Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

expert

97% Recommendation Rate

406 Meetings

USD 239 / Coaching

## Question merged

This question is read-only because it has been merged with Total Number of Gas Station/Restaurant Question.

3

# Hello I have a big problem with market sizing is there any structure to respect ? How can I improve my skills in market sizing ?

• Date ascending
• Date descending

Hi,

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 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 group)
• 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

Feel free to PM for clarifications

Good Luck!

Hi,

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 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 group)
• 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

Feel free to PM for clarifications

Good Luck!

Hello Victoria great break down. I am just curious how you got 4mln for each age group? I would think if we have a population of 320M and life expectancy is 80 years, we would have 8 sub groups ( 0-10, 10-20...70-80) and as such each group would have 320M/8groups which should be 40M/group. Contrarily, if we needed to know the amount of people that are say 5,10 or 15yrs old and we carry the same even split assumption, then 40M/10ages which will be 4M each. — Olu on Jun 01, 2017 (edited)

Hi there,

My experience is that you need to practice and in everyday life there are plenty of opportunities to do so.

when you are traveling to work/institute: how busses are there in the city, how many bus stations, how many bus lines, etc....

Out in the evening in some bar/cafe: how many people visit that place every day, every week every month, how much bewereges are consumed, how many similar palces are there in the city, etc...

etc. etc.

First time it will be kind of strange and you will think 'what the hell I know' but you will get better with practice. If you would do it with somebody else will be funnier and more effective :)

Hi there,

My experience is that you need to practice and in everyday life there are plenty of opportunities to do so.

when you are traveling to work/institute: how busses are there in the city, how many bus stations, how many bus lines, etc....

Out in the evening in some bar/cafe: how many people visit that place every day, every week every month, how much bewereges are consumed, how many similar palces are there in the city, etc...

etc. etc.

First time it will be kind of strange and you will think 'what the hell I know' but you will get better with practice. If you would do it with somebody else will be funnier and more effective :)

Hi,

Usually students struggle because no one has previously explained the basic principles. It makes you panic every time you see a arket sizing question and feel like it is a lot worse than it actually is.

The basic premise of these types of questions is: what is the £/\$ value so demand or population size of using a specific product. I like the toothbrush example.

Let's say there are 10mn people in London and 90% use a toothbrush. That is 9mn toothbushes being used, now let's say at a price of £2 per toothbrush, London market size is £18mn.

The above is very basic and there are lots of factors to add. But hopefully this helps as the starting point. The rest is additional info and 'colour' to the story (growth, etc.).

Hope this helps, let me know if you want to practise these.

Hi,

Usually students struggle because no one has previously explained the basic principles. It makes you panic every time you see a arket sizing question and feel like it is a lot worse than it actually is.

The basic premise of these types of questions is: what is the £/\$ value so demand or population size of using a specific product. I like the toothbrush example.

Let's say there are 10mn people in London and 90% use a toothbrush. That is 9mn toothbushes being used, now let's say at a price of £2 per toothbrush, London market size is £18mn.

The above is very basic and there are lots of factors to add. But hopefully this helps as the starting point. The rest is additional info and 'colour' to the story (growth, etc.).

Hope this helps, let me know if you want to practise these.

## Related case(s)

### Oliver Wyman case: Full Electrons Ahead

Solved 100.0k times
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
| Rating: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

### Bain Case: Old Winery

Solved 68.8k times
Bain Case: Old Winery You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. they are not organically farmed and certified. The vine stocks are in a good condition regarding age and care. Overall, only ¼ of the harvest is made into wine by the winery itself; the rest is sold. Your grandfather never wanted to change the image of the winery and left the managerial and administrative task to a young and energetic wine-maker. Due to the not so well-known brand , the demand for the “Old Winery” wine is currently rather low. You do not intent to run the winery operatively, given your limited knowledge of wine making, but find the idea of owning a winery exciting. Your plan is to give the winery some fresh impetus.
| Rating: (4.4 / 5.0)

You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. ... Open whole case

### Roland Berger Case: Onlinestar

Solved 48.7k times
Roland Berger Case: Onlinestar Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special business) in Eastern Europe. The company sells its goods via Amazon and ebay, and recently via an online shop on its website. Despite this development, the financial ratios have deteriorated in recent years. In particular, gross profit margin decreased significantly. Combined with a significant increase in shipping costs, this led to a negative result for the first time in the recently ended fiscal year and a resulting strained financial situation. Against the background of expected stagnating sales for the current financial year, short-term action is required. The board of Onlinestar asks you for an analysis of the reasons for the negative result as well as a derived recommendation for action. As a consultant, you should bring in your knowledge in online trading and develop solutions. In addition, the management board would like to receive a sales and gross profit plan from you for the current financial year.
| Rating: (4.3 / 5.0)

Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case

Solved 69.8k times
Nutripremium Nutripremium is a very well-known premium nutrition food company in Europe (€1 billion revenue last year). It is based in Spain and has an excellent market share not only in its home country but also in Portugal, France, Italy and Germany.  Nutripremium has two main lines of products: Vitamin-supplements for pregnant women Concentrated dehydrated aliments and vitamin pills for sick patients (with Diabetes or Cancer). The CEO of Nutripremium thinks that the market in Europe is starting to get saturated and wants you to analyze the Chinese market. What are the key areas you would explore to determine whether this is a good idea?
| Rating: (4.5 / 5.0) |

Nutripremium is a very well-known premium nutrition food company in Europe (€1 billion revenue last year). It is based in Spain and has an excellent market share not only in its home country but also in Portugal, France, Italy and Germany. Nutripremium has two main lines of products: Vitamin-su ... Open whole case

### Children vaccine

Solved 61.9k times
Children vaccine Beyer, one of the biggest pharmaceutical companies in the world, just invented a very reliable vaccine against Chickenpox, a disease that affects children in the age from 2 to 16 years. Beyer came to you wondering what their potential sales in Europe in the first year would be if they launched this product next year. They are only interested in the overall sales revenue as they already know that the vaccine can be sold for a profit. This is more meant to show them how big the volume they have to supply is and what the revenue would be.
| Rating: (4.4 / 5.0) |

Beyer, one of the biggest pharmaceutical companies in the world, just invented a very reliable vaccine against Chickenpox, a disease that affects children in the age from 2 to 16 years. Beyer came to you wondering what their potential sales in Europe in the first year would be if they launched this ... Open whole case