Part $1$: Market Size Calculation

Before you introduce a recommended product or service to leadership, you need to first determine if the market is sufficient to support the product or service. To determine this, you must perform a market size calculation. If the market is not sufficient for the recommended product or service, you must be able to make a compelling case regarding the community need.

$1.$ Determine the size of the market for the ECRHS product or service you are recommending. Assume East Chestnut Regional Health System is located in the market in which you live or work. $2.$ Visit the data sites from the University Library.

$3.$ A rough estimate of need for health care products or services can be made based on the population demographics using age, gender, and in some cases, race. On these sites, you can gain information on the total U$.$S$.$ market for health care, as well as the number of U$.$S$.$ consumers who fit your target market segmentation.

$4.$ Determine the local market for the product or service you recommend for East Chestnut Regional Health System.

$5.$ Next, multiply the percentage of people likely to purchase your recommended product or service by the estimate of market share you believe ECRHS can achieve for the product or service. For example, if there are $6,000$ women who might be interested in ECRHS obstetrical services and ECRHS has a potential $40\%$ market share, this results in $2,400$ patients $(6,000$ x $0\mathrm{.}40=2,400).$

Write a $175-$ to $350-$word summary of your market determination process. Begin your response on a new line.

Part $2$: Break$-$Even Analysis

Break$-$even analysis in economics, marketing, and cost accounting refers to the point at which total cost and total revenue are equal. A break$-$even point analysis is used to determine the number of units of a product or service that must be sold to cover total costs $($fixed and variable costs$).$

This means you have covered all of your costs at the number of units sold the formula calculates.

The formula for break$-$even analysis is as follows:

break$-$even quantity $=$ fixed costs $/($sales price per unit $-$ variable cost per unit$)$

Part $3$: Pro Forma Calculations

A pro forma income statement predicts income. You will use this for the new or revised product or service you are recommending to East Chestnut Regional Health System $($ECRHS$)$ after one year. The income statement shows the sales ECRHS expects to achieve during that time period, along with the costs associated with that level of sales. The organization must cover the costs of products or services it delivers $($cost of sales$)$ and the marketing expenses estimated to achieve those sales. $($We estimate these using $7\%$ of total revenues.$)$ This will produce a projected profit.

A good pro forma income statement proves out a strategy by showing the expected revenue minus the expected costs and the resulting profit. Conversely, it shows that an organization can't have $$100,000$ in forecast sales and $$3$ million in projected advertising costs because that would result in a loss.

This is a very simplified exercise to help you understand the concept of a pro forma income statement. In reality, you would provide a much more in$-$depth analysis of expenses. For instance, if you were hiring two new sales reps, their salaries must be factored in$.$

Part $4$: Marketing Plan Analysis

Now that you have a better understanding of your market and the finances of the organization, you must consider how economics and finance can affect your marketing strategy.

Write a $350-$ to $525-$word analysis of how your market share analysis, your break$-$even calculation, and your pro forma calculation will affect the marketing strategies for ECRHS. Make sure to recommend whether to pursue this product or service and your reasoning. Begin your response on a new line.