Market Potential Analysis
Market potential analysis is the assessment of how much demand and growth opportunities exist in a given market.
Simply put:
analysis of whether it’s worth entering the market and how much you can earn
What is evaluated during the analysis
- Market size
- sales volume
- number of customers
- monetary value of the market
- Growth rate
- whether the market is growing or shrinking
- industry development forecasts
- Demand
- how much the audience needs the product
- level of interest and need
- Competition
- number of players
- market saturation level
- barriers to entry
- Target audience
- segment size
- purchasing power
- consumer behavior
Why market potential analysis is needed
It helps:
- assess the viability of an idea,
- make investment decisions,
- forecast sales,
- choose markets for scaling,
- reduce business risks.
Where it is used
- launching a new product,
- entering a new region,
- startups,
- investments,
- strategic planningю
Key metrics
- TAM (Total Addressable Market)
- SAM (Serviceable Available Market)
- SOM (Serviceable Obtainable Market)
Example
A company wants to sell online courses. It analyzes:
- the size of the EdTech market,
- the number of competitors,
- demand for education,
- the audience’s purchasing power.
This helps understand the business’s potential.
Analysis methods
- marketing research,
- surveys and interviews,
- analysis of industry reports,
- web analytics and search trends,
- competitor analysis.
What’s important to remember
Market potential analysis is an assessment of the volume of opportunities and growth prospects in a market.
It helps understand how attractive a market is for a business and what the chances of success are.
