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Unit volume is one thing but to truly asses the potential of a market segment, you need to look at the revenue potential. Revenue potential is MARKET SIZE multiplied by the AVERAGE PURCHASE PRICE. What is the total market revenue of all market segments combined

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Answer:

Market Size

Explanation:

Market Size the total market revenue of all market segments combined, not just the revenue of a particular segment.

It can also be said to be the total sales revenue that can be generated in a market by all competitors present therein.

However it is true that as noted in the scenario, in order to truly asses the revenue potential of a particular segment, you have to look at the size of that segment multiplied the average price that consumers in that segment are willing to pay vis-a-vis their customer expectations.

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The total market revenue for the combined segment is the sum of the market revenue of each segment of the market. Hence, the total market revenue for the combined segment is $4,118,000

The market revenue of a single market segment is given by the relation :

  • Market size × Average purchase price.

The total market revenue combined will be :

The sum of the market revenue for :

  • (commuters + Luxury + Outdoor + School children + university)

Market revenue for each segment :

  • Commuters = (20000 × $45) = $900,000
  • Luxury = (10000 × $35) = $350,000
  • Outdoor = (18000 × $70) = $1,260,000
  • School children = (28000 × $30) = $840,000
  • University = (12800 × $60) = $768,000

Total market revenue for the combined segment :

$(900,000 + 350,000 + 1,260,000 + 840,000 + 768,000) = $4,118,000

Therefore, the total market revenue for the combined segment is $4,118,000

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