WHAT IS YOUR MARKET POTENTIAL?

Although It's Often Difficult to Pin Down, a Product's Market Potential May Revolve Around the Word "Use."

By James F. Riordan

The American Marketing Association defines "Potential Market as "the maximum possible sales opportunity for all sellers of a good or service."

I define Potential Market as the number of persons WHO WOULD BE ABLE TO USE YOUR PRODUCT if you gave them one for free. Again, Potential Market consists of the people who would be able to USE it, as distinguished from the people who would be able to BUY it, which are two totally different things. Winning products is this category are those which can be used by every man, woman and child in the country.

I determine the size of the potential market using two inputs:

1. Primary Information--Information obtained by showing or using the product, gathered through focus groups, field research, simulations, observing end users, etc.

2. Secondary Information--Existing data and research found in government reports, trade journals, syndicated marketing services, magazines, information databases, and perhaps your own company records.

Determination of potential market size must be done objectively to be sure the figures are not inflated and overestimated.

You can get a rough estimate of the size and buying habits of your potential market by using population, demographics, age, sex, nationality, and business information that you can find in "The Statistical Abstract of the United States." I recommend this publication highly. It contains data from the Commerce Department and the Bureau of Census and is available at your public library.

Using data from this publication, you can "quantify" your answers to the questions which follow (in terms of the number of people who would have a use for your product) and arrive at a rough estimate of your potential market size. 

The above article was taken from James F. Riordan's classic book, HOW TO EVALUATE THE POTENTIAL FOR SUCCESS OF A NEW PRODUCT OR TECHNOLOGY. Riordan's highly-acclaimed, 36-point system is a valuable tool for inventors, product evaluators or anyone interested in the invention process. Each section is followed by a comprehensive questionnaire that can be used to evaluate your product.

The highly-recommended book can be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.

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