Hi everyone, I saw in many cases that some persons take into account the growth rate when doing market sizing (see below the example).
I think it really makes sense to consider that :
the Volume of a product sold = # products being replaced + # products being purchased for the first time
But in the majority of cases, we only consider the products being replaced. Does that mean that we make an assumption that the growth rate is negligeable ?
Thank you so much
(edited)
Hi there,
I think you're confusing a few things here.
Growth rate is the result of our calculations over multiple years.
As such, if, next year, the replacement rate increases, or if more people buy new guns, we'll have growth in the market size/demand.
Growth is not used to calculate market size. The change in market size year on year equals growth...
Thats a great point. In a case like this I would also look at gun ownership rates overall. What you might assume is that growth increases with growth in population (keeping ownership rates the same). However it gets tricky because many countries aren't actually growing at this point. Any assumption that is reasonable will work as long as you state it clearly.
Best,
Udayan
Hi Ian, thank you for your answer. I think I didn't ask correctly the question. When we do a market sizing based on replacement concept, we only take into account the people who replace their product (for instance a mobile phone). What about those who buy that product for the first time?