The anticipated market share that a company intends to capture in a certain period after entering a market is known as company sales potential. The findings of sales potential are highly significant for a company when deciding whether or not to enter a market based on the projected profitability from sales potential.
The terms “company sales potential” and “company market potential” are not interchangeable. The entire sales or total prospective sales of all industry players in a particular geographical region over a certain period are referred to as market potential. A number showing the maximum or total sales from all potential purchasers of a product is known as company sales potential. The company’s market potential is a marketing activity that determines a product’s maximum potential. It’s usually expressed as a percentage of the overall market potential. The company market potential may be thought of as the projected market size for a product category, while sales potential can be thought of as the possible market share.
Advantages and Disadvantages of Company Sales Potential
There are numerous advantages to having high company sales potential, some of which are listed as follows:
It aids in the production of the correct quantity at the correct time, therefore assisting the firm in decreasing losses.
It assists management in determining the projected income from the company.
It also aids in estimating the number of raw materials and workforce necessary.
It offers the company a good head start in terms of decision-making.
It assists in appropriate planning to meet needed goals.
Some disadvantages are as follows:
Because there are so many options on the market, consumer buying behavior is unpredictable and irregular.
Because of technology upheavals and the emergence of megatrends, sales potential forecasting can often produce incorrect findings.
Importance of Company Sales Potential
The term “company sales potential” refers to the amount of money that might be made from a single product. It refers to the total quantity of a certain brand that might be sold in a market rather than the entire number of brands in a given product category.
A corporation or company forecasts future market demands by a method. This covers all direct costs so that profits may be calculated easily. Certain assumptions must be taken into account before sales potential may be forecasted. Market share will either expand or shrink by a specific proportion and the need to boost sales force, geographic benefits, and product price increases, as well as changes in technology, competition, and government regulations. It can be both short-term and long-term forecasted.
For instance, Coca Cola sales potential prediction is based on several elements, including historical data, social and economic characteristics, seasonal fluctuations, special events, festivals, and ceremonies. They do conduct weekly assessments so that monthly estimates can be adjusted. The majority of forecasts are done by region, with cities, towns, and villages being further subdivided. Before predicting, they examine regional and submarket demand and supply. They make judgments to maximize profits while minimizing risks. As a result, predicting sales potential aids Coca-Cola in gaining a significant market share.
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