Gas Electric Hybrid Car

Paper Summary:

A major consideration for companies is market demand and market potential, where market demand is the total opportunity within an industry and market potential is the maximum amount of sales that can be reasonably expected within a market. The paper explains why both these figures are important to access the profit potential of a market and to decide whether entering a certain market is likely to be a success for the company. To illustrate the difference between the two figures and to show how they are calculated, market demand and market potential are calculated for the gas electric hybrid car in the United States.

From the Paper:

"Total market potential is the maximum amount of sales that might be available to all the firms in an industry with the current environmental and marketing conditions (Kotler 2002, p. 131). Total market potential is equal to the number of buyers multiplied by the quantity purchased by an average buyer multiplied by the price of an average unit (Kotler 2002, p. 132). According to the Bureau of Transportation Statistics (2002), there were 6,325,000 new passenger car sales in the United States in 2001. The total new passenger car sales were slightly higher in the previous four years, with a highest of 6,979,000 in 1999 and a lowest of 6,831,000 in 2000 (Bureau of Transportation Statistics 2002). Based on these figures, a figure of 6,500,000 is a reasonable estimate for yearly sales of new passenger cars. This figure includes all car types, both conventional combustion engines and gas electric hybrid cars. To determine the total market potential for gas electric hybrid cars, total car sales needs to be divided into combustion and hybrid engines."

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