Mkt Sizing question

Market analysis Market sizing
New answer on Jan 22, 2020
6 Answers
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Anonymous A asked on Jan 16, 2020

Hello everyone!

How would you estimate the number of umbrella sold in one year in the US?

Thanks

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Udayan
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replied on Jan 22, 2020
Top rated MBB coach with many offers /Ex McKinsey EM in New York /6 years McKinsey recruiting experience/Real cases

Hi,

One approach is highlighted below :

Few things to remember when sizing this market

  1. It is important to divide umbrella purchases into planned vs impulse buys given the nature of the market
  2. For planned purchases - you can take a household approach using standard assumptions and anything from less than to a little over 1 umbrella per member is reasonable
    1. One thing to note here is there are also non-household purchases (hotels, offices etc.). So scale up your household assumption by a reasonable number like 10- 25% to account for these (depending on your assumptions)
    2. Replacement rate also matters but I think would be extremely small for non impulse umbrellas (I cant remember the last time I checked an umbrella without going in the rain!)
  3. For impulse buys I think the following are the key markets
    1. Domestic buyers caught in the rain
      1. Look at number of rainy days in a year in US -
      2. Make assumption on number of people there that would need to buy umbrellas because they are outside in the rain and got caught or umbrella didn't work (should be a very small % for each day)
      3. Add up the numbers for all the days
    2. Tourists
      1. Estimate total tourists (maybe by season so you can focus on rainy season if relevant)
      2. Estimate % that would need umbrellas on each rainy day(fair to say a high number of tourists like 50% or so don’t have space to or don’t remember to bring umbrellas on their trips). This number should be quite a bit higher than domestic number because tourists are looking to do things outside all the time.
      3. Add the numbers up
  4. Also remember competition from things like ponchos - which should reduce all your numbers (make an assumption on poncho vs umbrella sales depending on factors like price and intensity of rainfall)
  5. Accounting for all of the above get rough market size for annual umbrella sales in USA
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Antonello
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replied on Jan 17, 2020
McKinsey | MBA professor for consulting interviews

Hi,
I would approach it with a household perspective:
- umbrellas per household
- life of umbrellas
- umbrellas purchased because forgotten at home
- umbrellas purchased in the US by foreigners (tourists, businessmen)

Best,
Antonello

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Luca
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replied on Jan 17, 2020
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hello,

In addition to suggested approaches I would also mention the possibility to consider the number of umbrella sold to tourists.
Even if tourists are low compared to US population, It could be significant number since they have to buy a new one (if needed) without considering the average life of an umbrella.

Best,
Luca

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Christine
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replied on Jan 17, 2020
PrepLounge Community & Marketing Manager
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Clara
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replied on Jan 21, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Search in the Q&A "market sizing" if you are struggling with these type of problems, since there are plenty with commented solutions for you to practice.

Cheers,

Clara

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Vlad
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replied on Jan 17, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

  1. Segment the states and population into Heavy rains / slightly rainy / non rainy
  2. Assume % of people having umbrellas in each
  3. Divide by the umbrellas average lifetime
  4. Make an assumption re other segments (re umbrellas as presents / souvenirs)

Best

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Udayan gave the best answer

Udayan

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Top rated MBB coach with many offers /Ex McKinsey EM in New York /6 years McKinsey recruiting experience/Real cases
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