Estimating the potential market with few data
To estimate how many iPhones Apple sells in the U.S. each year, we will use a structured top-down market sizing framework, as outlined. This approach allows us to break down the problem logically and apply assumptions based on available data. The goal is to approximate the annual sales volume of iPhones in the U.S. by using population data and consumer behavior trends.
Calculations for estimating the annual sales volume of iPhones
Below are the steps:
Step 1: Start with the population of the U.S.
The current U.S. population is estimated to be around 336 million people. This will be our starting point.
Step 2: Estimate the percentage of people that have cell phones
It is estimated that about 90% of the U.S. population owns a cell phone. This gives us a base number of individuals who are potential customers for smartphones, including iPhones.
336 million × 90% = 302,4 million people with cell phones
Step 3: Estimate the percentage of cell phones that are iPhones
Next, we need to estimate the market share of iPhones in the U.S. smartphone market. Recent data suggests that Apple has approximately 60% of the U.S. smartphone market share.
302,4 million × 60% = 181,4 million people with iPhones
Step 4: Estimate the frequency of iPhone purchases
Not everyone who owns an iPhone buys a new one every year. Based on typical consumer behavior, iPhone users tend to upgrade their devices approximately every 3 years. Therefore, we estimate that one-third of iPhone owners purchase a new iPhone each year.
181,4 million ÷ 3 = 60,5 million iPhones sold annually
Through this top-down approach, we have estimated that Apple sells around 60,5 million iPhones annually in the U.S., based on the population, cell phone ownership rates, iPhone market share, and purchase frequency.
For Mini MBA students it is important to dare to calculate market estimates, despite the lack of reliable data, in different strategic decisions such as marketing, product development, partnering, etc.
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