Interviewee: I would like to approach this question from the demand side.
Total population of India = 130 crore
Let us take a number of members in a family = 4
Total Households = 130/4 = 32.5 crore
For Metro/Tier I class households
Percentage of poor: middle class: rich = 20%:60%:20%
For Tier II/III class households
Percentage of poor: middle class: rich = 40%:50%:10%
For Village Households
Percentage of poor: middle class: rich = 60%:38%:2%
Market Penetration
| Metro/ Tier I | Tier II/ III | Villages | |
| Poor % | 0 | 0 | 0 |
| Middle-class % | 50% | 40% | 0 |
| Rich % | 100% | 100% | 100% |
Absolute Refrigerators Numbers = Sum of Penetration * No of households in each segment
| Metro/ Tier I | Tier II/ III | Villages | |
| HouseHolds | 0.2*32.5 = 6.5 Cr | 0.15*32.5 = 4.875(Let’s take it 5) | 0.65*32.5 = 21.125 (Let's take it 21) |
| Refrigerators Penetration | 0.5*0.6+0.2 = 50% | 0.4*0.5+0.2 = 30% | 2% |
| Total | 0.5*6.5 = 3.25 | 0.3*5 = 1.5 | 0.02*21 = 0.42 |
Total number of refrigerators = 3.25+1.5+0.42 = 5.17 crore
As the question asks the number of refrigerators sold every year, we have to take care of following points too:
- i) People buying refrigerators due to replacement (as their old machine is not working)
- ii) People buying refrigerators as their first refrigerator
Let's take the average life of Refrigerators= 10 years
Assumed growth rate = 5%
Refrigerators sold in a year = refrigerators due to replacement + New Demand due to growth
= (Total refrigerators ( i.e. market size) / Avg Life) + (Growth rate * Total machines (i.e. market size))
= (5.17/10)+(5.17*0.05) crore
= 0.775 crores
= 77.5 lakhs
***
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