Market Sizing Questions: the market size of electric toothbrush in China

calculation estimation market sizing guess-estimates Market sizing
New answer on Jan 23, 2022
6 Answers
1.2 k Views
Daisy
Skilled
asked on Jan 05, 2022

Hi everyone, I have one sizing question: estimating the yearly sales of electric toothbrushes in China (including the yearly sales of the toothbrush Heads)

This is how I did:

1. To calculate the sales of electric toothbrushes

Chinese population: 1400m; assume the number of people in each age group is evenly distributed.

1400m/4 = 350m

-1641392048-hfyan58imp2k.png

Therefore, there are 140 m people having electric toothbrushes in China

Assume: 

each has one toothbrush
Replacement rate 1/3 (life = 3 years)
Growth rate 20%

the yearly sales = 140m*1*(1/3+20%) = 75m

However, I have stuck in the calculation of the yearly sales of the toothbrush heads:

I assumed that each newly bought electric toothbrush has 4 heads, and each head can be used for 1 quarter.

Can anyone help me with that? Thanks :)  

 

(edited)

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Hagen
Expert
updated an answer on Jan 06, 2022
Current Bain & Company Project Leader and interviewer | 250+ interviews conducted | 6+ years of coaching and mentoring

Hi Ruizhi,

First of all, it is great to see your consistency in finding out the solution to the question!

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

  • Generally speaking, you are on the right track with regards to the toothbrush heads!
  • I would advise you to, again, think through how many heads one would need during the lifetime of a toothbrush. For instance, if they start with 4 heads in the package with the toothbrush and each head lasts a quarter, the will be no sales in the first year. Thus, in 3 years lifetime, (3-1 years) * 4 quarters * 1 head = 8 heads will be sold, thus, 8 / 3 = 2.66 heads per year. When you multiply this by the 75m toothbrushes, you will end up with a market volume of 200m toothbrush heads.
  • Still, I would advise you to (re-)consider the following aspects of your market sizing:
    • Think carefully about the underlying drivers of the usage of an electric toothbrush for your segmentation. To my understanding, unless the dynamics in China are vastly different, the key underlying drivers are 1) age (i.e. small children normally use normal toothbrushes since they first need to learn it) and 2) household income. Based on this, I would advise you to segment the Chinese population in a different, maybe more efficient way.
    • Think carefully about using a growth rate since you want to estimate the current market size as opposed to the development over time.
    • In case you want to add more detail to your market sizing, you should also keep in mind that in many households, electric toothbrushes are shared (yet not the toothbrush heads).

In case you want a more detailed discussion on how to best approach any type of case study question, please feel free to contact me directly.

I hope this helps,

Hagen

(edited)

Was this answer helpful?
Luca
Expert
Content Creator
replied on Jan 05, 2022
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Ruizhi,

Happy to help!

First of all a couple of notes regarding your resolution:

  • Be careful to divide the population in 4 buckets that are evenly distributed: do you believe that a 20 years old man may have the same habit of a 2 years old child? It wouldn't be easy to justify that penetration rate in an interview
  • Why did you use a growth rate? If I understood correctly, you want to size the as-is market.
  • Are you sure that you are calculating the number of electric toothcrush and not the number of heads? It depends on how you tought that penetration rate (I would refer to # of families to calculate the number of electric toothbrush).

Anyway, taking into account your numbers, you should proceed as following:

  1. # of people using that electric toothbrush (let's assume 2.5 people, as average of the people composing a family)
     
  2. # of heads needed per person per year = 1 year / Life of 1 head= 1 / 0.25 = 4
     
  3. # of new heads per year = # of toothbrush existing * # people using a single toothbrush * # of heads needed per person per year = 27M * 2.5 * 4 = 270M
     
  4. # of heads sold per year = # of new heads per year - # of heads included in new electric toothbrush * # of new elec. toothbrush per year = 270 M - 4 * 9M = 270M - 36M = 234M

Does it make sense?

Hope it helps,
Luca

Was this answer helpful?
Lucie
Expert
Content Creator
updated an answer on Jan 05, 2022
10+yrs recruiting & top BCG trainer & BCG Project leader & experienced hire & ICF coach

Hello Ruizhi, 


I can imagine how frustrated it is to get stuck on the case :-( but no worry it happened all of us!

First of all, there is no right or wrong answer but you will be measured on how you approach the case, what logic and assumptions you do, how you argue them, etc.  You used a lot of assumptions/estimations and these are the critical equation in the whole process! You need to be able to ground your estimations with facts and do a sanity check to validate your thinking/logic. 


I would recommend first to spend a good time to structure the case, lay down all assumptions, and try to validate them with sound arguments BEFORE doing the calculation (also remember your calculation can be completely off, still you may succeed if you have a sound argument for that).  Often candidates try to match some number on the case but they miss the whole purpose of the case, it is about your approach, you unlikely will get into someone's else result.

Just as a side note, during my interview I had a sizing business case and I estimated 8x larger number than it was actual, but my assumptions made sense and I got the offer


If you would like to discuss this deeper, please feel free to reach out directly. 


Wishing you all the best,


Lucie


Was this answer helpful?

(edited)

Was this answer helpful?
Clara
Expert
Content Creator
replied on Jan 05, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

The other coaches gave wonderful hints, and you reasoning also was sound. You are in the right track for these!

Given that market sizing cases were the topic of many questions in this Forum, I developped a market sizing case, that you can find for free in PrepL´s library

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/market-sizing-new-startup-launch-baby-strollers-in-the-us-244

Let me know if you have any doubts with it, it contains a detailed explanation and methodology about how to solve this specific example, but you can extrapolate to many other market sizings!

Was this answer helpful?
Ian
Expert
Content Creator
replied on Jan 06, 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

Careful with your segmenting. What's the point of segmenting on age? It has no impact on electric toothbrush sales. Rather, segment by things that actually impact sales…income or urban vs rural split would be a smarter approach.

Was this answer helpful?
Daisy on Jan 06, 2022

Dear Ian, thanks for your reply, but I do think electric toothbrush sales are related to ages. Young people are more willing to buy it, but of course, it is also concerned with income.

Pedro
Expert
replied on Jan 23, 2022
Bain | EY-Parthenon | Roland Berger | FIT | Market Sizing | Former Head Recruiter

"I have stuck in the calculation of the yearly sales of the toothbrush heads:

I assumed that each newly bought electric toothbrush has 4 heads, and each head can be used for 1 quarter."

You found that 140 million people have electric toothbrushes. So because a head last a quarter, they need 140*4 = 560m heads per year. However, the heads for the first year come with the toothbrush, so you only need heads for ⅔ of its lifetime. So you have an additional 540m * ⅔ sales of heads every hear = 373m heads. Then add the 20% growth rate. (360*1,2=448m).

By the way, you have the 75m wrong. Its 140* (1/3)*(1+20%)=56m.

Was this answer helpful?
Hagen gave the best answer

Hagen

Current Bain & Company Project Leader and interviewer | 250+ interviews conducted | 6+ years of coaching and mentoring
153
Meetings
3,643
Q&A Upvotes
21
Awards
5.0
134 Reviews