Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

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).

Manage settings individually I accept
expert
Expert with best answer

Francesco

100% Recommendation Rate

3,385 Meetings

14,511 Q&A Upvotes

USD 449 / Coaching

4

How many are there? - Which method is better?

I came upon a question regarding market sizing:

Whenever there is a question like "how many schoolbuses/ commercial airplaines etc. are there in the USA?

I saw two ways of doing it:

a) easier way: the amount of students in the USA taking the school bus divided by how many students fit in a bus

b) harder way: how many rides are demanded a day (or month or year) divided by how much rides one bus offers a day (or month or year)

Preplounge generally suggests using the later one (demand = supply). However, often this takes too much time during a bigger case.

My question: where is the logically difference between the two?

Same for this question: how many airplaines are there in the US?

b) passengers/year divided by how many passengers one plane transports a year

a) Could we say: how many people are there in the US who use commercial airplaines divided by how many people fit in an airplaine (assuming 100 occupation) ?? Here we would have to assume the full capacity in the airplaine is used?

Thanks a lot,

Best

I came upon a question regarding market sizing:

Whenever there is a question like "how many schoolbuses/ commercial airplaines etc. are there in the USA?

I saw two ways of doing it:

a) easier way: the amount of students in the USA taking the school bus divided by how many students fit in a bus

b) harder way: how many rides are demanded a day (or month or year) divided by how much rides one bus offers a day (or month or year)

Preplounge generally suggests using the later one (demand = supply). However, often this takes too much time during a bigger case.

My question: where is the logically difference between the two?

Same for this question: how many airplaines are there in the US?

b) passengers/year divided by how many passengers one plane transports a year

a) Could we say: how many people are there in the US who use commercial airplaines divided by how many people fit in an airplaine (assuming 100 occupation) ?? Here we would have to assume the full capacity in the airplaine is used?

Thanks a lot,

Best

4 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Francesco

100% Recommendation Rate

3,385 Meetings

14,511 Q&A Upvotes

USD 449 / Coaching

Hi Anonymous,

you should always use the second method (b). The first method (a) is not as accurate for two reasons:

  • it neglects the frequency people have using a vehicle, as Vlad mentioned
  • it assumes that a single transportation vehicle can be used only once in a specific period of time

If you find how many people in the US use commercial planes, for example, you are not considering that they may use a commercial plane more than once in your selected period of time. Also, you are not considering that the airplanes can be used more than once.

Let's see that with an example.

Let's say that in a generic country you have 100M people taking a flight every year. For simplicity, let's say airplanes just go from point A to point B and the other way round. Let's say that there are 200 people per airplane as possible occupancy and that you have a 75% occupancy, thus 150 people per airplane on average.

Application of method a

Applying 100M/150, you find 670k airplanes approximately

Application of method b

For this method, you need to know

  • Frequency of usage - let's assume 4 flights per year per person in this particular country
  • How many times the airplane can be used again by someone else - let's say the airplane goes from A to B to A in 24h

Let's assume for simplicity 50% of the trips are from A to B and 50% from B to A.

The yearly number of trips is equal to 100M*4=400M, let's assume equally distributed during the year

This means that daily you have 400M/365 = 1.1M trips, of which 550k from A to B.

Thus, the number of airplanes needed in this country is 550k/150= 3.7k

As you can see, using the correct approach b, which takes into account frequency and multiple usage of the vehicles, you get a completely different number compared to approach a.

Hope this helps,

Francesco

Hi Anonymous,

you should always use the second method (b). The first method (a) is not as accurate for two reasons:

  • it neglects the frequency people have using a vehicle, as Vlad mentioned
  • it assumes that a single transportation vehicle can be used only once in a specific period of time

If you find how many people in the US use commercial planes, for example, you are not considering that they may use a commercial plane more than once in your selected period of time. Also, you are not considering that the airplanes can be used more than once.

Let's see that with an example.

Let's say that in a generic country you have 100M people taking a flight every year. For simplicity, let's say airplanes just go from point A to point B and the other way round. Let's say that there are 200 people per airplane as possible occupancy and that you have a 75% occupancy, thus 150 people per airplane on average.

