Hi,

Replacement concept is just one of the tool, that **you should use in combination with the other tools.** In other words, it's not a magic pill (And yes it works)

**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 the 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)
- 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**. Almost all casebooks have good market sizing examples and the solutions

Feel free to PM for clarifications

Good Luck!

Hi,

Replacement concept is just one of the tool, that **you should use in combination with the other tools.** In other words, it's not a magic pill (And yes it works)

**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 the 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)
- 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**. Almost all casebooks have good market sizing examples and the solutions

Feel free to PM for clarifications

Good Luck!