Interview Case #2 : Chewing gum

How would you estimate the size of the annual U.S. chewing gum market?

Question

How would you estimate the size of the annual U.S. chewing gum market?

Check your answer for reasonableness.

Solution

Estimate the number of people who chew gum: of the 300 million population, 15% are between the ages of 10 and 20, the heaviest users, for a total of 45 million. Estimate that these people chew two packs per week, for annual sales of 4,500 million packs. For the other users over age 20, (70% of the 300 million population, or 210 million) estimate a usage rate of one half pack per week, for a total of 5,250 million packs per year. Total packs per year is 9,750 million, or approximately 10 billion.

To check for reasonableness, figure the dollar sales that these packs represent: at 25 cents per pack, annual sales would be $2.5 billion, a reasonable figure.