According to the U.S. Census, there are 113 million households in the U.S., with approximately 60 million U.S. households (53%) making over $50,000 a year, and with 20% of those households consisting of a traditional family of two parents and at least one child. Therefore, there are approximately 12 million family households earning more than $50,000 a year. However, only 2.5 million family households earn more than $75,000 a year, which may be a better indicator of the number of "affluent" households CUTCO considers its target market. Therefore, we can estimate CUTCO's target market is approximately five million households. .
CUTCO currently fulfills 750,000 orders per year through direct marketing, with each order representing one customer. Therefore, the number of customers compared to the target market is 15%. In order for CUTCO to reach $1 billion in annual revenues in 2021, with an average sale price of $345 ($270 adjusted by 5% every two years), it would need to sell to 3 million households. Based on a population growth of .86% (from World Bank), CUTCO's target market would be 5.5 million households in 2021. This means CUTCO would need to reach 55% of its target market, which is a steep climb from just 15%. This indicates that although $1 billion in revenues may be possible without international expansion, it is not probable. .
China Expansion Model.
Canada's sales currently comprise 6% of CUTCO's revenue. In order to grow annual revenues to $500 million within five years, the growth rate would need to be 14% annually. Canada's population in 2011 was 35 million and sales in Canada generated approximately $15 million. Since the average sale price is $270 for direct sales, these sales earnings represent 55,800 items. Assuming each person makes just one purchase per year, only 0.16% of Canada's population - or 1 in 600 people - purchases CUTCO products each year. .
China has a population of 1.
