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Estimate the popcorn market in the cinema industry (pre-covid) 

marketsizing
New answer on Jul 06, 2021
1 Answer
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Anonymous A asked on Jul 06, 2021

Estimate the popcorn market in the cinema industry (pre-covid) 

    1)    Population of country (e.g. US 320 million)
    2)    Divide by different segments 0-20, 20-40,40-60, 60-80
    3)    320 million divided by 4 that is 80 million per age group 
    4)    Ask interview if they have any info on how often each age group goes to the movies. If no information is given make the following assumptions: 0-20 and 20-40 would be the ages where more people go to the movies because children love going to the cinema + young parents have to take their kids to the cinema. So we could assume something like on average 0-20 people go to the cinema 5 times a year, 20-40 go to the cinema 4 times a year, 40-60 go 3 times a year and 60-80 go to the movie once a year. They 
    5)    We can then calculate that : 
80*5=400
80*4=320
80*3=240
80*1=80
TOTAL= 1.04 billion movie ticket sales a year 
6) Ask the interviewer the % of people that buy popcorn when they go to the movies. If no information is given make the following assumptions: on average 50% of the time people go to the movies they buy popcorn. Amongst other things other potential substitutes - e.g. sweets or hot dogs/salty treats. 
7) Assume that on average a popcorn is shared by 2 people. 1.04 billion divided by 2 and divided by 2 again is 0.26 billion. Aka 260 million. 
8) Make an assumption price of an average popcorn price is 8 dollars. Quick maths in head. 250*8=4000 + 10*8 = 80 = 4080 million = 4.08 billion dollars 

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Ian
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Content Creator
replied on Jul 06, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

This is generally right, but I have a few comments:

  • Please never just generically create segments. 0-20 is an odd segment. I understand that it's "even", but you should really have 0-10, 11-19, as an example. Teens go to the movies much much more than children. You need to account for this.
  • In these breakdowns, understand whether you can generalize spend or not. In this case, popcorn spend is directly dependent on age groups - take this into account!
  • When estimating frequency, make sure to use personal experiences (i.e. my niece goes x amount of times, my friends go x amount of times)
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Ian

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