Final answer:
Businesses need to calculate the Net Potential Market by deducting non-qualified segments of the population, using factors like age, sex, and income. They estimate the population proportion of potential customers using surveys and consider the labor force proportions and threshold population for business planning.
Step-by-step explanation:
When calculating the Net Potential Market, businesses deduct portions of the population that are not considered potential customers based on specific disqualifying factors such as age, sex, income, or other exclusion criteria. This process ensures that a company's marketing efforts are targeted towards the segment of the population that is most likely to purchase their products or services.
For example, if a marketing company is interested in the population percentage of women who make the majority of household purchasing decisions, they have to account for the fact that not all individuals within a population will fit this category. Suppose a survey found that in 200 households, 120 had women as the primary decision-makers. Assuming these households are representative of the broader population, this proportion can be used to estimate the population proportion for a target marketing campaign.
Similarly, understanding the labor force proportions is essential for businesses targeting working individuals. If there are 14.8 million unemployed persons out of a total adult population of 237.8 million, this indicates a 6.2% unemployment rate. Reflecting on these statistics helps businesses to understand the economic environment and its potential impact on the market.
The concept of the threshold population is also vital for businesses determining where to locate. For instance, a Wal-Mart store may consider a minimum population of 20,000 sufficient to maintain profitability, whereas a Starbucks might only require a threshold population of about 5,000 within a few miles range.