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    SDM My Notes

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    Ammy k
    Sales potential is the estimated market share a company expects to capture in a given time period after entering a market. It is important for determining profitability and whether to enter a market. Sales potential forecasting involves assumptions about factors like market share changes, sales force size, prices, technology, competition and regulations. Accurately forecasting sales potential allows companies to produce the right quantities at the right time to reduce losses and help management determine expected revenue. However, consumer behavior is unpredictable and forecasts may be inaccurate due to disruptions. Sales potential considers only one brand's quantity sold, while market potential considers all brands in a product category.

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    SDM My Notes

    Uploaded by

    Ammy k
    63 views3 pages
    Sales potential is the estimated market share a company expects to capture in a given time period after entering a market. It is important for determining profitability and whether to enter a market. Sales potential forecasting involves assumptions about factors like market share changes, sales force size, prices, technology, competition and regulations. Accurately forecasting sales potential allows companies to produce the right quantities at the right time to reduce losses and help management determine expected revenue. However, consumer behavior is unpredictable and forecasts may be inaccurate due to disruptions. Sales potential considers only one brand's quantity sold, while market potential considers all brands in a product category.

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    Sales potential is the estimated market share a company expects to capture in a given time period after entering a market. It is important for determining profitability and whether to enter a market. Sales potential forecasting involves assumptions about factors like market share changes, sales force size, prices, technology, competition and regulations. Accurately forecasting sales potential allows companies to produce the right quantities at the right time to reduce losses and help management determine expected revenue. However, consumer behavior is unpredictable and forecasts may be inaccurate due to disruptions. Sales potential considers only one brand's quantity sold, while market potential considers all brands in a product category.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    63 views3 pages

    SDM My Notes

    Uploaded by

    Ammy k
    Sales potential is the estimated market share a company expects to capture in a given time period after entering a market. It is important for determining profitability and whether to enter a market. Sales potential forecasting involves assumptions about factors like market share changes, sales force size, prices, technology, competition and regulations. Accurately forecasting sales potential allows companies to produce the right quantities at the right time to reduce losses and help management determine expected revenue. However, consumer behavior is unpredictable and forecasts may be inaccurate due to disruptions. Sales potential considers only one brand's quantity sold, while market potential considers all brands in a product category.

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    Download as docx, pdf, or txt
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    Definition: Sales Potential

    Sales potential is the estimated market share that company expects to capture in
    a market in a stipulated time period after entering the market. Sales potential
    results are very important for a company in determining whether to enter a
    market or not depending on the estimated profitability from sales potential.
    Importance of Sales Potential

    Sales potential generally means how much one product could be sold. Sales
    potential means total quantity of a particular brand that could be sold in a
    market instead of all the brands of a particular product category. It is actually a
    process by which a business / company predict the future market demand. This
    includes all the direct costs so that it will be easy to estimate profits. Before
    sales potential forecasting the sales, there are certain assumptions that need to
    be considered. Those are – either market share will grow or shrink by certain
    percentage, need of increasing sales force, location advantages, and increase in
    product’s prices, change in technology, competition, and government
    regulations. Sales potential forecast can be short term as well as long term.

    Advantages of Sales Potential


    Sales Potential has several advantages, some of which are written below:

    1. Sales Potential helps in producing right quantity at the right time which in
    turn helps company in reducing losses.

    2. Helps the management to determine the expected revenue out of the business.

    3. Also helps in determining an approximate quantity of raw materials and labor


    force required.

    4. Sales Potential gives a good driving start to the business in terms of decision
    making.

    5. Helps in proper planning to achieve required targets.

    Disadvantages of Sales Potential

    Some disadvantages of sales potential are:

    1. Consumer’s buying behavior can’t be predictable and are irregular as there


    are many alternatives available in the market.

    2. Sales potential forecast may sometimes give inaccurate results because of


    technological disruptions and coming up of mega trends.

    Difference Between Market Potential Vs Sales Potential

    While defining market and sales potential, both of the concepts takes into
    consideration both the needs and demands of the customer. Market Potential is
    the total quantity of all brands of a same product category that could be sold.
    Sales Potential differs from Market potential as it only considers the total
    quantity of a particular brand instead of all the brands that could be sold in the
    market.

    For example, if there are two brands - Brand X and Brand Y. Customers who
    are very much loyal to Brand X would be market potential estimate for Brand Y
    but would not be their sales potential estimate and vice versa. So, there is no
    guarantee that sales potential estimates will be equal to market potential
    estimates. Mostly sales potential estimates are calculated from market potential
    estimates. So in order to calculate sales potential estimates, one needs to know
    market potential estimate.

    Examples of Sales Potential

    Coca Cola sales potential forecast is combination of various factors like


    historical data, social and economic parameters, seasonal variations, occasions,
    festivals and ceremonies. They do have weekly reviews so as to adjust monthly
    forecasts. Ion Mostly the forecast is done region-wise and are further
    fragmented into cities, towns and villages. They analyze regional and submarket
    demand and supply and take into consideration macroeconomic conditions
    before forecasting. They build their decisions in order to maximize returns and
    minimize risks. Hence, estimating sales potential helps coca cola in getting a
    huge market share and the company is able to cater to the demands of a huge
    population.

    Hence, this concludes the definition of Sales Potential along with its overview.

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