Case Study Question: Market Size

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Recent activity on May 14, 2017
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Sudipto asked on May 14, 2017

our client is a Major Magazine Publisher. Currently, they own a Women’s magazine (similar to Cosmopolitan) and a Personal Finance magazine (similar to Fortune). They are considering launching a new magazine about Fine Living, targeted to Wealthy Males (similar to GQ). What is the market size?

Information to be given if asked:

300M people in the U.S.

50% Male

Age demos split evenly (Age 0-20, 21-40,41-60, 61-80)

Market research shows that 10% of Age 21-40 demographic is Wealthy, that 10% of Age 41-60 is Wealthy and that 5% of Age 61-80 is Wealthy

People under 20 are too young for the magazine.

Find market size.

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Best answer
Anonymous replied on May 14, 2017

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!



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