Market sizing contraceptives in Europe

Question

Assuming this prompt wants market size in $ and not # of consumers I am struggling on how to approach this market sizing.

On one side, I would want to break the population into segments as certain age groups are more likely to be buying contraceptives, but contraceptives can range from pills to protection to anti viral and bacterial medicines. I can see this market sizing get very complicated. If I broke it down by age group I now struggle to come up with a well-supported reasoning for how many people per age group would purchase contraceptives and how often (50%, 60% etc.)

On the opposite side of my framework I would look at the average cost of the contraceptives. Here is where the contraceptive type would begin mattering (different average prices per type of contraceptive). But as people may invest more in protection than they have to in bacterial and viral medicines, it feels like i would have too much to account for and this could take me an hour.

Any suggestions on how to approach this?

Answer 1

Your approach to this problem is generally correct. For market sizing questions, it's common to face a variety of variables that can be considered, and indeed, you can't account for all of them. The goal is to come up with a reasonable estimate, not an exact figure. In real-life consulting projects, consultants often have more time and resources to delve into the details, but for an interview, it's about demonstrating your problem-solving skills and ability to make reasonable assumptions. Here's how I might approach this:

Population Segmentation: Segment the population of Europe by age and gender. It's reasonable to assume that the majority of contraceptive users fall within a certain age range, say, 15-49 years. In terms of gender, you could focus on women if considering contraceptive methods like birth control pills, patches, IUDs etc. For condoms, which can be bought by either gender, you might consider both men and women in the age group.

Usage Rate: Make a reasonable assumption about the proportion of these people who are sexually active and would therefore need contraceptives. Then, make another assumption about the proportion of these sexually active individuals who use contraceptives. These percentages will be rough estimates, but should be based on general knowledge and intuition.

Frequency: Next, estimate the frequency of purchase. For example, birth control pills are often bought monthly, condoms might be bought more or less frequently depending on the individual's sexual activity.

Cost: Make a reasonable estimate of the average cost of the contraceptive methods considered. Since it might be complicated to consider all types of contraceptives, you could focus on the most common ones like condoms and birth control pills.

Finally, multiply all these factors together to get a rough estimate of the total market size in dollars.

In a case interview, you should explain each assumption you're making and why it's reasonable. The interviewer is interested in your thought process and ability to logically estimate a market size with limited information.

Remember, market sizing is as much an art as it is a science. Good luck with your preparation!

Answer 2

Hi there,

Remember that you should never add complexity to a problem unless it actually helps.

You should not split out contraceptives into pills, antiviral, etc. This should only occur with cost and should be done quickly to get an average cost.

You should break the population down into gender first and age second. Then think about weekly/monthly use and extrapolate out into a year.

Answer 3

1. Consider why do they use them… some are used for both contraception AND to prevent STDs. Segment analysis per type of contraceptive they use

2. How many people need and use that contraceptive on a regular basis?

3. How much of that contraceptive do they use per year (e.g. pill is 1 per month… condom would be x per week).

4. Contraceptive price

Answer 4

Hi there,

You're thinking in the right direction and asking the right questions.

What I'd suggest you're also careful with is not going too much into detail and trying instead to be more top-down. For instance, don't go into analysing the different types of contraceptives. It's ok if you just judge the category high-level.

I actually made the same mistake during my final interview with McKinsey. I was asked to estimate the total number of wedding in a certain country and I went into so much detail that I was discussing sexual orientations and whether in that country gay marriage is legalised. Needless to say, the Partner jumped in to redirect the conversation.

What you should focus on is an 80/20 approach, i.e., the most important levers, not reaching a super detailed answer.

Best,
Cristian