Bottom Up Market Analysis

Hello,

• One way to generalize/think of ‘bottom-up’ is ‘multiplying' as opposed to top-down which is ‘dividing’
• For bottom-up, you are starting from one/an anchor variable and multiplying ‘up’ - i.e. # of Customers * Avg price
• Some types of sizing questions lend themselves to be solved more optimally by one or the other methodology
  • There is no one-rule-fits-all, but if you are struggling to come up with the FIRST variable/assumption then maybe consider using the other approach 
• In addition to Ian's suggestion on coffee shops, try finding or coming up with estimations that have some sort of constraint (supply, physical locations)
  • e.g. revenue of an Uber driver in a day
  • e.g. revenue of a corn farmer with a 4 acre farm
  • e.g. revenue of an auto-service shop

Hope this helps!

Hi Adam,

This shouldn't be done bottom up. It just doesn't make sense. This is very much a top-down market sizing.

If you'd like to practice a bottom up, try estimating the daily revenue of your nearest coffee shop.

To do this using a bottom up method you would need to research some information first. So maybe you would do this in a real consulting assignment, but for the purpose of practicing case interviews, it is not adequate. You really have to go top down here.