The capacity of the market is the most important indicator for forming the strategy of enterprises

Market capacity is the likely volume of services (sales of goods) for a fixed period of time at a steady price level. Or effective demand for them. As a rule, a measure of time in the calculations is one calendar year. The main indicator of this aspect is expressed in monetary equivalent (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, and what the sales revenue will be.

Calculation of market capacity is made by the following formula: Е = К * Ц, where Е - directly sought capacity, К - the number of units (or mass) of the goods, Ц - cost. Market capacity is a factor that is formed due to real demand and predictable, elasticity of its volumes, availability of price level, the ability to productively promote the product, the welfare of the population, business activity and general market conditions. This is a fairly general situation. Each individual market has its own version of capacity calculation. But there are general provisions, for example seasonal price fluctuations.

Market capacity is a necessary indicator if the company 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. The intended is a reflection of the wishes of buyers of a certain type of product to obtain a new product or to have a new service. The existing market capacity is by no means always identical with the potential one. Calculations also take into account the region and geographical areas. To do this, an analysis of secondary indicators on the sales market (reviews, statistical data, analytical reviews in the press). The calculation includes the parameters of costs and behavior of consumers of specific products (volumes of one-off purchases, financial costs for goods, definitions in the choice of product categories, motivation and much more).

Market capacity is the multiplication of the consumption rate by one buyer by the total number of residents in a particular region. Or adjustment of the known indicator in one region with the help of price coefficient, average wage level, population and other data. Obviously, at certain time intervals the market capacity can increase, in others - decline. Therefore, special units of companies constantly monitor the existing dynamics, analyze the causes and create on the basis of the identified data certain schemes that help enterprises to steadily balance.

Market research, its modeling is the most important direction in the strategy of 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 existing trends are extremely important for making correct management decisions.