Market capacity is an important economic metric that shows the largest volume of products that consumers can buy in a given market in a given period of time. Simply put, market capacity reflects its potential.
The indicator can cover current demand and potential demand, which is more often realized under favorable conditions, such as price reductions, product range expansion, or the launch of new marketing campaigns.
For example, if the smartphone market in a certain region is estimated at 1 million units per year, then this is the current market capacity. However, the actual capacity may change depending on the level of average current income of consumers, the emergence of new technologies or competitors, and changes in the market structure.
How is market capacity measured?
There are two options for how to measure the capacity of a region, city, country, or world:
1. Quantitative capacity of the market – in pieces, physical volume:
Goods are measure in pieces, liters, kilograms gambling data singapore and other physical units. Such an assessment is needd to understand how much product or material nes to be producd.
Example: the dairy market in one small region is estimatd at 100 thousand tons of milk per year.
2. Monetary capacity (financial volume):
Measurd in money – rubles, dollars, euros. This type of metric allows you to understand what income can be obtaind. The greater the monetary capacity of the market, the higher the potential profit .
What is the market capacity?
There are several types of market capacity: potential, actual and available. This is one of the approaches to determining waitlist software vs event management tools: how to choose capacity in general. Within the approach, each type reflects a certain amount of capacity and is for specific situations, making management decisions. Let’s consider them in more detail.
1. Potential market capacity – Total Addressable Market
Potential market capacity demonstrates the contact lists maximum possible market sales volume under ideal conditions: without taking into account competition, entry barriers and the use of other restrictions. A situation in which every potential buyer will be able to purchase a product.
For example, let’s imagine that we produce smartphones. The potential market is all mobile phone users in the world. If there are 5 billion users in the world, and the average price of a smartphone is 20,000 rubles, then the Total Addressable Market should be calculated.