
Your company is developing a new video
game console and would like to know the
number of units to produce. What is your
recommendation?
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

To determine the production number the
potential demand for the product must be
estimated.
Limits on supply capacity or minimum
production requirements can also be an issue
Require knowledge of competitive landscape

Demand Data
◦ Potential customer demographics
◦ Current video game console owners
◦ Potential new video game console owners

Supply Data

Competitive Landscape
◦ Production Limits (labor, equipment capacity,
minimum commitment levels)
◦ Raw material capacity
◦ Number of competitors
◦ Competition sales
◦ Product lifecycles
(start small, can expand later)
 Demand Assumptions
◦ New customer target demographic
 Male, 12-21
 U.S. market
◦ Product penetration percentage of new console
customers
◦ Existing console owners
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Supply Assumptions
◦ Unconstrained supply

Competition Assumptions
◦ Fixed percentage of current console market

New customer demographic information
source
◦ U.S. Census data

Current console owners/competitive
landscape data source
◦ Current market share – Hoover’s, Yahoo Finance,
etc.
◦ Estimate product differentiation and impact on
market share (subjective)

Using found/estimated data determine
◦ Potential market size from new console customers
◦ Potential market size from current console owners
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Sanity check
Sensitivity analysis on assumptions and
inputs
Compare estimated market with first year
sales or competitors console products.