1) Estimating the patent value of an everlasting light bulb market

- Application only in domestic use not offices or cars

- There are 6B people in the world. You can assume that only 4B people have access to

Electricity

- You can assume that there are 8 people on average per household (HH)

- Conventional light bulbs price: $2. Everlasting light bulbs will be priced at $5-

- Assume a profit margin of 20% on conventional and everlasting bulbs

Market Sizing

A good candidate will ask what type of bulb this is as a clarifying question upfront before they

attempt a framework. They should also ask for the length of the patent. They will discover it is a

domestic bulb with an eternal patent

- If 6B people in the world, and average house hold size is 8, assume only 4B people have electricity.
Therefore there are 500M Households in the world

- Assume each house has 5 rooms on average, therefore there are 2.5 Bn domestic rooms.

- Assume 2 bulbs per room then there are 5B rooms

- If $2 / bulb, then amateurs ay industry is worth $10Bn today

- Normal bulbs last 2 years , therefore current industry is worth $5bn. At 20% current profit is $1bn

- IF everlasting bulb , market size = 5 bn * 5 = $25 bn. 20% profit = $5bn

2) Magazine

Question 1 Details

Sample assumptions:

• Based on normal distribution with a life span of 80 years, approximately 2/3 of the

population is between 30 and 50, or 100 people. Half of these are men, or 100

million people.

• Of these men, approximately 1⁄2 would read a magazine (50 million)

• 10% of these would read a men’s journal (5 million)

• 5% market share capture in first year (250k)

• Magazine cover price is $2.50 to $5.00 ($3.00 news stand and $2.00 subscription)

• 50/50 split between news stand and subscribers: $250k + $375k = $625k per issue

• Assume monthly magazine x 12 = $7.5 million annual revenue

• This is less than the $10 million target

3) How large is the Canadian market for jackets?

Answer:

• Canada Population: 30M

• * Skier Participation rate: 20%

• = Total Skiers: 6M

• Non-Skiers: 24M

• Likely to buy a ski-jacket: 1/4

• = Non-Skier Jacket buyers: 6M

• Lifespan of Jacket 5 years  0.2 jackets per year

• 12M Jacket Buyers = 2.4M jackets per year

• Price per Jacket: $150

• = Ski Jacket Market Size: $360M

4) Airlines Market Size

Assume that at any time a plane leaves one city, another plane leaves the paired city

o For example: LAX-SFO: 16 hours / 2 hours = 8 flights each way * 2= 16 flights

(LAX-SFO and SFO-LAX)

o Likewise, LAX-JFK: 16 hours/6 hours = 3.2 = 3 flights each way * 2 = 6 flights

Weighted average fare = 40%*100+25%*250+20%*20%*500+15%*600=$312.50

If interviewee wants to proceed the long way, following details are pertinent:

o 200 seats per plane

o 80% of seats are filled on average

 If calculated this way, total revenue is $2m per day, per flight revenues

are $50k, and average fare is also $312.50

Airline operates 365 days per year

Total flight revenue of $730m dollars (assuming $2m per day)

One incremental passenger on each flight is worth $12,500 per day or $4.56m per year

This represents an increase in revenue of 0.6%, a relatively minor impact

Market Size for Cheese

- I would like to develop a framework

- Explain equation that would get to the market size. For ex. I would need to estimate the population,
penetration * price = market size

I would like to first segment the market from the 300 million Americans

1)Cheese Lovers (High consumption) – 15% of the population will love cheese -

2) Medium Consumption

3)Low Consumption (lactose intolerant)

I am looking at myself, I consider myself to be an avg consumer. I eat 1lb/week . There are 50 weeks so
50 lbs/yr

For the high consumer, I would imagine consumers eating 2lb / week. They eat pizza, go to the store etc

Low market – 0lbs/ Yr

Of the 200 mill

- High Consumption – 50 mill

- Avg Consumer – 100 mill

- Low Consumer – 50 mill

Get the total pounds consumed and then multiply by price = $75 bn / yr

- $75 bn does seem a bit high. This translates to about $500 / yr. When I consider avg income at $40,000
/ yr . This is 1% hence seems ok