Market Potential of a Product: Definition & Analysis Example

What is market potential?

Market potential is defined as the total of the market size for a product at a given period of time. It is always calculated at a specific time. The measurement of market potential is usually done by two ways-either by sales value or by sales volume.

Example of market potential

The market potential for five motor bikes may be Rs 50,000,000 in a year. On the other hand, the market potential for cars may be 500,000 units each year. Now, this is a measure of sales volume rather than sales value.

We should know that the market potential is just a snapshot in time. It's a fluid number that changes. It is dynamic which changes with the economic environment. It represents the upper limits of the market for a product. For example, the demand for products that are typically financed, like cars and houses will be affected by rising and falling interest rates.

Market Potential Analysis

Marketing process will be successful if we find out the market potential of a product and therefore it requires marketing research. First of all, analysis of your potential customer base is important. Then analyze your competition because they are who you compete with and very importantly analyzing the current environmental conditions. It is because current environmental conditions may affect market potential and it is therefore important.

How to determine Market potential for any product or service?


1)  Analyzing Potential Customer Base


Important information that is required will be:
•   The population size of your target market
•   their product preferences
•   their household income.
And hence we can come to know about the number of potential customers and whether they can actually afford the product. You need to determine the size and demographic characteristics of your potential consumers

We can analyze the data using either primary data or secondary data. Both are effective and are used. Primary data is the first hand information, and secondary data is the second hand information which is not directly obtained.

2) Analyzing Competition

If you are willing to bring out a new product in the market you have to analyze your competitors well. It is said that a marketer should know its future competitors to actually position himself in the market. You have to know the competitors’ strengths, weaknesses, threats and opportunities and for that SWOT analysis is important.

3) Analyzing the Current Environment

We all know that market potential is not a static concept. It is absolutely dynamic which changes with the general economic and political environment.

For example:
•   If interest rates go up, the demand for a particular product will go down and this will decrease the product's overall market potential.
•   A change in tax rates may also suppress spending less money is available on discretionary purchases, thereby reducing a product's overall market potential.
•   On the other hand, market potential can increase if wages increase, taxes are lowered or interest rates decline. Thus to conclude we can say that market potential is defined as the total of the market size for a product at a given period of time.

What is Actual Market?

Actual Market is a type of environment situated in the market which is characterized by heavy transaction volume and day to day transactions hold importance in it. It can be called as commodity market because commodities in actual market are delivered immediately.

The actual market is basically concerned with the buying and selling of commodities. Commodities are tangible goods that are needed by humans. It usually involves diverse types of products.

Commodities are goods which can be of three types. The first one being FMCG products also known as fast moving consumer goods. These goods are needed every now and then like salt, sugar, rice, Colgate etc. Then we have durable goods which are long lasting and their need arises once in a while, like TV, ac, fridge, sofa set.

And then lastly, we have speciality goods. These are expensive goods which when bought adds status and pride to our value. Like ancient articles, jewellery, paintings. These goods are bought with care and a lot of thought unlike FMCG which can be bought without a second thought.

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The Importance of Product Positioning to the Marketing Plan
Market Segmentation - Definition, Bases, Types & Examples

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Effects of Thermal Pollution

With the given demand for cooling in power generation and other industrial processes, the extent of thermal pollution worldwide is huge and wide spread. It is mostly observed in the more mechanised countries. The countries of Americas, Europe, Asia and Australia show this trend majorly which is in the heavy influence of thermal pollution. The adversity of thermal pollution is usually related either to chemical contamination or biological contamination. These combined causes of pollution can create rigorous stresses on aqua-biotic ecosystems.

Effects of Thermal Pollution

There are mainly two schools of thought regarding their perception about the effects of thermal pollution. According to the first school of thought, without these industries operating like they do then many basic parts of human life would be rendered obsolete. Waste water will not be maintained properly and basic products won’t be provided then.On the other hand, according to the other group, there are more negatives of this on the marine ecosystems and how badly it reprimands the positive environmental practices. But it is very clear that the negatives outweigh the benefits that industries provide us with.

