Case Study Question: Market Size

Hello Sudipto,

the first part of this case would be only about crunching the numbers, then you will need to add some hypothesis and finally make some considerations.

----> Crunch the numbers to estimate the number of Wealthy people in each bucket

• 300/2 = 150 Million of male people
• 150/4 = 37,5 Million of male people in each bucket
• 21-40 & 41-60
  • 37,5*10% = 3,75 Million of Wealthy ppl in each bucket
• 61-80
  • 37,5*5%= 1,875 Million of Wealthy ppl

----> Add some hypothesis to estimate the addressable market of the magazine

• Assumptions on magazines' penetration:
  • 10% of the Wealthy people in the 21-60 range are interested in buying magazines: they are active people and they do not have a lot of free time to read magazines
    • (3,75+3,75)*10%= 750 K
  • 20% of the Wealthy people in the 61-80 range are interested in buying magazines: they have more free time
    • 1,875*20% = 375 K people that will buy the magazine
  • ---> Therefore 1,125 M of Wealthy people are interested in magazines
• Assumptions on features of the magazine:
  • The magazine is monthly
    • 1,125*12 = 13,5 M of magazines sold per year --> Market size in Volumes
  • The magazine has a price of 5$
    • 13,5*5 = 67,5 M$ of revenues from magazine per year --> Market size in $

----> Sanity checks and other considerations

• Remember that this is an estimation of the addressable market not the potential revenues of the company - you will need to assume a market share for those
• Remember to make sanity checks of the results - compare the results with the volumes of the other magazines
• Remember to consider the company as a whole - do not forget the other magazines (eg. cannibalization risks or cross-selling opportunities)

I hope that helps!

Best,

Guido