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Medium Market Sizing Market Entry Growth Strategy

Quality Bottling Co.

#Manufacturing #Retail
ProHub Comment

This is a classic market sizing case requiring bottom-up calculation combining initial inventory setup with ongoing replenishment demand. The key insight is recognizing that first-year market size includes both the one-time initial order to stock all rooms plus 50-52 weeks of replenishment based on occupancy and usage rates. The case tests whether candidates can structure a framework, ask clarifying questions, and perform accurate calculations.

Estimated Time 26 minutes
Difficulty Medium
Source Darden
24 / 100
After successfully servicing large beverage companies over the last 20 years, our client, the CEO of High Quality Bottles (HQB), a small plastics manufacturing and bottling company, wants to expand into the hospitality and leisure space. Specifically, she wants HQB to supply local hotel chains with bottled toiletries like shampoos, conditioners, body wash, and lotions. HQB already has the interest of local hotels in their hometown and they need your help in identifying the potential size of this business and deciding if it is worth pursuing. How would you approach finding the market size for the first year in this expansion?

Clarifying Information

  1. What is the size of the city? –Medium sized city, about the size of Seattle or Dallas
  2. How many hotels are in the local market? –There are roughly 50 hotels in the region
  3. Are we looking for dollar value or units? The client is primarily focused on market size in dollar value
  4. What is goal/ makes this a desirable venture? Right now the client only wants to know market size but later, profitability, namely potential profit margins above 25% will be important in determining if the market is attractive
  5. How broad of a market is HQB looking at? The client’s only focus is the local hotel market
  6. Which products is HQB looking to supply? Only shampoos, body wash, conditioners, and lotions for each hotel room (1 of bottle each for a total of 4 per hotel room)
  7. How big is HQB’s Business currently? –HQB currently does $20 million in revenue
Mock Interview
Interviewer

After successfully servicing large beverage companies over the last 20 years, our client, the CEO of High Quality Bottles (HQB), a small plastics manufacturing and bottling company, wants to expand into the hospitality and leisure space. Specifically, she wants HQB to supply local hotel chains with bottled toiletries like shampoos, conditioners, body wash, and lotions. HQB already has the interest of local hotels in their hometown and they need your help in identifying the potential size of this business and deciding if it is worth pursuing. How would you approach finding the market size for the first year in this expansion?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

High Quality Bottles seeks to enter the hospitality toiletries market by supplying 50 local hotels with shampoos, conditioners, body wash, and lotions. The candidate must calculate year-one market size by determining total bottles needed (initial stocking plus replenishment based on occupancy rates and guest usage), then multiply by price per bottle ($0.50) to arrive at total market value (~$912k-$948k).

Key Insights:

  1. Market sizing requires two components: initial order (all rooms × bottles per room) and replenishment (occupancy × turnover × usage per stay × weeks per year)
  2. Must distinguish between unit volume and dollar value, with the client specifically focused on revenue dollars
  3. Future attractiveness depends on whether 25%+ profit margins are achievable, which requires understanding cost structure (raw materials, labor, distribution) not included in initial market sizing
  4. Raw material price fluctuations in plastics manufacturing represent a significant risk to profitability in this low-margin hospitality supply business