Answer :
The fact that the machine building company identifies all potential buyers of wood lathes in the area and estimates the number of lathes each one might buy means that the company is using the market-build up to estimate market potential. This market-build up method produces accurate results if the company has a list of all potential buyers and a good estimate of what each will buy.
The company is using the market-buildup method to estimate market potential for its wood lathe. This method assesses demand by identifying all potential buyers and estimating their purchases while considering the cost of essential inputs like wood, which factors into machine operating costs and market potential.
A machine tool company that estimates the market potential for its wood lathe by identifying all potential buyers of wood lathes in the area and estimating the number of lathes each one might buy, is using the market-buildup method to estimate market potential. This method involves a bottom-up approach of assessing the potential demand by considering the likely number of units each potential customer in the market might purchase. Understanding this approach is essential for devising effective marketing strategies and making informed decisions about product distribution and pricing.
For instance, when examining the adoption of the Blanchard lathe, which cuts and shapes wood and other materials, one must consider not only the cost of the machinery but also the price of wood used as it factors into the operating cost of machinery. In regions like Britain, where wood was more expensive due to deforestation, the operating cost - and thus the market potential - would differ from that in the heavily forested United States. These variances in factor prices affect the isocost lines, influencing the calculated market potential for equipment like lathes.
It is also worthwhile for a company to consider the effectiveness and efficiency of such machinery as part of their market analysis, potentially by an advertising campaign that highlights these aspects. In short, understanding the market for a product like a wood lathe entails a comprehensive approach that includes both the product's price and ongoing operating costs as reflected in the usage of materials such as wood.
