Question

John wants to estimate the market potential for a low-carbohydrate fruit juice in the U.S. His research shows that 50% of the population of the U.S. drinks fruit juice; 10% of all fruit juice drinkers are interested in low-carb juice; the amount of fruit juice consumed per month by those who drink juice is 2 gallons; and the average price per gallon is $5. Assuming that the total population of the U.S. is 300 million, the market potential for low-carb fruit juice per year estimated by John is

• $1500 million

• $15 million

• $1800 million

• $750 million

• $18 million

Answer 1

So here we have some data already given in the question

The total population of the US = 300 Million .......................................(1)

Portions of the population who drink fruit juice = 50% .........................................(2)

.............................................(3)

Percentage of all fruit, juice drinkers who are interested in low-carb juice = 10% ...................................(4)

.............................................(5)

Amount of fruit juice consumed per month by those who drink juice = 2 Gallons ..................................(6)

Average price per gallon = $5 ....................................(7)

Total investment by a consumer who drinks 2 Gallons juice per month = 2 * $5 = $10 .........................(8)

Thus the total revenue generated in the fruit juice market from low-carb segment within a month

= total number of consumer in that segment * total investment by each customer on juice ................(9)

on putting value in equation no (9) by using equation no (5) and (8)

Thus total revenue generated in the fruit juice market from low-carb segment within a month = 15 * 10 = $150

............................(10)

now to calculate the market potential for low-carb fruit juice per year we will multiply the potential revenue that can be generated in a month by 12 so that we can get the potential demand of the market for a complete year

now by using equation no (10)

Market potential for low-carb fruit juice per year = $150 * 12 = $1800 million