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The notion of relevant market is used in order to identify the products and undertakings which are directly competing in a business. Therefore, the relevant market is the market where the competition takes place. The enforcement of the provisions of competition law would be not possible without referring to the market where competition takes place.
In 1982 the U.S. Department of Justice Merger Guidelines introduced the SSNIP test as a new method for defining markets and for measuring market power directly. In the EU it was used for the first time in the Nestlé/Perrier case in 1992 and has been officially recognized by the European Commission in its "Commission's Notice for the Definition of the Relevant Market" in 1997.
The market size is defined through the market volume and the market potential. The market volume exhibits the totality of all realized sales volume of a special market. The volume is therefore dependent on the quantity of consumers and their ordinary demand. Furthermore, the market volume is either measured in quantities or qualities.
Market capitalization is a term used to describe the size of a company based on the total value of the company’s stock. Market capitalization is an important data point for making informed ...
After determining the relevant market and firms, through defining the product and geographical parameters, various metrics can be employed to determine the market concentration. This can be quantified using the SSNIP test. A simple measure of market concentration is to calculate 1/N where N is the number of firms in the market.
Total addressable market (TAM), or total available market, is the total market demand for a product or service, [2] calculated in annual revenue or unit sales if 100% of the available market is achieved. Serviceable available market (SAM) is the portion of TAM that is reachable and can potentially be served by a company's products or services. [2]
usage gap = market potential – existing usage. This is an important calculation. Many, if not most, marketers accept existing market size—suitably projected their forecast timescales—as the boundary for expansion plans. Though this is often the most realistic assumption, it may impose an unnecessary limit on horizons.
Market trends: Market trends are the upward or downward movement of a market, during a period of time. Determining the market size may be more difficult if one is starting with a new innovation. In this case, you will have to derive the figures from the number of potential customers, or customer segments. [citation needed]