Question/Task: This assignment relates to the market potential estimation methods described in th...

Answer:

Given details of an assignment relates to the market potential estimation methods described in the article, Waheeduzzaman (2008).

Amazon has decided to enter country Country A.

We have two very similar countries Country A and Country B whose data are given below:

Number of households for Country A = 60 million.

Number of households for Country B = 25 million.

Percentage of households subscribing to eBay.com in Country B = 25%

Percentage of households having Internet in Country A = 60%

Literacy rate in Country A = 97%

Percentage of households with substantial purchasing power in Country A = 65%

Task 1:

Estimation of market potential for Amazon in Country A using Chain Ratio Method and Method of Analogy is:

Chain market method is a method where in population of a country, is multiplied by several percentages, such as the number in the population above and below certain ages, the number in the population with an interest in motor sport, the number in the population with motor-cycle licences, in order to arrive at a rough estimate of the potential demand for a particular good or service.

Amazon have selected Country A because of the following reasons and is correct to do that.

Reasons:

Number of house holds in country A is in large number = 60 million.

so will show a good ratio in chain ratio method.

Almost 50% population uses internet and literacy rate is 97%.

so almost entire population is literate and 1 out of 2 persons uses the internet which is good for online trading companies like Amazon.

Also the substantial purchase power is 65%.

Task 2:

Comment on the difference in estimation is:

Amazon have taken the correct and wiser decision only.