Estimate the demand for automatic washing toilets using the top-down approach described on the micro-lecture video (i.e., the approach for estimating demand for organic cat food).

Here's a template Download templatethat may help you. Or you might prefer to start by white boarding (or penciling) the estimation process, then convert to Excel.

Assumptions:

1. Assume there are two market segments: residential and hotels. Choose ONE segment only.
2. Assume the unit price of a washing toilet is $3,000.

To estimate the size of the market segment:

1. Start by identifying the market unit.
   1. For residential, you may want to assume Households are the unit. How many households in the US.?
   2. For hotels, the number of hotels in the U.S. may be the basic unit. How many hotels in the US?
2. Multiply the number of units (Step 1) by the number of toilets per market unit
   1. For residential, will people put them in every bathroom? Or just the master? This is just an exercise, so just use your judgement. Don't overthink!
   2. For hotels, how many rooms per hotel? Any other locations in the hotel?
3. Next make a list of at least FOUR characteristics of the target market.
   1. .For residential, what are the characteristics of families who will make these investments? Think of demographics but also psychographics. For the cat food example, we used mainly psychographics (buys 100% organic for family, thinks kitty is part of the family). Then consider how to quantify those characteristics. How could you find the percent of households with income of at least (whatever you estimate is the cutoff)? For this exercise, a Google search is fine, and if you strike out, use your judgment. If you have the time, look at the Research Guide summarizing secondary data frequently used by marketersLinks to an external site.. Important: use characteristics that measure different dimensions. For example, "income > $x" and "own a luxury home" will have a lot of overlap and so you'll be counting the same people.
   2. For hotels, what kinds of hotels will install these? Again, use characteristics that measure different dimensions. For example, 5 star rating and room rate > (some big number/night) will likely yield the same set of hotels.
4. Multiply Step 2 by the fraction of the population with each of the Step 3 characteristics of the target market.
5. Factor in the purchase cycle.
   1. Will every home in the target market install a new unit annually? Of course not. So what's the trigger likely to be? Perhaps a major remodel? If so, how frequently do people remodel bathrooms? If it's every 10 years, then multiple Step 4 by 1/10.
6. Multiply units from Step 5 by $3,000 to get total market potential in dollars.

Now you may be thinking, "Sure, but are people really going to buy these?" That's where the marketing mix comes in. The toilets need to be Promoted (perhaps celebrity endorsements and ads in Architectural Digest), Distributed (relationships with builders, designers, architects, plumbing supply houses), and Priced appropriately.