• Biodiversity Loss – With even a small glitch or dent in the aquatic system related to biological activity well being, there can be a heavy loss faced on the biodiversity front. As far as the changing conditions of the environment prevail, it may lead to make certain species of organisms to shift or migrate from their base. Again there can be many species that shift due to warmer waters prevailing in the water bodies. It is not easy for all the species to adjust to the warmer waters and some might have a lot of difficulty due to this.

• Disruption of Reproductive System – There is a noticeable pause and disruption in the reproduction of marine wildlife with also the likelihood of prevalence of defects in new born having increased considerably. This happens mainly due to the increased temperature conditions as reproduction happens within certain range of temperature only. Several activities like nest building, spawning, hatching, reproduction and migration depend hugely on an optimum temperature. Excessively higher temperatures can wane the release of immature eggs or prevent the normal development of eggs.

• Decrease in Dissolved Oxygen Levels – It is observed that the concentration of dissolved oxygen (DO) decreases with increase in temperature. The water with higher temperature reduces the levels of (DO) in water. The warm water holds relatively lesser amount of oxygen in dissolved form than cold water. With this condition of decreased presence of dissolved oxygen can create suffocation for plants and animals like fishes, amphibians and copepods due to anaerobic conditions. Also with warmer waters, algae can thrive better on the surface of water. More the algae more will the anaerobic conditions prevail in the water.

• Mortality & Migration of Aquatic Organisms– Thermal pollution is a major reason for the mortality of aquatic animals. Fishes die after a certain temperature due to failure of respiratory and nervous system. Again there are cases of migration taking place due to higher temperatures to more suitable environment catering for their requirements of survival. We might lose those species which depends on those species as a food source.

• Abnormal Metabolism – Thermal pollution causes the metabolic rate to increase of organisms. This makes them consume more food as their enzyme levels are increased rather than the normal conditions. Temperature plays an important role in the proper functioning of physiology, metabolism and biochemical processes which controls factors like respiratory rates, digestion, excretion and development of organisms. This disrupts the balance within the food chain and the species composition.

• Increased Toxins – more the flow of higher temperature waters from the industrial discharges more is the increased concentration of toxins into the water. Huge increase in the toxins that are being regurgitated into the water bodies. These toxins contain chemicals or radiation which have a harsh impact on the local ecology and becomes prone to diseases. The toxicity with warmer waters gets even more poisonous. At a higher temperature of even 10 degree Celsius doubles the toxic effect of Potassium Cyanide and O-Xylene at 80 degree Celsius causes tremendous fish mortality.

• Ecological Impact – With a sudden thermal shock from thermal pollution has the capability of mass killing of fish, insects, plants or amphibians. Warmer waters are not favorable for all types of species which might be better for only few species. Little increase in temperature has higher activities but then goes on decreasing with further rise. Some species are very sensitive and they undergo drastic changes in metabolism and other adverse cellular biological effects.

Read More:
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Ways to Prevent Ocean Pollution

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What is Dosanomics? Raghuram Rajan's Dosa Economics explained

Mr. Raghuram Rajan is an Indian Economist and a distinguished Professor at the University of Chicago. Mr. Rajan was the Chief Economist and Director at the IMF between 2003 and 2006, the Chief Economic Advisor of India in 2012 and the Governor of the Reserve Bank of India from 2013 to 2016. During his governorship he worked with a vision to bring down inflation rates, bring out large scale financial inclusion in the Indian masses, promote digitalization in the Indian Banking System and dig out bad loans that lay hidden in the Indian PSBs- a move that has opened the nation’s eyes that all is not well with the Banking system. Unlike many of his predecessors in India and peers around the world he is known for his bold and massively unpopular steps when it came to bringing India’s economy on track.

