specific market or its segment within a certain region.

Assessment of the capacity of individual market segments is intended for enterprises operating in certain regions and large concerns wishing to open a division in a particular area.

The research method depends on the customer’s goals and the specifics of the market - in total there are about ten main methods for assessing market capacity.

The volumes of markets cannot be called stable. During the year, market capacity may change within 10–15%. Growth and reduction of the indicator depend on:

- degree of development of the market or its segment
- the main characteristics of the products offered to customers
- availability of similar products/services (substitutes) on the market
- macroeconomic indicators
- mobility and elasticity of demand
- fluctuations in market prices

Other factors have less influence.

It is recommended to calculate capacity (volume) when entering the market and planning to reach a new consumer segment. Analysis is also important in monitoring your own positions and in deciding whether to invest in expanding production.

The minimum sample size when assessing market size is 400 questionnaires per individual region of study. In addition, about 8–12 expert interviews are conducted, as well as desk research.

Collection of data of the specified volume takes 15 working days. The timing does not depend on whether the study is conducted in a specific region or throughout the country.

The cost of estimating the volume of a particular market or its segment depends on:

- number of questionnaires and interviews (fees are charged only for completed documents)
- costs of analytics (no more than 15% of the price of data collection)

Using the calculator implemented on the website, you can quickly calculate the cost of one questionnaire. The price directly depends on the number of open and closed questions.

A study with a minimum sample will cost from 2,000 £.

There are about ten different methods for calculating market capacity, but four of them are widely used.

1. Buyer research. The indicator is calculated taking into account per capita consumption, the number of inhabitants of the region and prices
2.Analysis of manufacturers. When assessing market capacity, prices are taken into account, as well as shares and volumes of production
3. Analysis of sellers. For retail markets, the sum of sales of all large retail chains in the area of interest is taken, with a subsequent increase in the indicator due to small retail For B2B markets - the sum of sales of all dealers/distributors/importers/exporters
4. Method of analogy. For the study, we take a region that is similar in all respects (level of market development, consumption standards, productivity, population)

BCGroup analysts have developed mathematical models for each method for calculating market capacity. They are adjusted for specific projects. If necessary, additional parameters are entered. The methodology is selected depending on the specifics of a particular market or its segment.

The first method of calculating volume is the most accurate. Experts use it when assessing the capacity of existing markets. The research involves conducting surveys. Sample sizes are determined using Paniotto's table or a formula taking into account price dispersion, resulting error and other parameters. The analogy method is used to estimate the market capacity of new unique types of products.

Regardless of the chosen methodology, independently calculating market volume is a rather difficult task. BCGroup's team of analysts will help you approach this issue wisely. Research carried out by recognized professionals will save you time and money.

The process for calculating market size is as follows.

1. An NDA confidentiality agreement is concluded
2. The specialist studies the product features and international experience
3. A BCGroup employee agrees with the customer on a methodology for calculating market capacity, a survey questionnaire and a guide for expert interviews
4. Experts conduct research using qualitative methods. If necessary, revision and final approval of the questionnaire takes place at this stage
5. Interviewers conduct quantitative research (surveys). Every day, experts interview up to 5,000 representatives of the target audience
6. A BCGroup employee transfers all collected information to the client in SPSS or Excel format

After 10–15 business days, a BCGroup specialist sends the customer an analytical report containing the results of an assessment of market capacity. A full version with a detailed description of the work process and a brief executive presentation are provided.