Hi there, 

That's an interesting one. 

My suggestion would be to always try to give it a go first and then ask for feedback on your approach. You'll get more out of the forum this way. 

Another thing you can try is ChatGPT - ask it to give you feedback on your approach or for it to suggest several ways of doing this market sizing / estimation exercise. It's a great tool for improving your interviewing / casing skills if used right. 

In terms of structuring, I'd recommend you read the following guide that provides a great methodology for top-down and bottom-up structuring of problems (including market sizing questions).

How to structure and answer brainstorming questions

Best,
Cristian

What an interesting problem!

So I'd think about this in a few ways:

A. How many domestic lightbulbs are on?

1. Find the number of households in the USA: There are 300m people, and about 3 people per household, so 100m households
2. Find out how many rooms they have: I expect that the average house has two bedrooms. So there is a living room, dining room, kitchen, bathroom and two bedrooms. People are unlikely to be in the bedroom at the same time as the other rooms, so let's say there's an average of four rooms with lights on at any given moment. Four rooms multiplied by 100m houses is 400m rooms
3. Find out how many lightbulbs are on: I expect that there are an average of 5 bulbs per room, so 2,000m bulbs are on
4. However, they are not on at all hours, so find out the average number of bulbs on: I think that people only turn on lights when it's dark, so let's say 6pm to 10pm and 7am to 9am every day. So that's 6 hours a day, or ¼ of the total hours in a day. So on average, 2,000m / 4 = 500m residential bulbs on are per hour. 

B. How many bulbs relating to core infrastructure are on? e.g., hospitals, schools, train stations etc.,

1. Estimate the number of towns: I'm going to estimate that there is one town for every 100,000 people, so there are 3,000 towns
2. Estimate the number of buildings: I think that in a town there is normally one train station, two schools, one hospital and one other large infrastructure building e.g., power station. So there 5 large buildings per town, or 15,000 buildings
3. Estimate the size of each building: I'm going to assume that they're on average 3 stories high, with 20 rooms per floor, so 60 rooms, and in each room there are 20 bulbs, so 1,200 bulbs. In 15,000 buildings that's 18m bulbs
4. I'm going to assume that they are always on.

C. How many commercial bulbs are on? e.g., shops

1. You should really break this down by large, medium, and small businesses, but for the sake of ease I'll just assume that all commercial venues are medium sized. 
2. I'll assume that each town has 30 shops, so that's 30 multiplied by 15,000 so 450,000 shops
3. I'll assume that each shop has three rooms, with 30 bulbs per room, so that's 90 bulbs per shop, 40.5m bulbs
4. I'll assume that they're on 8am to 8pm, so 20m (rounded) bulbs are on per hour

Add them all up = 500m + 18m (round to 20m) + 20m = 540m bulbs are on in an average hour. 

Sense check, that means almost two bulbs per person at any given moment - that sounds broadly right, maybe a little low, but broadly right. 

Hi Teresa,

Next time, try it out yourself first and then post! 

This is a classic top-down market sizing.

You'll want to take a business + personal/individual approach. Business = industry/commercial (offices + factories) and individual will actually be on a household basis (house + car).

Asking the time of day is critical for this market sizing.

How to approach market sizing

It's very simple: Do the approach the is the easiest for you given the question.

Are they asking you to estimate something where you don't even know where to begin from the top (maybe you have 0 clue as to the market size of the industry, the GDP of that country, etc. etc.)? Then do bottom-up!

Alternatively, does it seem impossible to do a realistic from-the-ground-up estimation of something (perhaps it requires just far too many steps and assumptions)? Then do top-down!

Fundamentally, you need to take the approach that just makes the most sense in that circumstance. Quickly think about the key assumptions / numbers required and whether you 1) Know them or 2) Can reasonably estimate them. If you can, go ahead!

An Example

He's a Q&A for a great market sizing question here asking to estimate # of electric charging stations in a city in 10 years:

https://www.preplounge.com/en/consulting-forum/how-would-you-solve-this-market-sizing-question-from-roland-berger-7631

This one could be answered top-down (as I did) by estimating population of the city, # of drivers/ cars, etc. etc.

OR, it could be answered bottom-up by estimating # of stations you see per block (or # of gas/petrol tanks), % increase this might be over time (or # of EV stations that would be needed per gas tank given EV stations take 10 times as long), and # of blocks you'd estimate the city to have.

Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229