Before you make a single assumption, settle one distinction. It clears up more guesstimate ambiguity than any other: is the question about a stock or a flow? A stock is a quantity that exists right now, like the installed base of air conditioners in Indian homes, the number of smartphones currently in use, or the cumulative solar capacity on US rooftops. A flow is a rate: units sold this year, new installations this year, transactions this month. For a durable good with a long replacement cycle the two can differ by a factor of five or ten, so "size the market for air conditioners" stays ambiguous until you've picked one. Get it wrong and every downstream number is accurately calculated and completely irrelevant to the question you were asked.
How does the replacement cycle link stock and flow?
The two connect through the replacement cycle. Take a product with an average useful life of L years and a roughly stable installed base. The replacement part of its annual flow is approximately stock รท L, because each year, on average, one Lth of the installed base wears out and gets replaced. Add first-time adopters, whose purchases come from rising penetration and not from replacement, and you have the total annual flow. That bit of arithmetic (take the stock, divide by average life, get an annual replacement flow) comes up constantly and is worth owning cold. Practice P2 drills it directly. A 75-crore-unit smartphone stock replaced on average every 3.5 years implies roughly 21.4 crore replacement-driven units a year, before a single new adopter is counted.
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How do you pick stock or flow in a case?
In practice, always restate the question in stock-or-flow terms before you build anything. Do it out loud, the way you'd restate scope in a case interview's clarify beat: "Is this the number of cars on the road, or the number sold this year?" A market-entry or an M&A case almost always wants a flow: this year's revenue or unit sales, the thing a new entrant or an acquirer would actually capture going forward. An installed-base or infrastructure question (charging stations needed, service technicians required) wants a stock. Say which one you're building and build only that one. If you build the other by accident, more precision won't save it. Start over with the right target.