During one of his public speeches and press meetings he tried to explain his move to bring down inflation. He wanted to convey that a low interest rate with a low inflation rate is much better than a high interest rate with a high inflation rate. During his tenure the inflation rate had been controlled to 5% from 10% and as a result the bank term rates also fell from 10% to 8%. This left the conservative term deposit lovers disgruntled. So, to explain his move and to instill the basics of economics in the minds of the masses he used the simple example of a Masala dosa, thus the term Dosanomics.
Here’s his example:

Scenario 1

High inflation 10%


dosa economics wiki, dosanomics meaning, raghuram rajan dosa question
The saver knows that he can get more dosas if he just kept his money in a bank’s Term Deposit at 10% p.a. for one year. By the end of 1 year he gets Rs. 10,000 (100,000*10%) plus the original Rs. 100,000. So with Rs. 110,000 he can buy 2200 dosas. But here’s the catch! The economy is experiencing a 10% inflation rate. This means that the cost of a dosa has risen by 10% from Rs. 50 to Rs. 55. So effectively he can buy (Rs. 10,000/55) 182 dosas and not 200 dosas from the interest money at the end of a year.

Scenario 2

Low inflation 5.5%


dosa economics wiki, dosanomics meaning, raghuram rajan dosa question
If the saver deposited his money for a year @ 8% p.a. he would get Rs. 8000 as interest and he would be able to buy (8000/50) 160 extra dosas. But at the same time the inflation has reduced from 10% to 5.5%. that makes the cost of a masala dosa Rs 52.75. Thus the new number of dosas he can buy is (8000/52.75) 152 dosas.

After having read until now you must be wondering about the effectiveness of the Dosanomics, isn’t it? The calculation is wrong somewhere. So where is the error?

During high inflation one can buy 1818 dosas with Rs. 100,000 at Rs 55 per unit and 1896 dosas during low inflation. So ultimately,
High Inflation; High Interest Rate-- No of dosas: 1818+182=2000 dosas.
Low Inflation; Bit Low Interest Rate-- No. of Dosas: 1896+152=2048 dosas.

By this Dosanomics we now know that the savers are earning (48/2000) 2.5% more dosas at lower inflation levels!

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Transactional analysis : What is Transactional analysis ?

Transactional Analysis is a theory propounded by Eric Berne. Transactional Analysis is a psychoanalytic theory based on verbal communication between two people. This communication is called a Transaction.

According to Berne during a transaction a person sends the stimulus and the other person responds. The person sending the stimulus is called an Agent and the person receiving it is called the Respondent.

The psychology behind the concept of transactional analysis reasons it in terms of human thinking. When a person is confronted with a situation it is stored in his memory. And when encountered with another similar situation the brain brings out these memories not in its exact form but rather in the form of feelings that are associated with the memory. At a later stage the feelings and memories take form of alter ego in a person. During each transaction a person being an emotional being is filled with feelings and both parties hold to an alter ego while sending and receiving stimulus. There are three basic ego states- The parent ego, the child ego and the adult ego.

To understand the transactional analysis, it is important to understand the various alter ego states.

Ego States : What are the different Ego States ?

Parent Ego- Like a parent, parent ego is authoritative but also guiding. It often tells us the ‘how to’, dos, do not 's and the never's. Parent ego state can either be nurturing or controlling. Physical signs of this ego state include- body language with signs of impatience or anger. Verbal signs include use of criticising words, judgemental words and patronising language.

Child Ego- Child ego is characterised by joy, tantrums, curiosity, wanting to impress etc. It is the child in a person. In cases where anger and jealousy comes into play, it is the child ego state. This type of ego state can also be called the 'felt' ego state. Usually in a child ego state a person uses phrases like I don't know, I want, I don't care, superlatives etc.

Adult Ego- Adult ego state is our thinking self. The adult ego state comes between the child and the parent ego states, where with the help of others parent ego ones child ego develops into adult ego during adulthood. When we communicate if we receive information, process it and react afterwards we are in an adult ego state. Adult ego is marked with the ability to listen attentively, understand and communicate efficiently in a straight-forward manner. Common phrases used by a person in an adult ego state are- true, probably, possibly, I believe, I realise, in my opinion, comparative statements etc.

