At a BCG final round I was asked what was the Olive Oil Market Size in Australia and I am not sure I nailed it (still waiting for their reply). How would you tackle this problem?
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BCG Final Round Market Sizing
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Hi there,
Population broken down into household (how people shop for groceries) broken down into income brackets split into frequency of purchase times purchase value (higher income has higher frequency + purchase value)
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How to approach market sizing
It's very simple: Do the approach the is the easiest for you given the question.
Are they asking you to estimate something where you don't even know where to begin from the top (maybe you have 0 clue as to the market size of the industry, the GDP of that country, etc. etc.)? Then do bottom-up!
Alternatively, does it seem impossible to do a realistic from-the-ground-up estimation of something (perhaps it requires just far too many steps and assumptions)? Then do top-down!
Fundamentally, you need to take the approach that just makes the most sense in that circumstance. Quickly think about the key assumptions / numbers required and whether you 1) Know them or 2) Can reasonably estimate them. If you can, go ahead!
An Example
He's a Q&A for a great market sizing question here asking to estimate # of electric charging stations in a city in 10 years:
This one could be answered top-down (as I did) by estimating population of the city, # of drivers/ cars, etc. etc.
OR, it could be answered bottom-up by estimating # of stations you see per block (or # of gas/petrol tanks), % increase this might be over time (or # of EV stations that would be needed per gas tank given EV stations take 10 times as long), and # of blocks you'd estimate the city to have.
Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229
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(Please note this is not a full answer → I would use a mix of segmentation of residential vs. restaurants; in residential would think of % population in mediterranean region vs. other; in restaurants would consider % of think of mediterranean restaurants only, as other would have negligible olive oil usage.)
(edited)
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Share with us your approach so we can give direct feedback.
There are lots of ways of looking at it, so us providing one perspective does not necessarily mean that you have the wrong one.
Hope you hear back from them soon.
Cristian
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