Kylie Jenner...
07.03.2020 - Today's market sizing exercise
Hello Case Dojo,
Kylie Jenner is the world’s youngest self-made billionaire (sorry Zuck). Today, we want you to figure out how rich she really is. Good luck and have fun!
Reminders
Spell out your thinking process, state your assumptions, and evaluate your final answer. There are many valid approaches to each problem.
No calculators are allowed, so make the math easy for yourself.
Try to come to an answer within 3-4 minutes at the longest (here’s a timer).
Today’s Question
How much does Kylie Cosmetics (Kylie Jenner's makeup company) make in annual revenue?
Kylie Jenner with makeup (left) vs. without makeup (right)
Our sample answer
How we broke things down
We start by splitting the US into women and men. For simplicity, we assume men do not buy makeup.
We segment women into makeup power users, average users, and non-users and estimate the monthly spend of each group
We multiply the monthly spend by 12 to get the annual spend and get the total market size of the makeup industry.
We estimate the market share of Kylie Cosmetics and multiply by the market size to get annual revenue.
Assumptions we made
US population = 320M people and 50% are women so there are 160M women in the US
Men do not buy makeup, 15% of women are superusers, 70% are average users, and 15% are non-users
Superusers spend $150/month on makeup, average users spend $15/month on makeup. These estimates come from knowing that products can range in price from $10-100 dollars and users probably buy no more than 1-3 products per month on average.
Kyle Cosmetics has a 5% market share. This estimate is based on the concentrated nature of the makeup industry - there are so many brands but consumers rarely shop outside of those popular brands and market leaders. So each major brand likely has a small chunk of the pie (1-10% market share)
Our evaluation
We arrived at approximately $3B per year in annual revenue. This feels like an overestimate - I read in the news that Kyle Jenner is worth over $1B, but if her company was pulling in $3B per year in sales she'd be worth so much more than that.
Other potential approaches we like
Segment population of women by either age or income and estimate average makeup spend per those segments.
Actual answer
$360M per year. It looks like we got the size of the makeup industry pretty close but vastly overestimate Kyle Cosmetic's market share — I guess that's what it means to have a big brand name.
Extras
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🤠 Fun Fact
On average, Kylie Jenner earns $1.3 million dollars per Instagram post, which is $100,000 dollars more valuable than a Trump tweet.
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