Hi Anonymous,

You might want to check "How to Ace the Brainteaser Interview" (John Kador) - it includes quite a good chapter for market sizing (next to the more general brainteasers).

Hope that helps - if so, please be so kind and give it a thumbs-up with the green upvote button below!

Robert

Hi, please PM

I have good material to share on market sizing

Dear A,

You can find a lot of similar questions with recommendations from the experts.

If you need some real examples from the market sizing case interviews, feel free to reach me out.

Best,

André

Sure thing! Feel free to send me a message.

Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229

(editiert)

Hi,

I do cover the demand and supply driven market sizers in my course.

Here is an example of how I would approach estimating the credit card market in the USA:

In this case you should follow demand-driven approach to market sizing. By market size I would assume value of credit card debt in the U.S. (not the number of Credit Cards issued).

First of all you can start by outlying an algorithm which would consist of 3 big steps:

1. Total addressable market

X

2. Product penetration

X

3. Average ticket size

Now let’s see how to calculate each of these blocks:

1) Total addressable market = US population X % bankable population

2) Product penetration = number of credit cards per capita in US X % of active cards

3) Average ticket size = average credit card limit X %limit usage

• average credit card limit is usually estimated though debt-to-income ratio. In case of credit cards it is 5 monthly salaries on average
• limit usage could be derived from your personal experience but on average it is 20%

Let’s plug-in the data:

1. Total addressable market = 330 mln x 80% bankable population = 264 mln

X

2. Product penetration = 2 X 50%

X

3. Average ticket size = 4k USD X 5 X 20% = 4k USD

Thus credit card market size is 264 mln X 1 X 4k USD ~ 1tn USD

Let’s double check with official statistics. STATISTA.COM provides the following data: Value of credit card debt in the U.S is 0,93 tr USD. Thus our answer is super close

You can also make your calculations a bit more sophisticated if you add segments (e.g. by income or credit score). In this case you would have to provide detailed assumptions on product penetration and average ticket size for each segment.

As for the sources for your assumptions you can use:

• Input from interviewer, well known facts
• Statistical data
• Personal experience, e.g. from casual everyday situations
• Workplace experience, e.g. from working on projects in the industry
• An educated guess

Best,

Anton