Total market demand refers to the total volume that would be bought by a defined consumer group in a defined geographic area in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort.
Total market demand is not a fixed number but a function of the stead conditions. For example, next year’s total market demand for media phones will depend on how much other producers spend on marketing their brands. It also depends on many environmental factors, such as government regulations, economic conditions, and the level of consumer confidence in a given market. The upper limit of market demand is called market potential.
One general but practical method that Connect Phone might use for estimating total market demand uses three variables: (1) the number of prospective buyers, (2) the quantity purchased by an average buyer per year, and (3) the price of an average unit. Using these numbers, Connect Phone can estimate total market demand as follows:
Q=n×q ×p
Where
Q= total market demand
n = number of buyers in the market
q = quantity purchased by an average buyer per year
p = price of an average unit