Hi Anonymous,

reg 1) You don't count different intermediaries (wholesalers, retailers) into the total market size for a given product. That would be an analysis down the road when looking at who captures what part of the value-add in a given market (the producer, the wholesale, the retailer...).

However, in the sugar example, the sweets producers and restaurants "consume" the sugar as an ingredient to create something else with it (a biscuit or a sweetened ice tea). In that case, they will be counted into the total market size as a separate segment.

So - if a product is passed through unchanged, it is not counted, and only the final sale to the end user is counted into the market size. If it is transformed, that's the end of the road for that product, so the sale to the "transformer" needs to be counted.

Reg 2: In the mattress example there are indeed some blurry lines there. Market sizing isn't an exact science though, so just define how you treat things. You can say replacements are only "like for like" - so replacing one baby mattress with a different "baby mattress". That's clear-cut and can be defended. That way, baby/children's mattresses would mostly count into "new" but hardly ever be replaced. Fair enough...

You could just as well take the other argument, that one mattress is actually a replacement of the other. Although that makes things a bit murky, so I personally would stick with "like for like" replacements.

In any case, "new" mattress sales could also come from

• population growth
• increase in beds per person (i.e. vacation homes)
• increase in hotel or hospital capacities
• re-emergence of separate beds for couples
• increasing number of singles
• ...

Hope this helps,

Elias

(edited)