This makes sense.

However, the potential market share is a complex one. You should not just make up a number (e.g. "I think they can get to 10% market share"), but break it out further. There are a myriad of dimensions you could look at, but a few important ones could be:

• What's the current supply in the market? How many joints are there already?
• What is the client's market share in other markets where they are more established?
• Is the new city comparable to others in their customer preferences and does that resonate with the client's brand? (e.g. is the client's brand playing to testosterone-fuled, BBQ-loving cave men, while the new city is a center for veggie-loving hipster culture?)

(edited)

This is about right. However, I'm not sure I agree with potential market share. Rather, I'd try to estimate demand vs supply (i.e. how many people exist + eat burgers versus # stores and store throughput)

Additionally, when it comes to market sizing you of course need to break this equation down even further to get reasonable estimates!

2 points on market sizing in addition to everything that has already been mentioned:

1) communicate the overall approach clearly before you even go into the details (before you take a minute off for your formula). Most candidates immediately lose themselves in a jungle of formulas, approaches, formulas, etc. without making sure that the interview is in the picture of what is going on what you are doing. There is nothing worse than going down the math rabbit hole while your interview (or client on a case for that matter) is already lost or does not agree with the approach. Tell the interviewer you will be:

1. think about different approaches, both bottom-up / top-down (e.g. population is typical bottom-up approach, top-down in this case would be to apply a top-down proxy such as ppl per burger joint in a city you grew up with to have a 80/20 range). Pick the best approach, which is typically the one requiring you to make the fewest number of assumptions and which is the quickest.
2. take a minute to come up with formula / algorth / logic tree or whatever you want to call it. tell the interviewer you will discuss your formula with him
3. discuss required assumptions (either specific numbers or ranges), as well as what is driving those assumptions. actually discuss the assumptions and pause here and there to see if your interviewers wants to speak up - do not just go through the case lost in your little bubble
4. do the math. transparenty.
5. tell the interviewer once you have a result you will sense-check it. e.g. by using the 2nd best approach you identified earlier or by stress-testing the assumptions used earlier.
6. next steps: if you had more time, what would you do to improve the quality of your result.

2) Really make sure that steps 1-3 are solid. Most candidates have the urge to tackle every possible market sizing by going the bottom-up population approach. Yes, this may be the best approach for some market estimations, but certainly not for all. Justify why you pick a certain approach and what exactly you d do to get to the result. Ideally you are in agreement with your interviewer even before you go into the math.

Best,
Denis

Hi there,

I think it's a good approach for the start! However, don't miss out on the suggestions of the coaches.

If you want to practice more market sizing questions:

• https://www.preplounge.com/en/consulting-forum/estimate-number-of-traffic-lights-in-a-london-5692
• https://www.preplounge.com/en/consulting-forum/how-to-estimate-the-size-of-the-bottled-water-market-in-france-9286
• https://www.preplounge.com/en/consulting-forum/estimating-of-cryptocurrency-owners-market-sizing-9180
• https://www.preplounge.com/en/consulting-forum/how-many-wealthy-people-are-in-the-uk-8819
• https://www.preplounge.com/en/consulting-forum/how-would-you-estimate-the-market-size-for-video-games-in-the-usa-9427

Hope that helps!

GB