Future
Market Growth
How big is your market? Is it large enough to sustain your
business and competition? What is the growth trend for the next
five years? Once a market has been identified, what is the size
of the actual market that you can compete in? The actual market
segment that you can sell to may be a small fraction of the
total market. Each total market must be examined in light of:
- size of the total market
- size of the market that is interested in your products
- size of the market that is available for distribution of
your products
- size of the market that already buys competitive products
- size of the market that your company can serve
- size of the market that your company can reach with
advertising and distribution
For example, the total potential market for water
purification and filtering devices is 100 percent of the world's
population, almost five billion people, since everyone needs to
drink pure water. But the size of the market interested
in water purification devices may be three billion people. The
size of the market available for distribution may
constitute two billion people. But the size of the market
that currently buys such products may be under 700 million
people.
Assume your company is planning to introduce new water
purification devices only in the United States and only in the
outdoor/camping industry for portable water purification
devices. Then the total market you can serve for your
company's products may be only one million potential users, or
0.02 percent of the total potential world market.
What about the size of the market segment that your company
can afford to reach with advertising and then distribution?
Depending upon your company's resources and size, you may be
able to effectively reach only 50 percent of the one million
American camping enthusiasts through distributors who are
willing to take on your product line. Assuming you are able to
afford a modest print magazine ad campaign in two or three
national industry magazines, perhaps 50 percent of consumers may
be aware of your products, or a net 250,000 potentially
interested, aware consumers.
If only one in four interested, aware, available, and
servable consumers end up buying your product, you have
potential sales of 62,500 units/year. Not bad, you say. But if
the repeat purchase rate is five years, you would need to
generate an entirely new group of 62,500 qualified consumers
each year, at least for the first five years. And this may be
more difficult to execute than previously thought with a total
potential market of almost five billion souls! Perhaps you could
increase the distribution base, increase advertising, or
increase the served market to include other countries, or expand
the product line by creating different sizes of portable water
purification devices, or different units for varying severity of
non-potable water conditions.
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