How to "improve structuring" on market sizing cases?

Big 4 Case Interview Market sizing
New answer on Feb 29, 2020
5 Answers
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Anonymous A asked on Feb 28, 2020

On market sizing cases, I was told to improve my structuring. Also, all my assumptions were questioned repeatedly, and after getting flustered I did not pass the interview.

I have had two Big 4 interviews (first stage) now, and they all had market estimation cases. How can I improve on this?

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Vlad
Expert
Content Creator
replied on Feb 29, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

It's less about different types of the problems but rather about the tools that you use:

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!

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Luca
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replied on Feb 28, 2020
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hello,

I can give you some suggestions to approach a market sizing in the best way possible:

  • Use a "block structure" that can make visual every step and can guide you towards solution
  • Whenever you have to use a formula, take 30 seconds to write it down and to clearly identify all the factors. Start doing your estimation only after this step
  • Be fact based, every assumption or estimation has to be justified
  • Be critical and add complexity to each step. You can overlook some aspects in your analysis, but your interviewer wants to know if you thought about everything
  • Propose a second approach to solve the problem, that you could use to do a sanity check of your results

Feel free to text me if you want to discuss it further,
Luca

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Gustavo
Expert
replied on Feb 28, 2020
Ex-Bain & Company | Everyone can land a job at consulting

Hi,

From what you said, I see some issues might come from:

1. Your structure wasn't organized enough to allow each variable bucket (with an assumption behind it) to be constantly changed as the interviewer questions your assumptions

2. Your main variable was not mathematically broken down in the right way (at one or more branches of your issue tree)

3. You did not have enough depth when breaking down your main variable (not enough levels in your issue tree), so the interviewer expected more detail in your assumptions

4. Or, your communication of the structure was not clear enough and, even if you did alright on paper, you were perceived as unstructured to the interviewer

Remember: market sizing / estimation questions are not about getting the right number. It's about having the right process, reasonable assumptions, sharp math and assuring your results make sense.

Please, feel free to reach out if you have any other questions

Best,

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Antonello
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replied on Feb 29, 2020
McKinsey | MBA professor for consulting interviews

Hi, I recommend building issue trees starting from the resolution formula of the market sizing. I have a specific package to crack it, feel free to text me to understand if I can help.

Best,
Antonello

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Clara
Expert
Content Creator
replied on Feb 29, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello, can you give more detail to "improve your structuring"? This is too generic to give insightful information. Feel free to PM it to me.

Cheers!

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Vlad gave the best answer

Vlad

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McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
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