Amber Grid: This Market Size Looks Too Big
Consulting
hard35 min0 submissionsStripe
Scenario
A junior consultant has sized the annual replacement market for a household appliance in Europe. The number is being used to justify a €157 M capacity investment.
Their working, verbatim
Population is 195m. Average household size is 5, so there are about 39m households.
Penetration of this appliance is 30%.
Appliances are replaced every 4 years.
So annual replacement demand = 195m × 30% ÷ 4 = 14.6m units per year.
At €4368 per unit, that is a market of roughly €63,882 M a year.
The partner has asked you to check it before it goes in the deck.
Supporting data
derived hints
- corrected units m
- 2.9
- overstatement multiple
- 5
stated working
- households m
- 39
- population m
- 195
- household size
- 5
- price per unit
- 4368
- stated units m
- 14.6
- penetration pct
- 30
- replacement years
- 4
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: Marlow Chemicals: Pressure-Test This RecommendationNext 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