Hi, i've seen some market sizings which included not only the replacement rate (e.g., current number of smartphones in the US x replacement-rate) but also a growth rate.
How important would you say it is for market sizings to include the growth rate? I mean i can understand it for "new" products like smartphones or tablets, in which the penetration rate might increase. However, would it also be important, for example, for mattresses or diapers?
Thanks in advance!
Hi,
I think you answer the question yourself already. My rule of thumb is: If growth is expected to be significant, you should consider it. If you wouldn't assume major growth (well above inflation, etc.), you don't need to include it, but should mention that you neglect growth. With this strategy, you show that you are aware that growth may be important in specific situations, but also you show that you are able to make pragmatic simplifications.
Being aware of complexity and being able to reduce complexity are to essential skills that you can demonstrate when you apply this strategy.
Hope this helps! Let me know if you need further help on market sizing cases or if you have any other questions that I can help you with.
Cheers, Florian
Hi there,
Growth rate is very rare...
Market sizing is about today's market. Unless explicitly indicated otherwise, you should be calculating this year's market size. I've never seen a market sizing that asks for the NPV of all future growth...
That said, if we're doing market sizing within a case, and we want to understand our % of total market against x years for a specific investment purpose, that is of course different.
Again, it's rare to calculate growth rate - only really needed if explicitly indicated.
Hi, I agree it's rare, but my recommendation is to think about it and check with the interviewer.
I would like to suggest MS cases in the platform to practice with:
Hope it helps,
Antonello
