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

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.