What Is a Market Potential Analysis?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 25 February 2020
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Market potential analysis is a system used by businesses to analyze a potential market with the aim of finding out how viable such a market is with regard to the product that the company has to offer. As such, it can be used by those companies with a product or service they want to introduce into the market. This type of analysis will help businesses identify the strongest markets and also enable them to allocate their resources more effectively.

One of the reasons for conducting a market potential analysis could be for the purpose of identifying potential customers in a new or already existing geographical location. For instance, if a company based in Canada has a new product it wants to introduce into the market, it will first carry out a market potential analysis within its environment to identify the potential customers. The analysis might span several cities or several states. The result will inform the company of the areas of concentration based on where the most potential customers are located.


The same company could also carry out a market potential analysis of other geographical locations when it is thinking of expanding sales. Such a move is necessary due to the increase in globalization and the advantages offered by international trade. As such, the company might conduct a market potential analysis of several countries. The result of the analysis will reveal to the company where the greatest cluster of potential customers are located. This information will allow the company focus on the markets with the greatest potential in terms of customer base.

Another reason for conducting a market analysis could be to find out where there might be a wealth of untapped resources or potential. Transition to such a market might require a combination of market analysis, strategic design management, and effective marketing targeted to that specific market in order to benefit from it. For instance, a company producing a certain type of product that does very well in one market might also benefit from packaging or designing the product in a manner that it will be accepted by other markets.

An example of this is a company producing tailored pants that has identified wealthy, middle-aged men as its main market or customer base. This same company could discover through market analysis that there is an untapped market in the form of younger men between 21 and 35. The company could start a new line of redesigned and repackaged pants aimed at this market by making pants that are more appealing to its more youthful tastes.


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