Part II w/ Chris: Management Consulting Sample Case Interview Question (Market Sizing)


let’s break down the steps that define
the u.s. diaper market annually so you’re going to have to go ahead and
think about three things first your total population in which all your
customers lie your actual customer segmentation and then the number of
diaper is that each of the segments would purchase so the total population
of the u.s. is about 300 million people if you assume evenly distributed
populations by year and an average life expectancy of 0 to 80 that brings you a
three point seven five million people in each year let’s round that to four
million for simplicity sake and move on from there
all right let’s get to customer segmentation the u.s. diaper mark is
probably split between infants and the elderly and let’s define infants as
people from 0 to 3 and the elderly is people from 75 to 80 so between the ages
of 0 to 3 assuming this evenly distributed population we have about 12
million possible customers but within those 3 years 0 to 1 1 to 2 and 2 to 3
you have slightly different take-up rates of diapers so let’s say that from
0 to 1 100% of 4 million infants use diapers
from 1 to 2 another 100 percent and another 4 million youths diapers and
from 2 to 3 75% so 3 million youths diapers so the first part of our
customer segment infants makes up 11 million total possible customers the
second part adults 75 to 80 are 5 total years of lifespan times you’re 4 million
people per year gives you a 20 million total customer base and let’s assume
that about 10 percent of those people actually use diapers as well so now you
have your 2 million plus your 11 so 13 million total possible customers within
each of these segments we actually have to think about who uses how many diapers
and I’m going to go ahead and assume that amongst infants you have a
decreasing number of diapers used as they get older so if you take your
original 4 million people from the age of the 0 to 1 they use diapers and
assume that they use them 7 they use 7 diapers per day that gets you to about
28 million diapers let’s say that from 1 to 2 you
slightly fewer diapers so six per day and you get to 24 million and from two
to three you also use slightly less again so let’s say five you have three
million people from two to three by your five diapers per day so that’s 15
million so 24 plus 28 plus 15 gets you to 67 million and let’s do the same
exact process just for people who are age of 75 to 80 we said that there are
two million people who fall in that category who fall within the market for
diapers and assume let’s assume that three those who lose about three diapers
per day that’s an additional six million diapers which gets us to a total 73
million diapers use per day now the question originally asked and it’s
always important to keep scope in mind how many diapers were used per year so
let’s multiply or 70/30 million by 365 and get to our final answer because
we’re doing this just on top of our head let’s break it down 73 million times 300
is 73 times 3 which is 219 million times 100 which is 21 point nine billion plus
60 times 73 which is six times 73 which is roughly 4.4 billion so that gets us
to twenty one point nine plus four point four that’s twenty six point three
billion and we have to add our final five days and five days times 73 million
is 365 million so let’s add another point four billion to get to a final
total of 26 point seven billion diapers sold in the US per year

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