market sizing

Hi there,

I would be happy to share my thoughts on your question:

• First of all, can you please provide a proposal that I can review?
• Moreover, please keep in mind that except for Bain in the UK and few smaller consulting firms, most consulting firms have not used standalone market size estimations for a long time, contrary to the false statement of others. While this does not mean it never happens, this type of case study question is typically not be very meaningful for both the candidate and interviewer, as only a few skills are being tested.
• That being said, simpler market size estimations may still be a part of a case study, for instance when estimating the revenues of the client is required.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

Hi there,

Here are a few pointers:

US e-commerce market: Start by estimating total retail sales with a population-based approach then apply assumptions about e-commerce’s share and expected growth (likely above GDP growth).

Emissions in Europe: This is by far the trickiest one and the AI-assisted answer in this thread does not provide an answer here. If the question is to calculate emissions in Europe, then using the emissions as an input value is not valid...I would potentially approach it from a population-based perspective or try to estimate it as a share of global GPD (which could be a far-distance proxy) or a share of global emissions (if the interviewer has the data which they likely do not - see the previous point).

Pipeline length in Europe: Estimate the general size of the continent, define average length of pipeline by running a few distance calculations across Europe, assume number of pipelines and multiply.

Used shoe market size in the U.S.: A population-based approach would work here either bottom-up or top-down. Calculate the total shoe market and take smaller percentage as used.

One thing to note is that you need a strong approach first, e.g.:

1. Define the scope of the question

2. Take time to think about your approach

3. Present the approach to the interviewer

4. Ask for any available data to perform the calculations

5. For data points that are missing, come up with assumptions and defend them

6. Calculate

7. Evaluate the outcome (too high/low? feasible? missed something? how can the result be improved?)

Contrary to what Hagen posted here, market sizing is still part of many firms' evaluation, so much so that for instance Bain is conducting one full 40-50 minute interview just on market sizing in certain regions...

Cheers,

Florian

Hey! 

For your market sizing ideas mentioned, I would look at the following factors:

1. E-Comm: estimate total U.S. retail sales & apply the % of sales happening online. Also, I would use known data like average spend per online shopper and number of shoppers to guide your estimate.
    
2. Emissions: Break it down by sector (transport, industry, agriculture), using available data on CO2 emissions. Estimate each sector's share to get an overall figure.
    
3. Pipeline: Try focusing on key oil and gas-producing countries, using data on major pipelines, then estimate the total length by summing up prominent pipeline projects.
    
4. Used Shoes: I would look at the total footwear market, and estimate the second-hand percentage, factoring in trends from online resale platforms and typical resale behavior.

That's what I just came up with some brainstorming. Hope this gives you a first idea! :) Of course, there are also different approaches on how to get reasonable numbers. 

BR Alesa :)

Hello there, 

Before suggesting any solutions to the questions, I would like to highlight a couple of points pertinent to market sizing exercises:

• The logic behind your approach is the most important element your interviewer is assessing
• Always look out for nuances that show business awareness of the problem at hand (e.g., in estimating ecommerce market size, differentiating between frequency of online shopping by age and / or gender shows additional awareness)
• Assumptions do not need to be perfect but they need to be sound and based on justifiable rationale
• Sense-check your answer to figure out how reasonable it is

Proposed responses to questions:

1. Ecommerce US market size: Estimate based on population and purchases per individual. Include nuance based on age/gender/income to show situational awareness
2. Europe emissions: For individuals, estimate based on emissions per individual and population across travel, home, food, etc. For companies, identify major emitting sectors, develop a factor of comparison across sectors, make an assumption of the emission of the base sector (or request from the interviewer). Add individuals' emissions to companies'
3. Europe pipeline length: Estimate required pipeline length for a baseline reference area. Multiply that to scale over the whole area of Europe. Include nuance based on urban vs rural split with urban areas having more pipelines due to additional supply requirements. You may also differentiate countries
4. US used shoe market size: Estimate based on population and amount spent on shoes, then assume a percentage for used shoes. Differentiate between client segments based on age and income levels since younger/less affluent are more likely to buy used shoes

Feel free to reach out if you would like to discuss any of the above points further.

Best,

Fathu