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Market Penetration
In order to be able to calculate the market penetration in our case, we should first give a brief definition and description of the market penetration concept. Identified by some with the company's market share, the market penetration concept allows a company to determine "what percentage of all possible sales was represented by their actual sales"
It is calculated by " measuring all real sales of a given good for a given period and then comparing that total with the total of all sales of that specific good for the same period made by one's own company"
In our particular case, we will be calculating the market penetration as the ratio between the total number of customers on the market and the number of customers that have actually bought our company's products.
As such,
Market Penetration = Number of customers that have bought the product/Total number of customers on the market
Market Penetration = (10,000/50,000)*100 = 20%
The market penetration for our company is 20%.
Potential Sales Revenue
The potential sales revenue is calculated by multiplying the potential number of customers by the product's price.
In this case, the potential number of customers is equal to the total number of customers in the market because, ideally, this is the maximum amount of products that the company can sell on the market.
Indeed, the maximum number of products sold is equal to the absorption capacity of the number and that is in turn equal to the market size, that is, the total number of customers in the market.
Hence, for our company, we have:
Potential Sales Revenue = Total market size * Price per product
Potential Sales Revenue = 50,000 * $100 = $5,000,000
The potential sales revenue for the company is $5,000,000.
Bibliography
1. Kobulnicky, Paul and Stoffle, Carla. Market Penetration in Research Libraries. January 1999. On the Internet at www.arl.org/stats/program/Market.pdf
Kobulnicky, Paul and Stoffle, Carla. Market Penetration in Research Libraries. January 1999. On the Internet at www.arl.org/stats/program/Market.pdf
Ibid.
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