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How to incorporate all possibilities of usage of a product/ service in market sizing by using Replacement Theory?

Anonymous A asked on Aug 04, 2019 - 2 answers

The cases explained in Boot Camp videos only touch base with one use-case, eg:

- # cars in US-- how about cars used for taxis or for offices or other uses? It's solved using only the # households

- # bulbs in Germany-- how about bulbs in other places- shopping malls, public convenience, corporate buildings, schools, hospitals, etc? It's solved only using the # households

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Vlad updated his answer on Aug 05, 2019
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Hi,

It should not be calculated with the replacement theory.

First of all, you can always ask in clarifying questions if we are taking into account the commercial usage.

The approach case by case is different:

For example, once you calculate the household cars you can use your personal experience and mention that every 5th car on the street is commercial and divide the households cars number by 80%

For the Malls and hospitals, you need to calculate the commercial vs non-commercial real estate areas and then apply a different number of fo bulbs per sqm

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(edited)

Udayan
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replied on Aug 07, 2019
Ex McKinsey EM with 7 years of recruiting experience/ received all 3 MBB offers/Real MBB cases
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To add to Vlad's answer you can also make assumptions - for example, typically taxi permits are issued per 100K of population. Similarly Uber is another mode of transport to take into account. There are multiple approaches you can take. As long as you explain your rationale and are logical there are very few wrong approaches

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