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

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

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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 :)

Book a coaching with Victoria

3 Meetings

52 Q&A Upvotes

USD 279 / Coaching

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.

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