Section 12 Potential sales

February 7th, 2013 Leave a comment Go to comments
WINNERS = Products which have almost as large a potential sales volume as the potential market size.

Potential Market . . . consists of every person who could use the product if you gave them one for free.

Potential Sales . . .  is totally different from potential market.  Potential sales is the probable number of units that you can reasonably expect to sell during the specific time period for which you are forecasting or “projecting”.

Total Potential Sales  . . . is the probable number of units you can reasonably expect to sell to everyone who could use one, afford one, and probably will buy one if they are properly educated about the existence, features, advantages, benefits and whereabouts of the product, during the entire life cycle of the product.

Potential sales will never equal potential market, because it is virtually impossible to reach everyone who can use, afford and will buy the product during a product’s life cycle.  Keep in mind that of the people you do reach, not everyone who could use one and could afford one, will want one.

For example when I was a child, a friendly old monk used to visit our family a couple of times a year.  Because of his vow of poverty he had no money, yet he would still go through the stores regularly to see all the new products.  One day I asked him why he “window shopped” for merchandise which he never intended to buy.  He told me “I enjoy seeing all the things I can do without”.  He is a classic example of a person who could use one if you gave him one free, but who would never buy one.

If there are other products available that will present the end user with a choice, then your potential sales figures must be downgraded, because some of the end users will buy the other brand.  Also, it is important to be realistic about the end users reaction to your product entering the market, especially if other similar products have been out there for a while.  For example, if your product is the “Hair Guard”, a hair dryer with a digital temperature readout to show you how hot the air is, your potential sales DO NOT include all persons who are capable of using or affording a hair dryer, since many of those persons already have a hair dryer, and they would not be likely to throw theirs in the garbage just to buy yours with a digital air temperature readout.  Those people are likely to wait until theirs goes “belly-up” before purchasing another one.

Your potential sales are yet another matter.  Your potential sales may end up being only a small piece of the pie we call total potential sales. Why?  Because:

  1. You may have limited ability to quickly reach the market, educate the targeted buyers, and supply them through distribution channels.
  2. You may have competition from other suppliers.
  3. Consumers are fickle creatures.  Generally, many factors must coincide favorably to change the potential buyer into that beloved character we call “your customer”.

To a great degree, your potential sales will depend on:

  1. The marketing skills of the company or individual.
  2. How much money is allotted for the marketing budget.
  3. Timing: (product, advertising, market condition, moods, money, etc.)
  4. How many channels of distribution can be utilized.

The actual number of sales experienced during any given sales projection or forecasting period will be radically impacted by the “marketing mix” (the positioning of the product, the promotional mix and level of promotion, pricing policies, and level of distribution). (Please see the “Promotional Opportunities” section).  Since there is a high level of uncertainty involved in potential sales projections, I define potential sales, on the average product, to equal about 3% to 5% of the potential market for the first two years after introduction.  This figure can vary WILDLY!  Your product may be a high visibility product, with strong and diverse distribution, that sells itself and by word of mouth alone you may capture 15% of your potential market in the first year.  Then again, your product may be used only in private where other prospective customers are not able to witness its benefits, you may have weak distribution, the end users may not tell anyone else they use the product, and you may capture only 1/2 of 1% of your potential market in the first year.  That is why using 3% to 5% (and NO more) of your potential market figure as your projected potential sales for the first two years after introduction is usually a safe average.

As soon as you get the OK from your patent attorney (which is generally after the first “office action”, but can be as soon as the patent application has been officially filed), you will have to conduct a focus group to determine your projected potential sales compared to potential market.  You will need a cross section of people who fit in your target market.  Ideally you should have not only potential buyers and end users but also store owners, who will be potential distributors, and their sales people.

While it can be more risky, you can conduct focus groups before the patent has been officially filed as long as you keep your product information confidential by having each person you interview fill out and sign a confidential non-disclosure agreement (NDA) and non-competition agreement.  Check with your patent attorney for the proper non-disclosure forms to use with the focus group participants to protect your foreign patent rights, trademarks, copyrights, trade secrets, etc.

Try to use a minimum of ten people for your focus group.  You might offer to provide donuts & coffee, lunch, dinner, or wine tasting in return for them taking the time to participate.  You should prepare a questionnaire that the participants will fill out after seeing a demonstration of the product and hearing a presentation describing its features, advantages and benefits.  Your questionnaire should be similar to the one found on the following page, and should include all of the questions which apply to your product.  You should add as many other questions as you can think of relating to the product to get all the information you possibly can from your focus group.

When you conduct your focus group, remember not to become upset when an attendee voices an objection about the product.  My dad gave me a gem of a saying that I have used constantly when faced with adversarial situations while trying to sell my products and my clients’ products to other companies:


In other words, don’t argue with a person regarding an objection, instead figure out the question the person is trying to ask you and answer it!

(Questions for this section follow this sample focus group questionnaire.)


Product_______________________________       Date________________

Name of Interviewee___________________________________________

How much would you expect to see this product cost in the store?_______________________

Would you pay for this product with cash, check or credit card?__________________________

Where would you expect to purchase this product?__________________________________

Would you buy one from a magazine ad or would you have to see it in person?______________


Would you buy one for yourself?________________________________________________

Would you buy more than one for yourself?________________________________________

Would you buy one to use as a gift? _____________________________________________

Would you buy more than one as a gift?___________________________________________

What other features or functions would you like to see added to this product?_______________


What other accessories would you like to see added to the product line?___________________


What other colors should the product be available in?_________________________________

What would you name this product?_____________________________________________

Where would you most likely use this product?_____________________________________


What do you perceive to be the best feature of this product?___________________________

What do you perceive the biggest drawback to be?__________________________________

How often would you use this product?___________________________________________

How long would you expect this product to last?____________________________________

Would a product which is more durable or lasts longer be worth more to you?________________

Do you have any other questions about the product or its uses?_________________________


Do you have any suggestions for improving the product? _____________________________



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