Saw this on a website for example of market sizing questions and was wondering what is the right approach for this.
How to answer the market sizing questions "What is the revenue of British Airways per month?"
This is an interesting MS question! Don't forget to ask as a clarifying question if this is for British Ariways UK or global revenues, as it will drastically change the structure. I am assuming this is for UK only, but let me know if they are looking for global British Airways revenues (can become very tricky as they have few subsidies, co-operate flights etc.)
To answer such questions, I usually advice to:
- Be "equation-driven" i.e. stucture it as Market Size = A x B x C x D x E
- Do not over-complicate it, i.e. have between 3 and 5 components of your equation
One way to think about this specific problem is for instance:
> Daily flights x Average passengers per flights x Average ticket price x Days in a month
You could mention that this could be split upward with International vs Domestic as they have quite different dynamics, the interviewer should appreciate the comment but tell you that for now we don't go for this level of granularity.
The interviewer should be able to provide you the daily flights (in a real case the client will definitely know this data), but if not:
- Assume large airports drive most of the traffic
- How many flight per day per airport
- How many flights are British Airways
Another way, maybe less intuitive, is to go with the number of aircrafts they operate and their utilization rate.
In reality, the market sizing exercise is more for the interviewer to see how you can break a big problem in smaller pieces, so you may be ask to keep breaking down the structure until he is "satisfied", so give him that :)
I hope that helps!
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