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Diese Frage ist schreibgeschützt, da sie mit folgender Frage zusammengefügt wurde: Market sizing procedure.

Market Sizing

Market sizing
Neue Antwort am 18. Jan. 2020
4 Antworten
1,0 T. Views
Anonym B fragte am 15. Jan. 2020

Hi Everyone,

I have problems in doing the market sizing cases, how do you recommend to structure it? With the equation or with the issue tree? What is the difference?

Thanks !

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Vlad
Experte
antwortete am 15. Jan. 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

1) First of all, there are 2 ways to structure market sizing:

  • Formula - basically a math formula to come up with a solution. The problem with the formula is that it is easy to forget something or get lost.
  • Tree - same as with regular cases you build a tree. A very simple example: you need to calculate the number of dogs on manhattan. A number of dogs = share of households having a dog * # of households. # of households = population / average household size. In the end, you'll have a pyramid where you have to fill the numbers on the base of the pyramid. This approach is much easier and help you track all the numbers

2) You should learn the key market sizing techniques:

  • Making assumptions based on personal experiences (Use the example of your house where out of 100 apt-s 10 have dogs)
  • Adjusting numbers (NY is a busy city thus fewer people have dogs)
  • Sanity check - try to apply your calculations to the real environment
  • etc.

3) You should learn the key tools:

  • Using age even age split (suppose life expectancy is 80 years. Assuming even age split we have 4 mln people in US of each age)
  • Using 80/20 split (suppose 20% people earn 80% wealth and the average salary is xx...)
  • Using approximations (Length of NY-SF flight and plane speed to calculate US length)
  • etc.

4) Learn key numbers: populations, gas price, gas consumption, Boeing speed and nmber of seats, average salary, # of gates in the airport, GDP growth rate, inflation, etc.

5) Practice 10-15 cases and you'll be fine. Almost all casebooks have good market sizing examples and the solutions

Feel free to PM for clarifications

Good Luck!

Antonello
Experte
Content Creator
antwortete am 15. Jan. 2020
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

Hi,
there is no a gold rule to structure every market sizing. For sure you are going to solve it with a formula, sometimes a logic tree will help to better estimate and explain it.
Here some helpful examples of good market sizing:

  • https://www.preplounge.com/en/consulting-forum/how-much-would-you-charge-to-clean-all-the-windows-in-seattle-4965
  • https://www.preplounge.com/en/consulting-forum/market-sizing-milk-consumption-5087
  • https://www.preplounge.com/en/consulting-forum/how-would-you-calculate-the-value-of-a-cow-4982
  • https://www.preplounge.com/en/consulting-forum/estimate-number-of-traffic-lights-in-a-london-5692

I have specific sessions to crack it, feel free to text me for more details.

Best,
Antonello

Francesco
Experte
Content Creator
antwortete am 18. Jan. 2020
#1 Coach for Sessions (4.000+) | 1.500+ 5-Star Reviews | Proven Success (➡ InterviewOffers.com) | Ex BCG | 10Y+ Coaching

Hi Anonymous,

both could be fine, however I usually recommend to use a tree or a table for market sizing questions, simply because they make easier to add numbers and calculate the final result. If you struggle with market sizing please feel free to give an example of what you find challenging.

Best,

Francesco

Clara
Experte
Content Creator
antwortete am 16. Jan. 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I agree with the approaches posted below.

Only would add that this is like every other case, only comes better with lots of practicing -not so much with a recipy-.

Good luck!

Clara

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