Market penetration

Question

Why is 90% market penetration used in the revenue calculation? Doesn't that mean 90% of customers already own a camera and are unlikely to buy a new one? Shouldn't the focus be on the remaining 10% who haven’t purchased yet?

Answer 1

Hi there,

Market penetration refers to customers buying a camera that year. Penetration growing slower year or year means revenues grow slower as well.

Best,

Alberto

Answer 2

Hi there,

It does seem a little ambiguous considering that this is not a recurrent purchase and we’re talking about the percentage of the addressable market that will buy during that year in order to calculate revenues.
Good question. Always make sure to bring up your POV when your logic is different from the interviewers one, sometimes cases can be interpreted in more than one way.

Best,

Mari

Answer 3

Hi there,

I see you already received clarifying answers on your question, so I'm only adding here a resource that you might find useful for casing:

Cheatsheet: The Must-Know Consulting Terms for Interviews

Best,
Cristian

Answer 4

Hi there, Market share loss is calculated by looking at the difference in a company's market share over a specific pe... (read entire answer)

Hi there, Market share loss is calculated by looking at the difference in a company's market share over a specific period. The basic formula is: Market Share Loss = Previous Mar... (read entire answer)