Estimate the German boot market

estimation market sizing Market sizing
Recent activity on Aug 19, 2018
2 Answers
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Anonymous A asked on Aug 19, 2018

Dear all,
I wanted to ask where my mistake lies in calculating the German boot market. Is it the structure? Or are the assumptions wrong? This question is part of a large case and thus I tried to keep it simple.

I chose to calculate it by using the replacment method. Personally, I buy boots every three years to replace the old ones and I choose this as an implicit assumption.

My formula:
how many pair of boots are there right now in Germany x 1/Life expectancy of a pair x avg. price for a pair of boots = annual boot sales in Germany

I segmented the amount of pairs of boots in Germany into pairs owned by the female population and vice versa for the male population (assumign females have more boots than men)
Hence: how many pair of boots are there right now in Germany = number of pair of boots owned by female pop. + number of pair of boots owned by male pop.
Then, I calculated for both genders by mutliplying the population for each gender by how many pairs the respective gender on average has.

Assumptions:
- Average price of boots = 100 euro
- Life expectancy of boots = 2 years
- German pop.: 80M
- 50% women, 50 percent men (40 M for each gender)
- pair per man: 1.5
-pair per women: 2.5

My final result is 8 billion euros. However, the actual number is around 5 billions. I'm not in the ball park of 20% and this should be incorrect.

Thanks a lot for your help!!

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Anonymous replied on Aug 19, 2018

Your margin of error does not mean you did anything wrong.

You have made severala assumptions, any of which could be inaccurate. Notice I didn't say wrong, because you are not expected to accurately know the (weighted) average price of boots in Germany or the average life expectancy of boots. This can easily account for the level of error in your answer.

If you really wanted to get your answer precise, you would have to look into market research/reports to get more accurate assumptions.

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Dom
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updated an answer on Aug 19, 2018

Hi Anonymous A,

What do you think?

Best,
Dom

(edited)

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