Estimate the demand for plastic bags in the US.

Market sizing
New answer on Jun 29, 2020
3 Answers
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Anonymous A asked on Mar 14, 2020

Hello! I was wondering how you would tackle this question. I considered only businesses that use plastic bags, but I do not think that is inclusive enough.

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Daniel
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updated an answer on Mar 20, 2020
McKinsey / ex-Interviewer at McKinsey / I will coach you to rock those interviews

Hi!

I would go from the consumer perspective:

  • Approximately 300 Mio people in the US
  • Out of them: 75% who go to the stores (total population divided into 4 age groups: 0-20; 20-40; 40-60; 60-80 -> those who are 20 to 80 go to the stores) = 225 Mio
  • I would divide those 225 Mio into urban (80% = 180 Mio) and rural (20% = 45 Mio) because they have a different frequency of going to the stores and different demand for plastic bags
  • We could assume urbanites go to the stores at least several times a week (buying small quantities of food), let’s say 3 times using on average 1 plastic bag per visit = so, 180 Mio * 3 = 540 Mio plastic bags a week for urban population. Multiply it by ~50 weeks in a year and you get = 27 bn plastic bags a year for urban population
  • Rural population visits to the store are probably less frequent, like 1 every two weeks, so we could calculate with 0,5 times a week but they probably use more plastic bags, let’s assume 5. So, 45 Mio * 0,5 times * 5 bags = ~ 112 Mio plastic bags a week. Multiply this by 50 weeks and you get = 5,6 bn plastic bags a year for rural population
  • Overall yearly demand for plastic bags in the US = ~ 33 bn per year, or around 110 plastic bags per capita per year – which sounds realistic.

Hope this helps! If you want to brainstorm more on this feel free to reach out!

Best,
Daniel

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Clara
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replied on Mar 14, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would first of all clarify demand from which segments (e.g., consumers, companies, etc.)

If, for instance, was for consumers, you can try to extrapolate the # of bags you use weekly:

  • For groceries
  • In stores
  • For storage purposes
  • etc.

Once you have the number, you can extrapolate to different age groups (e.g., babies and childen won´t barely use any, very elderly people will use less, etc.)

Cheers,

Clara

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Anonymous on Mar 16, 2020

Sounds good, I will practice with this method again. Thank you!

(edited)

Anton
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replied on Jun 29, 2020
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Hi,

I would suggest that you should present your own approach and I would be happy to review.

Meanwhile please see below my approach to segmentation in market sizing as well as examples of solved cases:

B2C:
-Demographics (Age, education, income, family size, race, gender, occupation, nationality)
-Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status)
-Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers)
-Geographic (Geographical boundaries)

B2B:
-Company characteristics (Industry, company size, number of employees)
-Geography (Geographical boundaries)
-Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship)
-Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
-Demographics (Type of agency, size of budget, the amount of autonomy)
-Geographic (Geographical boundaries)
-Government Tier (Federal , State, Local, Quasi-governmental, International)
-Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:
https://www.preplounge.com/en/consulting-forum/how-should-i-approach-the-following-question-estimate-the-market-size-of-credit-cards-in-the-us-6695

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Daniel gave the best answer

Daniel

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McKinsey / ex-Interviewer at McKinsey / I will coach you to rock those interviews
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