Size a market for a client memo
Who asked: Kettlebrook Labs, a small maker of home espresso machines, is writing a memo for investors.
Why: investors want to know how big the US market is and what Kettlebrook could sell at a realistic share.
The data: about 130 million US households, and the interviewer's notes on retail sales. Everything else is your assumption, and you'll need to defend it.
Done looks like: a top-down market size you can compute by hand, a bottom-up cross-check, a revenue figure at a 6% share, and the paragraph that goes in the memo. Each step continues from your own work. All figures are fictional.
This project runs a market sizing the way a consultant would for a client, not the way you'd answer a quick interview question: build a first cut, check it per household, size it a second way, compare, and turn it into the number the client needs.
Your tree from step 1 carries into step 2, so the arithmetic you do by hand is on your own assumptions. The memo at the end should state the size as a range, the method, and what it means for Kettlebrook.
Skills from the market sizing unit come back here: dividing by a lifespan, utilization-free bottom-up counts, per-household checks, and comparing two estimates.
Top-down: households × share that own ÷ years a machine lasts × price
Bottom-up: sellers × machines per seller per week × 52 × price
Answer: a range where both land, then share × market = revenue
The two methods should land within a factor of two of each other.