Hello,
Is the market sizing solution correct? I do not believe it is considering the alloy wheels that are needed for new cars built, therefore not considering the 20 years car life.
It could be the case that we are not considering wheels on newly built cars because this is not our market, however it is not stated on the case that we only sell direct to consumers and not to companies who build the cars.
Thanks in advance
It is considering the alloys for new cars. Let's look at this part of the solution:
"So over 20 years, out of 100 cars, the number of wheels purchased are:
Let's “translate” these numbers into their meaning:
As such, you can see that this calculation was considering new vechiles.
I hope this clarifies your doubt and was helpful to you.
I see Pedro already gave you an excellent answer.
It's great that you're pushing for clarity. Feel free to bring that free-thinking into the interview as well and challenge some of the assumptions in the case.
Also, if you have your interviews soon, you might find it useful to have this list of common terms that show up:
Best,
Cristian
Pedro gave an excellent explanation here.
Remember that “lifespan” or lifecycle of products i.e. replacement rate is one of multiple methods for market sizing. For more practice consider signing up for this course:
Market Sizing Analysis: Approaches, Techniques, and Exercises
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