A wholesaler sells goods to hundreds of retailers and knows both the sales of its own products and the total sales of similar goods at each retailer. How can the wholesaler determine if its goods are selling significantly better than competing goods?
1 Answer
We should also know the number of competitors, so therefore we can say
Explanation:
Let's assume for a moment that, aside from our company, there is only one other that is selling similar goods to the same retailers. Since we know our sales and we also know total sales at the retailers, if we were doing equally as well as the other wholesaler, we'd expect our sales to be roughly half of total sales at the retailers. If our sales were a lot more than half, we'd say we were doing better than the other wholesaler, and if they were much less we'd say we're doing a lot worse.
Now let's expand this out. Aside from knowing our sales and total retail sales, we'd also know the number of competitors in the market. If there are 10 competitors, we'd expect our sales to be 10% if we're doing as well as the average, and much more, so perhaps 15% or even 20% to say we're doing significantly better than our competitors.
As a general rule, to say we're doing better than average, we'd say:
