Digital Strategy Market Sizing

Big 4 Digital transformation MBB mbb big4 Siemens Advanta Consulting Siemens Management Consulting (SMC)
New answer on Aug 07, 2022
5 Answers
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Anonymous A asked on Jul 27, 2022

Hello

I am preparing for digital strategy roles and hence i wanted to prepare for digital strategy cases. I wanted to understand how does one do market sizing for digital strategy products like cloud or IoT etc. 

Also most casebooks i have are old and hence they cover all strategy cases and no digital strategy cases. hence i wanted to ask, the best source to practice such cases.

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Ian
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replied on Jul 28, 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

Market sizing is the same no matter the topic/industry! All the same rules apply.

Now, I have a background in digital (former IT Consultant, worked with Platinion+GAMMA at BCG), so feel free to reach out for support! I've helped a number of tech-based candidates get offers, and have run digital-based market sizings with!

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:

https://www.preplounge.com/en/consulting-forum/how-would-you-solve-this-market-sizing-question-from-roland-berger-7631

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/interviewer-led-mckinsey-style/intermediate/taxis-in-manhattan-market-sizing-229

 

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Sofia
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replied on Jul 28, 2022
McKinsey San Francisco | Harvard graduate | 5+ years of coaching | DISCOUNTED SESSIONS Sep 2022 | Free 15 min intro call

Hello,

Market sizing questions should have the same general approach regardless of strategy - it may be tough to find a lot of examples if you are zeroing in specifically on IoT/cloud. I would recommend doing all the market sizing questions you can find to refine your approach - the more you do, the more you should see how to tailor the approach to specific industries. It might also be worthwhile reaching out to a coach for more specific examples.

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Cristian
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replied on Jul 27, 2022
#1 rated and most recommended McKinsey Coach | 97% success rate (tracked) | Honest feedback: no sugar-coating

Hi there,

By and large, the same way you did with the classical cases, only that now you need more business understanding to do it. 

I would recommend you train your skills on the traditional examples, then refine them with friends who work in the industry or a coach. 

Best,

Cristian

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Pedro
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replied on Jul 27, 2022
Bain | EY-Parthenon | Roland Berger | FIT | Market Sizing | Former Head Recruiter

Honestly, the techniques are the same. Whether it is tourism, aviation, automotive, pharma, restaurants, it isn't really different for market sizing. You will benefit more from the diversity of industries, than for “narrowing down” into a single topic, particularly because you don't know how that topic will play out in the interview. Digital applies to any industry and to any product or service. 

By the way, Cloud and IoT are not “digital strategy products”. They are neither “digital strategy” nor “products”, they are just technologies.

E.g. If I ask you about the IoT market size for… beer manufacturing… you will need to size beer manufacturing, and only afterwards narrow down to IoT specifically.

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Michael on Jul 28, 2022

Thanks for this answer. Continuing your example about IoT for Beer Manufacturing, after one has done the market size for the beer market, what does one do to narrow it to IoT? If you could give one short example, it will be great for me to understand the process and then practice it

Pedro on Jul 28, 2022

Assuming here the objective is to estimate IoT spend in industrial sites for beer manufacturing you can either: 1) Estimate beer market size (revenues) and assume that IoT spend is a given % of total spend budget 2) Estimate beer market size -> translate into number of industrial facilities -> assume $ Capex per facility -> assume % opex per facility

Ashwin
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replied on Aug 07, 2022
Ex Manager Bain and company | INSEAD

Digital strategy market sizing cases will not be very different, the calculation approach that you need to conceptualise will be similar. For example, estimating # of zoom users globally would be - Global population * % of working population * % of white collar workers * % of workers that have a hybrid/remote work arrangement * % of workers that use video conferencing solution * % that use zoom 

Thanks 

 

Thanks 

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Ian gave the best answer

Ian

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