METHODS OF MEASURING

MARKET POTENTIAL:
Different methods were used to estimate market potential. They are known as the:
1. Direct method
2. Correlation method

1) DIRECT METHOD:
In the direct method data on the actual product for which one wishes to estimate the
potential is used. The correlation method is used. The correlation method makes use of data
related to but different from the product at hand for example in direct method a company used a
total including sales figures to estimates efforts are changed ,the sales figure are also likely to
change. Thus this method may suggest subjective production based on some assumption about
business conditions and competitive activities

2) CORRELATION METHOD:
This method of measuring market potential is based on the data idea that there is some
association between sales and another variable called a “Factor” for example population size is a
good general factor that helps in estimating the sale potential for numerous products. As such
many statistical technique are now available to measure the degree of association between sales
and the market factor. For instance and automobile company was interested in finding out the
market potential of spare parts for its vehicles market in different regions. It is a reasonable to
collection of fresh data. So as to arrive at a genuine conclusion of there by suggest a practical
solution.

The primary data for the survey were collected from the respective target audience.

The questionnaire method was used to obtain primary data. The questions were made
simple as the brand to assume that the demand in any area is closely related to the no of vehicles
in the area. The application of this method based on hypothetical data.

Defining Sales Territories:

 A sales manager typically tries to develop sales territories that are equal in sales potential
and in work load so that each salesman has an equal opportunity to make sales. A study of the
literature in the field found that four territorial characteristics were typically used in defining
territories. Market potential was used in every case which concentration dispersion and work
land were used to less digress. Potential was found to have a positive effect on sales in almost
all instances and concentration the extract to which potential was concentrated in a few accounts
also tended to have a positive relationship to sales. Geographical dispersion and work land
(defined as No of accounts) where not found to be strongly related to sales, but this may be
partially the result of the fact that only proxy measures were available to measure them.

Setting Sales Quotas:

Sales quotas should be set after market potentials have fun derived and sales territories
established. The potential for each territory is then known, but sales quotas must also consider
fast sales performance changes to be made in the amount of supporting sales effort during the
coming year and anticipated activities of compotators. Quotas are usually set for such sales
territory and for each sales representative. They are ordinarily not the same as potentials are
even of the same relative size. One market may have twice the potential of another but may have
local competitors that look the market potential of a consumer Non-durable, data was collected
from different sales territories. Percentage distribution was used as a measure of the relative
potential that existed in each of the territories. These percentage figures were then used to
estimate the potential for each territory.