Hi!

There is no a “one-fit-all” market sizing framework, because they mostly depend on the type of question and the inputs coming from the interviewer.

However here a useful structure to be applied for this type of questions:

1. Ask clarifying questions

The first thing you should do is ask a few clarification questions to make sure that you know exactly what number your interviewer wants you to calculate.

In addition, they are also a great way to buy yourself some time. While your conscious brain asks these questions, your sub-conscious brain can start working on the related calculations and reasoning.

2. Map out your calculations

Once you know exactly what number you want to calculate you need to map the calculation steps to get to that number.

A good approach is to start from the number you want to calculate and draw an issue tree from top to bottom as we have below. The advantage of that approach is that the issue tree will force you to be MECE (i.e. not forgetting anything and not overlapping things) and it will also give you a starting point.

You should validate your approach with your interviewer before starting to calculate numbers. This is important because it gives your interviewer a chance to rectify your course of action if they had another plan in mind.

Skipping this validation step is extremely risky because your interviewer might only realise half way through the case that you are approaching the problem in a different way to what they wanted you to.

3. Round numbers and calculate

Once you've agreed an approach it's time to start calculating. You will need various data points to get to your final estimate. In most cases your interviewer will ask you to make your own assumptions to get to the final number. But in some other cases they might share data with you. The best way to find out which situation you are in is to ask the interviewer which approach he/she prefers.

When making assumptions it is vital that you pick simple numbers. In addition, you should talk out loud when doing calculations so that your interviewer can follow your thought process. Your interviewer is interested in what's going on in your head - not the final result.

4. Check your results

Finally, most candidates stop talking at the end of step 3. They look up and expect their interviewer to tell them if they got to the right result or not. This is a mistake. The best candidates sense-check their results and try to spot their own mistake before telling their interviewer they are done.

Mental calculation errors happen frequently. If your interviewer spots a mistake in your calculations, you most likely won't get an offer. But if you spot your own mistake you still have a chance.

So check your own calculations and give a “so what” to the results.

Finally, before the interview it’s always useful to prepare a “cheat sheet” to memorize some common assumptions such as population and life expectancy as they will often come up in market sizing questions.

Here an example for US:

• Population: ~325m
• Households: ~100m
• Person per household: ~3
• Median household income: ~$60k
• Life expectancy: ~80 years old

Hope this helps!

All the best!

Claudio

Hi,

The first step is to make sure you're clear on why the company is looking to enter the market. Is it for topline growth, bottom-line growth, diversification, to gain economies of scale, to gain market share, build new skills/competencies, pre-emptively strike a foreign competitor, ahieve a long-term vision (applies well to an NGO) etc.?

Once you have this, you can get a feel for which of your 3-4 classic market entry buckets (company, market, competitor) you want to tackle first.

For example, if it's topline growth, the market size probably matters most. If it's economies of scale or building skills/competencies it's company first. If it's strike a foregin competitor or even bottom-line growth (for a comparison) it's competition first. I think you get the gist :)