Market capacity is the likely volume of services (sales of goods) for a fixed period of time at a steady
price level. Or solvent demand for them. As a rule, the measure of time in the calculations is one calendar year. The main indicator of this aspect is expressed in monetary terms (dollars, euros, rubles, yuan and so on). In other cases, market capacity can be expressed directly in commodity terms. But when calculating strategies and prospects or analyzing the current situation, financial structures are not interested in how many units of products can be sold to the consumer, but what will be the revenue from sales.
The calculation of market capacity is carried out according to the following formula: E = K * C, where E is the directly sought capacity, K is the number of units (or mass) of the product, and Ts is the cost. Market capacity is a factor that is formed at the expense of real demand and forecasted, elasticity of its volumes, availability of price level, the ability to productively promote the product, the welfare of the population, business activity and the general situation. This is a fairly generalized provision. Each individual market has its own capacity calculation option. But there are general provisions, such as seasonal fluctuations in prices.
Market capacity is a necessary indicator if an enterprise intends to increase its presence in the industry or to develop new sales areas for goods. This factor has two levels: real and potentially predictable. Expected - this is a reflection of the desire of buyers of a certain type of product to receive a new product or have a new service. Existing market capacity is far from always identical to potential. Calculations are also made taking into account the region and geographical areas. For this, an analysis of secondary indicators on the sales market is carried out (reviews, statistics, analytical reviews in the press). The calculation includes parameters of costs and consumer behavior of a particular product (volumes of one-time purchases, financial costs of a product, definitions in the selection of product categories, motivation, and much more).
Market capacity is the multiplication of consumption by one customer by the total number of residents in a particular region. Or an adjustment of a known indicator in one region with the help of a price coefficient, average wage, population and other data. Obviously, in some time periods, market capacity may increase, in others - decrease.
Therefore, special divisions of companies constantly monitor the current dynamics, analyze the causes and create, on the basis of the identified data, certain schemes that help enterprises to balance sustainably.
Market research, its modeling is the most important direction in the strategy of the existence and development of each enterprise. The more accurate the data, the more stable the company can operate in the industry. Determining market capacity, current information, and current trends is extremely important for making sound management decisions.