Basil & Co: This Market Size Looks Too Big
Consulting
medium35 min0 submissionsGoldman Sachs
Scenario
A junior consultant has sized the annual replacement market for a household appliance in India. The number is being used to justify a ₹146 Cr capacity investment.
Their working, verbatim
Population is 173m. Average household size is 4, so there are about 43m households.
Penetration of this appliance is 28%.
Appliances are replaced every 8 years.
So annual replacement demand = 173m × 28% ÷ 8 = 6.1m units per year.
At ₹4564 per unit, that is a market of roughly ₹2,764 Cr a year.
The partner has asked you to check it before it goes in the deck.
Supporting data
derived hints
- corrected units m
- 1.5
- overstatement multiple
- 4
stated working
- households m
- 43
- population m
- 173
- household size
- 4
- price per unit
- 4564
- stated units m
- 6.1
- penetration pct
- 28
- replacement years
- 8
Your task
Check the estimate. Your answer should provide:
- Analysis — find the error and quantify how much it distorts the answer.
- Risks — what depends on this number being right.
- Recommendation — the corrected size, computed, and how you would sanity-check it.
State any assumptions you make.
Ready to move forward? Up next: How many cups of chai are sold in Mumbai on a weekday?Next question
How you'll be graded
100 points, 60% to pass.
- explanation20
- residual review15
- error identification35
- quantitative correction30
Hint
Reveal suggested structure
Unit consistency; households vs individuals; recompute; sanity-check against a known anchor