Question

Determine the market potential for a product that has 20 million prospective buyers who purchase an average of 2 per year and price averages $50. How many units must a company sell if it desires a 10% share of this market

Answer 1

4,000,000 units should be sold a company

Step-by-step explanation:

Calculating the sales in units:

It has been given that the toal market demand is $20 million, average quantity purchased by buyer per year is 2 units, price average is $50, and the desired share of the market is 10%.

`Q=n * q * p`

Where:

Q = Total market demand,

N = number of buyers in the market, q = average quantity purchased by the buyer per year,

P = price of average unit

`$\mathrm{Q}=20,000,000$ buyers $* 2$ per unit per buyer $* \$ 50$ per unit`

= $2,000,000,000

Market share =
`$(20,000,000 \text { buyers } * 2 \text { units per buyer }) * 0.1$`

= 4,000,000 units

Hence, the company should sell 4 million units to achieve 10 percent market share.