So, where do market potential forecast come from? There are three approaches that can be used to estimate market potential. These approaches include formulas called market factor derivation, surveys, and test markets. The first approach is market factor derivation. For this approach, a sales manager uses some factor that is known to trigger demand for a product. To illustrate, consider the market for mobility equipment such as walkers. Suppose age is a market factor that triggers purchasing walkers, specifically those who are 65 years and older. In this case, the number of adults 65 years or older is considered a market factor. Using that as a base, further assume that about 12 percent of those adults who are 65 years or older purchase walkers. In this example, there are 47,800,800 adults in the US age 65 or older. Twelve percent of that figure is 5,736,000 adults. This is considered the market potential. That in a given year, we expect almost six million walkers sold. Further assume that there are a number of companies that sell walkers, and one of these companies has about a 20 percent market share. That company's sales potential is 1,147,200 units. So, in order to use this approach, you need to key things. First, you need a market factor, which is some aspect of the market that triggers the sale of a product. Second, you need the market share of the company you are performing this analysis on. This approach is very popular because it can be quite accurate as long as you have an effective market factor, and it is very simple to use.