Four Life Positions

There are four common life positions that describe the different ego states. They are-

I am Okay, you are Okay. This is the most mentally healthy position a person can be in. In this life position during a transaction both parties have an adult ego. In this life position people feel positive about themselves and others. Here people solve problems practically and act rationally.
I am Okay, you are Not Okay. This is a parent ego state where one believes he is right and the other person is wrong. Here people feel they are victimised. Commonly people in this position feel miserable and blame others for their miseries.
I am not Okay, you are Okay. Here the person is in a child ego state. A person compares themselves with others and feels that there are many things they don't have control over. So they tend to withdraw from others.
I am Not Okay, you are Not Okay. This position is the most dangerous life position where a person can become depressed and have a feeling of anger and helplessness. But they must remember to grow. It is then that they find a purpose within themselves and stop looking outside for happiness and comfort, thereby making the conversation with others more constructive and leading to growth.

It is said that no human interaction is without a motive; a selfish one or a selfless one is the question, but does it even matter? Don’t we do everything to satisfy something in us that we deem necessary? A transaction indeed.

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What is Market Segmentation? Basis, Types & Examples
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4 Cute Ways To Pacify Your Angry Spouse

How to Deal With an Angry Partner

Is it really safe to ask your partner to take a chill pill when he or she is really angry? I guess it is best not to say something that can flare up an argument. If your partner is angry because of you, then be even more cautious. Defending yourself will be like adding fuel to the fire. We need to understand that nobody is upset by choice there is always a reason. So, as a first step to calm your partner down, you should let your partner vent out their emotions. Here are some ideas that will definitely help.

1. Humor- Yes manners are good but humor is a must in a relationship. We all are attracted to people who have a good sense of humor. Humor takes the centre stage when it comes to sustaining a relationship or calming down your partner. When he/she gets angry turn on their favorite music and ask them to dance or even better, dance on the same notes in a weird funnier way! That should definitely improve their mood. I will tell you something funny: just repeat the words your spouse says, keep on repeating them until he/she become quite and that will force them to laugh.

2. Speak the truth- When they shout at you, don’t shout back or reply angrily. Instead confess that you get scared and feel hurt when treated like that. They will lovingly disengage themselves from their angry self.

3. Know your partners melting point- Aha this is very crucial to note down folks. There are times when you will hate your significant or better half for the kind of behavior they present. But trust me behind their red facade is a golden heart that you once traded with yours. So research a little about your dear one, what, when, how does your sweetheart get upset or irritated and then try to figure out ways to handle such situations if they crop up! To melt away the anger be genuinely sorry if you have made a blunder. Accept the punishment and from the next time make sure that degree Celsius is not shot up!

4. Don’t ever run away- Okay many have the habit of abstaining from the main point and bringing in other ‘not so important’ point and fighting over it. Handle it well and please don’t refrain from the point. Communication is a must. This will not make your partner feel frustrated or resentful otherwise they will think that you simply don’t care.

Anger is like fire, it will burn everything down. So be calm, be patient and you will notice the anger cascading. Don’t forget you can always take help from near and dear ones if the situation is not manageable all by yourself. Many people gather the wrong notion of not seeking help as they feel ashamed (they think people will think that they are adults but still can’t handle such situations). But that is incorrect. In that way they are digging their own graves. Life will invite numerous twists and turns or ups and downs but to maintain the balance in a relationship you have to maintain inner peace yourself. Understand that your spouse has a lot of pressure like you; at the end of the day we all are human beings. If both are of the same temperament then you guys will only repeal and worsen the condition, the strength of our relationship. So keep calm, back-off for a while, try to judge the gravity of the situation and finally act.

Read More:
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Things You Should Say To Your Partner Every Single Day

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