Hi everyone, I saw in many cases that some persons take into account the growth rate when doing market sizing (see below the example).
I think it really makes sense to consider that :
the Volume of a product sold = # products being replaced + # products being purchased for the first time
But in the majority of cases, we only consider the products being replaced. Does that mean that we make an assumption that the growth rate is negligeable ?
Thank you so much
Hi there,
I think you're confusing a few things here.
Growth rate is the result of our calculations over multiple years.
As such, if, next year, the replacement rate increases, or if more people buy new guns, we'll have growth in the market size/demand.
Growth is not used to calculate market size. The change in market size year on year equals growth...
Thats a great point. In a case like this I would also look at gun ownership rates overall. What you might assume is that growth increases with growth in population (keeping ownership rates the same). However it gets tricky because many countries aren't actually growing at this point. Any assumption that is reasonable will work as long as you state it clearly.
Best,
Udayan
