Estimating market potential, stage of estimating market potential, steps of estimating market potential and Entry strategies

Estimating market potential

Market potential is the total amount of prospective sales in the market. The process of determining market potential or demand for products in international markets is known as estimation or assessment. Managers must employ cutting-edge research techniques to gather information or insights. Determine the economic viability of a venture by estimating the market or market potential for a new firm or business growth. The challenge of identifying and choosing a positioning strategy is highly challenging.

The following equation can be used to calculate market potential:

MP = N X PX Q

Where, MP = Market potential

N = Number of possible buyers

P = Average selling price

Q = Average annual comsumption

Stage of estimating global market

When evaluating the worldwide market, two steps must be taken.

Estimating industry market potential: Analyzing general market demand is the first step in estimating an industry's market potential. An estimate of the expected sales of all the businesses in the specified industry for a given time period is known as the industry market potential. Managers of multinational corporations can use it to study and evaluate market possibilities. In order to get the desired result, the company might build its marketing mix. The following are some examples of market potential and opportunity indicators:

• Gross National product
• Population
• Personal income
• Cultural factors
• Substitution of products
• Buyer's behavior

International managers can estimate the potential of the industrial market using a variety of techniques. Certain of them are

• Simply analyzing trends
• Crucial industry-specific indicators for trading
• Paying off important rivals
• Connecting with the network of suppliers going to an international trade show

Estimating prospective sales for a company: Calculating the sales and demand of a specific product on a foreign market is calculating the company's sales potential. The researchers must get highly specialized market data. Several factors that affect a company's sales potential include

• The type of competition
• quality of the goods
• access to the supply chain
• businesses' talents and contacts
• companies' standing
• the standard of human resources

Steps of estimating market potential

The following are the five steps for estimating market potential:

• The first stage in determining market potential is to define the target market and market segments.
• The market's geographical boundaries should then be established.
• The category's typical spending, please.
• Identify the regions' and the state's average household income.
• The market share, please.

Entering and operating in international market

• Exporting and importing : The most typical strategy for breaking into international markets is exporting. To enter the foreign market, it uses direct or conventional marketing channels. Currently, the internet supports it. Market size can be increased via exporting. A direct or indirect approach is possible. The business sells directly to a client in another nation. Examples include marketing middlemen, export agencies, etc. and indirect exporting typically refers to a corporation selling to a domestic customer. As an illustration, consider a trading corporation. Similar to exporting, importing is the act of bringing products or services produced in another nation into the place of origin. Both of these need little risk and investment. The act of importing and exporting is governed by cooperative agreements or contracts between several exporters and the company, which also agrees to handle the necessary paperwork and documentation.
• Collaborative ventures: Collaborative ventures are essentially two or more companies working together to develop joint ventures that will compete on the global market. Some examples of these ventures include
  • Strategic alliances: A strategic alliance is when two or more businesses work together to implement a certain plan. Contractual agreements between the companies for cooperation on a specific objective, such creating new products through research and development, are possible. It could be any relationship between commercial organizations with the intention of attaining certain strategic objectives. As they are employed to pursue long-term strategic goals, joint ventures are a subset of strategic alliances. It may lessen political danger.
  • Joint ventures are cooperative arrangements between unrelated individuals or businesses that share or combine different resources while yet retaining separate and independent legal entities. Additionally, it is a limited-time partnership between two or more people without the usage of the corporate name. Limited partnerships end when the project for which they were formed is finished. It comes in two varieties. They are party to a contract and have equity.
  • Consirtia: A joint venture is referred to as a consirtia when it involves more than two firms from different nations. It is the procedure of gathering various data and listening to risk.
  • Turnkey operation: A turnkey operation is a project in which a company undertakes to set up an operating facility for a foreign client and transfer ownership once the facility is fully operational. When foreign direct investment is restricted, turnky operations are mostly used in infrastructure development.
• Licensing and franchising: In a licensing agreement, a business grants permission to another business to utilize its brand name, trademark, technology, patent, and other assets in return for loyalty that is typically based on sales. It allows more people to enter the market and has a lower risk of failure. Licensing is effective for the goods. The licensee reimburses the licensor for licensing costs. There are no requirements for how licensees must conduct business in it. In terms of initial investment and ongoing expenses, it is less expensive than franchising. The relationship between the licensor and the licensee is distant. In the event of licensing, training and support are not given in the same way. as in Pepsi-Cola
  Similar to licensing, franchising is a business model whereby the franchiser grants the franchisee permission to utilize its brand name and all associated trademarks in exchange for continued support. Franchisee agrees to follow tight guidelines for running the business. The greatest method for the services is franchising. For franchising, the franchisee pays the franchisor royalties. The franchiser must adhere to tight guidelines or requirements. Because royalty must be paid with every profit, it is expensive. Franchiser and franchisee have a close relationship. On branding and marketing, training and assistance are provided. as in KFC
• Wholly owned subsidiaries: Another type of foreign investment made through which a firm is controlled is through totally owned subsidiaries. There are two kinds. These investments and acquisitions are new. A green field investment project entails the launch of an entirely new business in another nation. Its purpose is to move production to an area where labor costs are lower. It is challenging to carry out. experience startup issues. Similar to this, acquisition refers to buying an operating unit from an existing company in a foreign target market. It indicates that a country with a larger than average population buys another established or existing business. It is simple to carry out. No issues during startup.