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Estimationstandard
Estimate the US market size for meal-kit subscriptions.
How to approach it
Pick a top-down path from households that cook at home and can afford meal kits.
How a strong answer opens
“I'll go top-down from US households to the share that cook at home, can afford meal kits and actually subscribe, then multiply by annual spending per subscriber.”
Outline of a strong answer
Try answering out loud for a few minutes before you open this.
- Households, about 130 million
- Share who could afford and want meal kits
- Share who actually subscribe
- Average spending per subscriber per year, allowing for skipped weeks
- Multiply subscribers by annual spend
- Sanity-check: share of total US grocery spending this implies
Where this question usually goes wrong
Assuming a full weekly order for every subscriber all year, which ignores skipped weeks and the high churn in meal kits.
Learn the method
Top-down and bottom-up in Module 3, Estimation.
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