Question

Assume that there are 600 customers in your target area. The average income per annum per customer amount to R12500. You estimated that each customer spends 2;5% of his/her yearly income on your product/service. You believe that you can enjoy a market share of 25% of the total market.

1 Calculate, by showing all the steps, potential market share of your business.

2 Complete the sales budget figures for your business. Assume that you provide the service or sell the product for R50 each. ​

Answer 1

To calculate the potential market share of your business, multiply the number of customers by the average income per customer and then multiply by the percentage of income spent on your product. For the sales budget figures, multiply your estimated market share by the price of your product/service.

Step-by-step explanation:

To calculate the potential market share of your business, you need to follow these steps:

1. First, determine the total market size by multiplying the number of customers in your target area (600) by the average income per customer (R12500).
2. Next, calculate the total spending by multiplying the total market size by the percentage of income spent on your product (2.5%).
3. Then, estimate your market share by multiplying the total spending by the desired market share percentage (25%).

For the sales budget figures, multiply your estimated market share by the price of your product/service (R50) to calculate the total sales.