In an annual reunion with your MBA colleagues, one of them shares with you an idea of a new venture they have been working on: affordable baby strollers. They have deep experience in puericulture and childcare, and know there is a stable business to tackle.
Given your experience in consulting, they ask for your help in determining the number of baby strollers that are sold yearly in the United States, which they have selected as their beachhead market.
How would you help your colleagues determine the number of baby strollers that are sold yearly in the United States?
For these types of market sizing exercises, top-down approaches work best.
There is not just one right solution: there are a number of different ways to arrive to the final number, all of them equally good provided they are well articulated and constructed.
Please find below two different approaches, that illustrate the most frequently used steps when solving market sizing exercises:
Your friends greatly thank you for your help, they really benefited from your back of the envelope calculation. They would like to hear your opinion on the industry attractiveness in general, in order to help them in the go/no go decision of launching their business.
See Graph 3
Which factors would you look into for assessing the baby stroller industry attractiveness?