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2

Do you structure a market sizing question differently than other cases and how detailed do you get in segmenting ?

If the question was: What is an optician's revenue per year?

Can you start with clarifying questions as you would in other cases? (E.g. where is the optician located, what is the population of the town, is the distribution only in stores or also online?)

How do you lay out the structure? I could think of several ways, but is there a right or better one? (E.g. you could start by identifying the different revenue streams and then add them together in the end, you could identify the customer base and then multiply them by the average purchase of a customer) -> What is the bottom up approach to this?

How detailed should a segmentation be? I tend to segment too much, get tangled up, loose my structure and take a too much time. (e.g. if I would think about the revenue generated by glasses, I first go from population of town -> devided by number of opticians in town -> think about percentage of how many have problems with their eyesight (I could segment by age and argue that children and youth tend to have a lower percentage and older generations have a higher percentage of people with eyesight problems) -> percentage of people actually wearing glasses( how many of them would wear glasses and how many wear contactlenses, although I think people with contaclenses also have a pair of glasses) -> then I could also think that some people have more than one pair especially older people tend to have two because they need one pair as reading glasses and the other pair for everyday life -> then I would have to think about how often people replace their pair of glasses (maybe every 2-4 years?) and divide the customer base by this number, because we are looking for a per year revenue -> and then finally multiply by the average price of a pair of glasses...

This is only for one revenue stream, but what can you do to give it more structure and when do you stop going too much into detail and segmenting too much?

Thank you very much,

Marilena

If the question was: What is an optician's revenue per year?

Can you start with clarifying questions as you would in other cases? (E.g. where is the optician located, what is the population of the town, is the distribution only in stores or also online?)

How do you lay out the structure? I could think of several ways, but is there a right or better one? (E.g. you could start by identifying the different revenue streams and then add them together in the end, you could identify the customer base and then multiply them by the average purchase of a customer) -> What is the bottom up approach to this?

How detailed should a segmentation be? I tend to segment too much, get tangled up, loose my structure and take a too much time. (e.g. if I would think about the revenue generated by glasses, I first go from population of town -> devided by number of opticians in town -> think about percentage of how many have problems with their eyesight (I could segment by age and argue that children and youth tend to have a lower percentage and older generations have a higher percentage of people with eyesight problems) -> percentage of people actually wearing glasses( how many of them would wear glasses and how many wear contactlenses, although I think people with contaclenses also have a pair of glasses) -> then I could also think that some people have more than one pair especially older people tend to have two because they need one pair as reading glasses and the other pair for everyday life -> then I would have to think about how often people replace their pair of glasses (maybe every 2-4 years?) and divide the customer base by this number, because we are looking for a per year revenue -> and then finally multiply by the average price of a pair of glasses...

This is only for one revenue stream, but what can you do to give it more structure and when do you stop going too much into detail and segmenting too much?

Thank you very much,

Marilena

(edited)

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Hi Marilena,

good question.

I would always structure such a case completely top down. E.g. in your case, start with the population, then % of people needing glasses, % of those in reach of your optician,...)

The channels only become relevant in this example on the lower levels of the structure (% in reach). As glasses are not a "nice to have" item for most people, the total market will not change depending on the channels used. This might be different for e.g. a restaurant (where a delivery option might create new customers, that would otherwise cook their own food).

And yes, you are right, that you are going very deep into one branch in your example. This is a good thing, as long as you point out that there are many other branches. In a real case setting you likely won't have the time, so you have to prioritize harder. E.g. make the assumption that 60% of all adults (14+) will need glasses and buy 1 pair every 2 years (If you ask the interviewer if this seems to be valid, you will likely get an OK)

For staying more structured, draw out the structure of your approach explicitely (this will also help your interviewer to follow along). In this example, a tree structure will work well.

Then be sure to frequently check back on your initial strucuture and you won't get lost in detail.

Hope this helps. Feel free to ask more questions.

Chris.

Hi Marilena,

good question.

I would always structure such a case completely top down. E.g. in your case, start with the population, then % of people needing glasses, % of those in reach of your optician,...)

The channels only become relevant in this example on the lower levels of the structure (% in reach). As glasses are not a "nice to have" item for most people, the total market will not change depending on the channels used. This might be different for e.g. a restaurant (where a delivery option might create new customers, that would otherwise cook their own food).

And yes, you are right, that you are going very deep into one branch in your example. This is a good thing, as long as you point out that there are many other branches. In a real case setting you likely won't have the time, so you have to prioritize harder. E.g. make the assumption that 60% of all adults (14+) will need glasses and buy 1 pair every 2 years (If you ask the interviewer if this seems to be valid, you will likely get an OK)

For staying more structured, draw out the structure of your approach explicitely (this will also help your interviewer to follow along). In this example, a tree structure will work well.

Then be sure to frequently check back on your initial strucuture and you won't get lost in detail.

Hope this helps. Feel free to ask more questions.

Chris.

(edited)

Hi Marilena,

thanks for asking your question on our Consulting Q&A!

In case you haven't seen it, in another Q&A, our expert Guido briefly mentions the use of a different structure for market sizing questions:

As a general rule of thumbs I would suggest you to apply a 2-level structure for general/classic cases and a more detailed one for market sizing.

For the full Q&A, check out the following link: How many levels to original issue tree?

If you have further questions, feel free to ask on our Q&A!

All the best for your preparation,

Astrid

PrepLounge Community Management

PrepLounge Consulting Q&A Forum

Follow us on: Facebook | Instagram | LinkedIn | twitter

Hi Marilena,

thanks for asking your question on our Consulting Q&A!

In case you haven't seen it, in another Q&A, our expert Guido briefly mentions the use of a different structure for market sizing questions:

As a general rule of thumbs I would suggest you to apply a 2-level structure for general/classic cases and a more detailed one for market sizing.

For the full Q&A, check out the following link: How many levels to original issue tree?

If you have further questions, feel free to ask on our Q&A!

All the best for your preparation,

Astrid

PrepLounge Community Management

PrepLounge Consulting Q&A Forum

Follow us on: Facebook | Instagram | LinkedIn | twitter

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