Market size calculation for school buses

Question

Dear,

I don't understand the calculation framework for the school bus market size in Australia.

I have no problem with the 1st part - # of buses required per day. But I don't understand the 2nd & 3rd part - why multiply # of school days per year and divide useful life of school bus?

Anyone could do me a favor for clarification? It's highly appreciated.

Answer 1

Hi there,

You're exactly right! This market sizing has been overcomplicated.

Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229

Answer 2

Hi there,

I think this is an interesting question that may be relevant for many people. I would be happy to share my thoughts on it:

I agree with you that the calculation to estimate the market size is overcomplicated. Simplifying it would make it more accurate and easier to understand.

If you would like a more detailed discussion on how to best practice marketing sizing questions, please don't hesitate to contact me directly.

Best,

Hagen

Answer 3

This market size isn't very well done… I really don't understand why you would need “bus loading” if you already have how many buses you need per day.

Anyway, my understanding would be that the bus market size is the total number of buses in circulation (that is the 1st one you mentioned) divided by the average lifetime of a bus (maybe that is the 10 years divided by the average number of days per year that one uses a bus).

I am pretty sure you can use that as a guidance of factors to consider but still do a much better estimation.