Application of method a

Applying 100M/150, you find 670k airplanes approximately

Application of method b

For this method, you need to know

  • Frequency of usage - let's assume 4 flights per year per person in this particular country
  • How many times the airplane can be used again by someone else - let's say the airplane goes from A to B to A in 24h

Let's assume for simplicity 50% of the trips are from A to B and 50% from B to A.

The yearly number of trips is equal to 100M*4=400M, let's assume equally distributed during the year

This means that daily you have 400M/365 = 1.1M trips, of which 550k from A to B.

Thus, the number of airplanes needed in this country is 550k/150= 3.7k

As you can see, using the correct approach b, which takes into account frequency and multiple usage of the vehicles, you get a completely different number compared to approach a.

Hope this helps,

Francesco

(edited)

Book a coaching with Benjamin

100% Recommendation Rate

55 Meetings

517 Q&A Upvotes

USD 319 / Coaching

Hi,

As a general comment, keep in mind, multiple approaches are possible to size a market (top down vs. bottom up, demand vs. offer). Your goal is to find the most appropriate one to the current situation, meaning the one that will requires the less sensitive hypothesis, and that will be likely to be more accurate

Bus question

The second is simply a more advenced version of the first, bit basically in both cases you'll consider demand as a starting point. So depending on how much time is dedicated to market sizing you should oriente your structure in more / less complex direction

Airplanes question

You approach could be used, but of course would require an assumption on the plane occupation (which can't be 100%). Again you're building your sizing from the demand side

Best

Benjamin

Hi,

As a general comment, keep in mind, multiple approaches are possible to size a market (top down vs. bottom up, demand vs. offer). Your goal is to find the most appropriate one to the current situation, meaning the one that will requires the less sensitive hypothesis, and that will be likely to be more accurate

Bus question

The second is simply a more advenced version of the first, bit basically in both cases you'll consider demand as a starting point. So depending on how much time is dedicated to market sizing you should oriente your structure in more / less complex direction

Airplanes question

You approach could be used, but of course would require an assumption on the plane occupation (which can't be 100%). Again you're building your sizing from the demand side

Best

Benjamin

Book a coaching with Guennael

99% Recommendation Rate

284 Meetings

1,395 Q&A Upvotes

USD 319 / Coaching

The second option requires more assumptions (for example, what's the % of students needing a bus ride, which itself is a fraction of the number of students that you estimated anyone in the 1st option).

It comes down to how intricate the market sizing exercise needs to be. Are we talking something high level, 2 minutes back-of-the-envelope exercise, you can do in your head type? Or are we looking at a significant chunk of the case which can take a full 10 or 15 minutes on its own.

In my experience, MBB is more likely to ask about the 1st type, but that's not an absolute. You may also look to your interviewer for guidance if needed.

The second option requires more assumptions (for example, what's the % of students needing a bus ride, which itself is a fraction of the number of students that you estimated anyone in the 1st option).

It comes down to how intricate the market sizing exercise needs to be. Are we talking something high level, 2 minutes back-of-the-envelope exercise, you can do in your head type? Or are we looking at a significant chunk of the case which can take a full 10 or 15 minutes on its own.

In my experience, MBB is more likely to ask about the 1st type, but that's not an absolute. You may also look to your interviewer for guidance if needed.

Book a coaching with Vlad

97% Recommendation Rate

407 Meetings

11,410 Q&A Upvotes

USD 239 / Coaching

Hi,

- how many people are there in the US who use commercial airplaines divided by how many people fit in an airplaine (assuming 100 occupation) ?? - you are missing the frequency in that approach

- the amount of students in the USA taking the school bus divided by how many students fit in a bus - again missing the frequency

Best

Hi,

- how many people are there in the US who use commercial airplaines divided by how many people fit in an airplaine (assuming 100 occupation) ?? - you are missing the frequency in that approach

- the amount of students in the USA taking the school bus divided by how many students fit in a bus - again missing the frequency

Best

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.
4.6 5 6496
| 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.
4.4 5 1883
| 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.
4.3 5 1026
| 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

Nutripremium

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?
4.5 5 2244
| 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.
4.4 5 2240
| 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