Question

Suppose that you were interested in building a new townhome community on the east side of University City that will be marketed exclusively to senior citizens above the age of 62. In your analysis of local demographics, you discover that the target market makes up only 10% (core market share) of the households that currently live in this city. If market experts believe that a total of 500 townhome (or similar condominium) units will be purchased in all of University City within the next year, what is the projected number of units the developer could expect to sell in year 1 if he is able to capture 40% of the market potential?
(a) 20 units
(b) 50 units
(c) 10 units
(d) 500 units

Answer 1

Answer:

The answer is: A) 20 units

Explanation:

If 500 townhomes will be sold during the next year and your target segment makes up 10% of the total market, then only 50 townhomes will be sold in total to people above the age of 62. Your company expects to capture 40% of its potential market segment. That means you expect to sell 40% of 50 townhomes, which are 20 units.