Entrepreneurship and Small Business Management

Sales Potential

To estimate how much of a product you will sell in a certain amount of time, you can calculate sales potential. To do so, you first need to have a small number of people (a sample) try the product. The sales potential is then calculated based on: (1) the percent of the people in a sample who say they would purchase your product, (2) an estimate of the size of the market (the total number of people who would potentially buy the product), and (3) the average number of times that one person might purchase the product during a specified period of time.

Annual Sales Potential = Percent of Potential Purchasers × Estimated Market Size × Individual Rate of Purchase

1.		If 10 people out of a sample of 500 said they would buy the tested product, what is the percent of potential purchasers?
			A)	10%
			B)	20%
			C)	2%
			D)	30%
2.		If 240 bikers out of a sample of 2,000 said they preferred a new bike seat, what is the percent of potential purchasers for the bike seat?
			A)	20%
			B)	12%
			C)	10%
			D)	5%
3.		Calista's Calypso Cuisine asked 250 customers to try a new chicken sandwich and 150 of those customers said they would order the sandwich again. What is the percent of potential purchasers for the sandwich?
			A)	60%
			B)	16.7%
			C)	50%
			D)	35%
4.		After tallying sample results, GalorEous Gardens found that the percent of potential purchasers for a new plant food was 18%. They estimate that their market size is 800,000 gardeners. How many gardeners in their market can GalorEous Gardens expect to buy their plant food?
			A)	14,490
			B)	160,000
			C)	656,000
			D)	144,000
5.		In problem 4, GalorEous Gardens estimates that each gardener would buy the plant food three times per year. What is the annual sales potential of the plant food?
			A)	432,000
			B)	267,000
			C)	48,000
			D)	48,148
6.		A group of beginning entrepreneurs sampled a small business management software package. From the sample, the percent of potential purchasers for the package is 25%. The software development company estimates their market size to be 2,000,000 people. How many entrepreneurs in their market can the company expect to buy the software package?
			A)	100,000
			B)	250,000
			C)	500,000
			D)	800,000
7.		In problem 6, the software development company knows that entrepreneurs will only buy one software package per year. What is the annual sales potential of the package?
			A)	100,000
			B)	250,000
			C)	50,000
			D)	500,000

Use the following information to answer questions 8-10.
The Sunrise Company has developed a new baby shampoo called Gentle Raindrops. Sunrise chose a sample of 3,000 parents to try the product with their children and 1,800 parents in the sample said they would purchase the shampoo. The Sunrise Company estimates the market size to be 4,000,000. Sunrise's surveys have indicated that parents purchase about 8 bottles of baby shampoo every year.

8.		According to the results of the Gentle Raindrops sample, what is the percent of potential purchasers?
			A)	50%
			B)	60%
			C)	40%
			D)	70%
9.		How many parents in the total market can the Sunrise Company expect to buy Gentle Raindrops?
			A)	2,400,000
			B)	1,333
			C)	240,000
			D)	1,200,000
10.		What is the annual sales potential of Gentle Raindrops?
			A)	19,200,000
			B)	2,400,000
			C)	32,000,000
			D)	12,800,000
11.		The Paper Makers have developed new strawberry-flavored glue for envelope seals. They asked 320 customers to try envelopes made with the new glue and 96 of those customers said they would buy the strawberry-flavored envelopes. The Paper Makers estimate their market has 4,000,000 people. How many people in their market can The Paper Makers expect to buy the envelopes?
			A)	80,000
			B)	12,000
			C)	1,200,000
			D)	800,000
12.		A department store is trying to decide if they should provide a gift wrapping service. In a survey of 700 customers, 476 said they would appreciate and use the service. The department store has a customer base of about 90,000 people. How many people could they expect to use the gift wrapping service?
			A)	7,777
			B)	61,200
			C)	46, 298
			D)	30,005

Use the following information to answer questions 13-14.
Toledo Art Supply has formulated a new bright red pigment for watercolor paint. Of 2,300 artists in a sample, 1,725 were impressed with the color and said they would use it for their paintings. Toledo believes the market size is about 125,000 artists. Each painter probably would buy 2 tubes of the paint every year.

13.		According to the results of the sample, what is the percent of potential purchasers?
			A)	25%
			B)	18.4%
			C)	75%
			D)	62%
14.		Calculate the annual sales potential of the new red paint.
			A)	18,750,000
			B)	6,250,000
			C)	625,000
			D)	187,500
15.		Of 2,500 chefs in a sample, 750 preferred a new non-stick pan. The estimated market size is 75,000. Each chef buys 1 pan a year. What is the annual sales potential?
			A)	2,500
			B)	3,333
			C)	22,500
			D)	33,333
16.		Out of 30 local dry-cleaners asked to sample a delivery service, only 12 of the dry cleaners say they would use the service regularly. What is the percent of potential purchasers for the delivery service?
			A)	2.5%
			B)	40%
			C)	33%
			D)	55%
17.		OrthodonTIX has developed a new flossing device for people with braces. A sample of 3,000 people with braces tested the device, 1,050 people liked it and said they would buy it. OrthodonTIX estimates that there are 1,000,000 people with braces. The flossing device needs to be replaced every month. What is the annual sales potential of the device?
			A)	36,000
			B)	4,200,000
			C)	12,000,000
			D)	1,260,000
18.		ZZZip, Inc. has developed a new, stronger zipper to be used in soft luggage and backpacks. They asked 10 of their clients to try the new zipper in the bags they manufacture and 6 of those clients liked the new zipper and said they wanted to use it in their luggage. ZZZip, Inc. supplies zippers to 27 luggage and backpack manufacturers. On average, each manufacturer produces 400,000 bags every year. What is the annual sales potential for the zippers?
			A)	240,000
			B)	24,000,000
			C)	1,230,000
			D)	6,480,000
19.		A shoe manufacturer creates a new high-tech, expensive walking shoe for avid walkers. After testing the shoe with a sample, the manufacturer finds that the percent of potential purchasers is 18%. Their market consists of 1,000,000 walkers. The shoe will wear out after 6 months of use. What is the annual sales potential of the shoes?
			A)	500,00
			B)	180,000
			C)	360,000
			D)	167,000
20.		When the shoe manufacturer in problem 19 modifies the new walking shoe so it is less expensive but lower quality, the percent of potential purchasers decreases to 15%. However, the individual rate of purchase increases from 2 to 3 times per year. Does the annual sales potential of the shoes increase or decrease, and by how much?
			A)	increase by 90,000
			B)	increase by 33,000
			C)	decrease by 33,000
			D)	stays the same