Tide Pod Challenge
07.10.2020 - Today's market sizing exercise
Hello Case Dojo,
Today's market sizing question is the Tide Pod Challenge (Disclaimer: We do not endorse eating detergent.). 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 do Americans spend on tide pods each year?
Our sample answer
How we broke things down
We want to start by calculating the number of (unbranded) pods sold each year by determining how many loads of laundry are done each year. Then we will estimate the percentage of laundry done via Tide pods, Tide's market share, and the cost per pod to get our final answer
Let's determine how many loads of laundry are done each year. Based on our personal experience, each week generates one load of laundry from clothing. Towels and sheets are supposed to be washed every two weeks. Thus let's assume each person does 1.5 loads of laundry per week. Given approximately 50 weeks, this translates to 75 loads per year.
We suspect that the percentage of laundry done via Tide pods varies by age demographic. For simplicity, we split the population evenly across kids (ages 0-20), young adults (20-40), middle-aged (40-60), and elderly (60-80).
Next, we make an educated guess on the tide pod penetration across each demographic and average to get our final percentage. For example, we believe young adults are far more likely to use tide pods. We also assume parents (who are middle-aged) do their kids’ laundry.
Assumptions we made
US population = 320M
Loads/week clothing = 1
Loads/week towels, sheets, other = 0.5
Population is evenly split across people aged 0-20, 20-40, 40-60, & 60+
40% of people aged 0-20 and 40-60 use tide pods, 75% of people aged 20-40 use tide pods, and 10% of people aged 60+ use tide pods
Tide pod market share = 50%
Cost per load = $0.5
Our evaluation
We arrived at $2.1B per year. This feels like an overestimate because many people buy tide pods in bulk at a discount from stores like Costco. It may also be an underestimate, as we did not account for non-consumer purchasers of tide pods such as hotels.
Other potential approaches we like
Estimate the total spend on laundry before multiplying by the market share of pods and the market share of Tide.
Break down the population into different income groups to estimate laundry pod market share (pods are generally more expensive).
Actual answer
$2B per year
Extras
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🤠 Fun Fact
P&G - Tide's parent company - was founded by candlemaker William Procter and soapmaker James Gamble in 1837. They remained lifelong friends and are buried together in Cincinnati.
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