Entrepreneurial Marketing

Numericals
WEEK 11
By: Saifullah Abbasi
 TOTAL ADDRESSABLE MARKET (TAM)
Problem: Market Sizing and Demand Estimation for a New Product

Scenario: You are planning to launch a new eco-friendly water bottle in the market. You need to
estimate the total addressable market (TAM) and the market demand for your product in the first
year.

Data Provided:

1. The total population of the country: 330 million people.

2. Percentage of the population that regularly buys water bottles: 60%.
3. Average number of water bottles bought per person per year: 5.
4. Market share goal in the first year: 2%.
5. Selling price per water bottle: $20.
 TOTAL ADDRESSABLE MARKET (TAM)
Questions:

1. Calculate the Total Addressable Market (TAM) in terms of revenue.

2. Estimate the market demand (number of units) for your product in the first year based on your
market share goal.
3. Calculate the expected revenue in the first year based on your market share goal.

Solution Steps:

1. Calculate the Total Addressable Market (TAM) in terms of revenue:

○ Total population = 330 million people
○ Percentage of the population that regularly buys water bottles = 60%
○ Average number of water bottles bought per person per year = 5
○ Selling price per water bottle = $20
TOTAL ADDRESSABLE MARKET (TAM)
TOTAL ADDRESSABLE MARKET (TAM)
TOTAL ADDRESSABLE MARKET (TAM)
TOTAL ADDRESSABLE MARKET (TAM)
 TOTAL ADDRESSABLE MARKET (TAM)
Answers:

1. Total Addressable Market (TAM) in terms of revenue: $19.8 billion

2. Market demand (number of units) for your product in the first year: 19.8 million
bottles
3. Expected revenue in the first year: $396 million
 BREAK-EVEN ANALYSIS
Problem: Break-even Analysis for a New Café

Scenario: You are planning to open a new café. To determine the financial feasibility, you need
to conduct a break-even analysis.

Data Provided:

1. Fixed costs per month: $10,000

2. Variable cost per cup of coffee: $2
3. Selling price per cup of coffee: $5
4. Estimated monthly sales: 5,000 cups of coffee
1.
 BREAK-EVEN ANALYSIS
Questions:

1. Calculate the break-even point in terms of the number of cups of coffee sold per month.
2. Determine the total revenue and total cost at the break-even point.
3. Calculate the profit or loss if the café sells 5,000 cups of coffee per month.

Solution Steps:

1. Calculate the break-even point in terms of the number of cups of coffee sold per
month:
○ Fixed costs per month (FC) = $10,000
○ Variable cost per cup of coffee (VC) = $2
○ Selling price per cup of coffee (SP) = $5
BREAK-EVEN ANALYSIS
BREAK-EVEN ANALYSIS
BREAK-EVEN ANALYSIS
BREAK-EVEN ANALYSIS
 BREAK-EVEN ANALYSIS
Answers:

1. Break-even point in terms of the number of cups of coffee sold per month:
Approximately 3,334 cups
2. Total revenue at the break-even point: $16,670
3. Total cost at the break-even point: $16,668
4. Profit if the café sells 5,000 cups of coffee per month: $5,000
 Startup Valuation Problem
Scenario: A startup is looking to raise $1,000,000 in a seed round. The investors are offered a
20% equity stake.

Questions:

1. Calculate the pre-money valuation of the startup.

2. Calculate the post-money valuation of the startup.

Solution Steps:

1. Calculate the Pre-money Valuation:

The pre-money valuation is the valuation of the startup before the new investment is added. It
can be calculated using the amount of money being raised and the equity stake being offered.
Startup Valuation Problem
Startup Valuation Problem
 Profit and Loss Projections Problem
Scenario: A new online store sells custom t-shirts.

Data:

● Fixed costs per year: $12,000

● Variable cost per t-shirt: $10
● Selling price per t-shirt: $25
● Expected sales volume: 1,000 t-shirts per month

Questions:

1. Calculate the total revenue for the first year.

2. Calculate the total variable costs for the first year.
3. Calculate the total profit or loss for the first year.
Profit and Loss Projections Problem
Profit and Loss Projections Problem
 Marketing Budget Numerical Problem
Scenario: Your company operates in the B2C (business-to-consumer) sector and expects to generate
revenue from three main sources for the upcoming year:

1. Online Sales:
○ Expected annual revenue: $1,200,000
○ Growth rate per quarter: 5%
2. Retail Sales:
○ Expected annual revenue: $600,000
○ Growth rate per quarter: 3%
3. Wholesale Sales:
○ Expected annual revenue: $200,000
○ Growth rate per quarter: 2%

You have decided to allocate 8% of the total projected annual revenue to your marketing budget. The
budget will be adjusted quarterly based on actual performance.

1.
 Marketing Budget Numerical Problem
Marketing Channels Allocation:

● Digital Marketing: 45%

● Traditional Marketing: 20%
● Branding and Creative: 15%
● Marketing Tools and Software: 10%
● Contingency Fund: 10%

Questions:

1. Calculate the total projected annual revenue.

2. Calculate the total marketing budget for the year.
3. Allocate the marketing budget across different marketing channels for the first quarter.
4. Adjust the marketing budget for the second quarter based on the projected growth rates.
Marketing Budget Numerical Problem
Marketing Budget Numerical Problem
Marketing Budget Numerical Problem
Marketing Budget Numerical Problem
Marketing Budget Numerical Problem
Marketing Budget Numerical Problem
 Marketing Budget Numerical Problem
Answers:

1. Total Projected Annual Revenue: $2,000,000

2. Total Marketing Budget for the Year: $160,000
3. Marketing Budget Allocation for Q1:
○ Digital Marketing: $18,000
○ Traditional Marketing: $8,000
○ Branding and Creative: $6,000
○ Marketing Tools and Software: $4,000
○ Contingency Fund: $4,000
4. Marketing Budget Allocation for Q2:
○ Digital Marketing: $18,738
○ Traditional Marketing: $8,328
○ Branding and Creative: $6,246
○ Marketing Tools and Software: $4,164
○ Contingency Fund: $4,164
Thank you