Hi Piyush,

In general very good approach since the most important thing in the estimation case is the right approach and not the right answer!

Your results (70m houses) differs from the actual figure (120m) by roughly 40% or less than the factor 2x, which is already good and acceptable (since it’s not 10x).

This implies, that some of your assumptions could be sharpened.

What’s not yet taken fully taken into account:

1. US population is already 330m+ which gives you another 10% in your calculation
2. Condominiums and homes for leisure and rental should be included on top ( +10-20%)
3. Actual home ownership in the US is not 50% (10% + 40%) but rather 65%, which adds another 15% to your calculation
4. Regarding the age group of home owners I would rather assume 25-80 instead of 20-70, since 20-25 might still be in college and don’t forget about 70-80 who have the highest ownership rate. This adds another 5% to your calculation

As you see, if you validate your assumptions, you will land at approximately the right number of ~110-130m houses. Anyway, please keep the structure and logic the same for the actual interview.

I hope it helps – keep safe and stay healthy.

Good luck!

André

Hi Piyush,

Overall agree and, honestly, the most important thing in the market sizing cases is the right approach and not the right answer!

Altought your result is not exactly "accurate", as outlined, is good enaugh. Furthermore, is not the key thing.

However, if you are particularly worried, the key would be to come back to your assumptions and re-think them (e.g., US population is +10% higher than what you had estimated -330 vs 300-, home-owners are actually higher numbers...)

However, and as you can read it you realize, those are things that you are not supposed to know! If they were really relevant, the interviewer would give you some instructions as the interview goes by (e.g., rather take 70% instead of 50%, etc.)

Hope it helps!

Cheers,

Clara

Hi Piyush,

I wanted to comment also, since it's already second question of that type, which you are asking and I feel you have a bit of a wrong focus.

I fully agree with Andre – the right approach and right logic are the things, which count. Your result in this sense is not that relevant, actually. So, focus on building a clear and understandable logic which is not too complex – and you will be fine.

Best,

Daniel

(edited)

Hi,

Your approach is indeed a good one.

If you want to master your market sizing skills I suggest that you should focus on segmentations patterns. You can use the following segmentation for market sizes:

B2C:
-Demographics (Age, education, income, family size, race, gender, occupation, nationality)
-Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status)
-Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers)
-Geographic (Geographical boundaries)

B2B:
-Company characteristics (Industry, company size, number of employees)
-Geography (Geographical boundaries)
-Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship)
-Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
-Demographics (Type of agency, size of budget, the amount of autonomy)
-Geographic (Geographical boundaries)
-Government Tier (Federal , State, Local, Quasi-governmental, International)
-Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:
https://www.preplounge.com/en/consulting-forum/how-should-i-approach-the-following-question-estimate-the-market-size-of-credit-cards-in-the-us-6695

Hi, the approach is good and is what you are going to be assessed on. The result should stay in the order of magnitude of the actual number, therefore a x2 or x3 is still acceptable. Be ready to discuss it with your common/business sense.

Best,
Antonello