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ISBPM - Assignment - 6.4 - Rohit Singh

ISBPM_Assignment_6.4_Rohit Singh

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67 views

ISBPM - Assignment - 6.4 - Rohit Singh

ISBPM_Assignment_6.4_Rohit Singh

Uploaded by

rohit05singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Required Assignment 6.

4
Estimate the Market Potential for the Following Products:
Diapers, Ice cream
Diapers:

During the 1990s, an average of 4 million babies are born annually in a country. The average
child goes through 7,800 diapers in the first 130 weeks of life (2.5 years) until toilet training or
60 per week (Deveny, 1990).

(a) What is the annual market potential for disposable diapers?

(b) What other qualitative issues need consideration here?

Diapers Market Potential Estimation

Methodology Used:

1. Estimating the number of babies born annually.


2. Estimating the average number of diapers used per child.
3. Calculating the total annual usage of diapers.
4. Considering other qualitative factors affecting the market.

Approach Taken:

1. Use historical birth data to estimate annual births.


2. Use average diaper usage per child to estimate total usage.
3. Calculate annual market potential in units and potential revenue.
4. Identify qualitative issues affecting the market.

Assumptions:

1. Birth rate remains constant at 4 million babies annually.


2. Each child uses 7,800 diapers in the first 2.5 years.
3. Diapers are used uniformly across the entire period.
4. No significant changes in diaper usage patterns or alternatives.

Calculation:

1. Annual Births:
o Number of babies born annually = 4 million.
2. Diaper Usage Per Child:

Product Management Page 1


o
Average number of diapers used in 2.5 years = 7,800.
o
Diapers used per year = 7,800 / 2.5 = 3,120.
3. Total Annual Usage:
o Total diapers used annually = 4 million * 3,120 = 12,480 million diapers.

Solution: (a) The annual market potential for disposable diapers is 12,480 million diapers.

Qualitative Issues to Consider:

1. Demographic Changes:
o Changes in birth rates due to societal, economic, or policy factors.
2. Economic Factors:
o Affordability and economic conditions affecting purchasing power.
3. Environmental Concerns:
o Increasing awareness and regulatory changes regarding disposable diaper waste.
4. Technological Advancements:
o Development of alternatives like reusable diapers or advanced materials.
5. Cultural Factors:
o Variations in diaper usage due to cultural practices and preferences.

______________________________________________________________________________

Ice cream:

In 1999, the population of a country was 273,401,000. Of these, 16 million suffered from
diabetes (and hence could not consume regular ice cream) and 30 million were lactose
intolerant (and hence could not eat ice-cream). On average, consumption per person is 46.6
pints per year. The average price per pint in 1999 was $3.19.

What is the market potential in (a) units and (b) dollars? ($ is used as a general unit of
currency)

Ice Cream Market Potential Estimation

Methodology Used:

1. Estimating the population eligible to consume ice cream.


2. Estimating the average consumption per person.
3. Calculating the total annual consumption in units and value.
4. Considering other qualitative factors affecting the market.

Approach Taken:

1. Use population data to estimate the total market size.

Product Management Page 2


2. Subtract the populations that cannot consume ice cream (diabetes, lactose intolerance).
3. Use average consumption data to estimate total consumption.
4. Calculate potential revenue based on average price per pint.

Assumptions:

1. Population in 1999 is 273,401,000.


2. 16 million people with diabetes and 30 million people with lactose intolerance do not
consume ice cream.
3. Average consumption per person is 46.6 pints per year.
4. Average price per pint is $3.19.

Calculation:

1. Eligible Population:
o Total population = 273,401,000.
o Population with diabetes = 16,000,000.
o Population with lactose intolerance = 30,000,000.
o Eligible population = 273,401,000 - 16,000,000 - 30,000,000 = 227,401,000.
2. Total Annual Consumption:
o Average consumption per person = 46.6 pints.
o Total consumption in units = 227,401,000 * 46.6 = 10,598,486,600 pints.
3. Total Annual Revenue:
o Average price per pint = $3.19.
o Total revenue = 10,598,486,600 * 3.19 = $33,209,923,940.

Solution:
(a) The market potential in units is 10,598,486,600 pints.
(b) The market potential in dollars is $33,209,923,940.

Product Management Page 3

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