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Denis

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How to know the critical factors in a market sizing practice?

Hello! I am curios about how to know the "critical factors" in a market sizing practice, especially if I don't understand the product or market. For instance, once I did a case about "estimation of malaria patients in Africa". It turns out the the critical factor is whether people live close to swamp and whether people use nets or not. In another exercise, "number of organ donators in US", some critical factors include number of who volunteered to donate organs if they pass away accidentally. I feel that these factors are not so obvious and I need some specific background information to solve the problem.

I'm curious how could I know these information accurately, as there are so many ways to segment a market? How could I communicate with the interviewer so that he can give me a hint or background knowledge about the market sizing problem? Thanks in advance for your advice.

Hello! I am curios about how to know the "critical factors" in a market sizing practice, especially if I don't understand the product or market. For instance, once I did a case about "estimation of malaria patients in Africa". It turns out the the critical factor is whether people live close to swamp and whether people use nets or not. In another exercise, "number of organ donators in US", some critical factors include number of who volunteered to donate organs if they pass away accidentally. I feel that these factors are not so obvious and I need some specific background information to solve the problem.

I'm curious how could I know these information accurately, as there are so many ways to segment a market? How could I communicate with the interviewer so that he can give me a hint or background knowledge about the market sizing problem? Thanks in advance for your advice.

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Book a coaching with Denis

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Hi all,

comes down to experience too. Frankly, whenever I am confronted with a market estimation, my mind automatically performs a certain process:

  1. Think about formula (not just a flimsy approach, literally an algorithm)
    1. How many approaches are there (bottom-up vs. top-down)?
      1. In your Malaria case using population proxies of any kind is in my book bootom-up, using however the revenues earned by Malaria medicine manufacturers for example, breaking down how many perople there MUST be given the revenues they have would be top-down.
    2. What are the upsides / downsides of each approach? Which one should I choose given the limited time in a case? Explain this to the iviewer.
  2. Necessary assumptions / key drivers (no numbers at this point, just in terms of important Proxies by thinking VERY practical). This is why you should ask follow-up questions after the case prompt. Not for the sake of asking but to help you identify Step 1 and 2. If you dont understand the basic business model and how the service / product PRACTICALLY works and is used, I dont see how you can comfortably estimate the market size.
  3. Do the Math transparently using clear language. No mumbling. Double-check your numbers before you speak up.
  4. Sense-check the result (!) 2 ways mostly work: checking your calculations and scrutinizing your key assumptions. Or using other "proxies", perhaps other bottom-up or top-down approaches brain-stormed before. E.g. if you have a number of Malaria patients... does this correspond to perhaps the number of available hospitals or the revenues earned by Malaria meds producers? You need to be able to tell me as an iviewer if you think your result is too high / low at least. Ideally also give me a rough range of the expected result with a rationale.

Best,

Denis

Hi all,

comes down to experience too. Frankly, whenever I am confronted with a market estimation, my mind automatically performs a certain process:

  1. Think about formula (not just a flimsy approach, literally an algorithm)
    1. How many approaches are there (bottom-up vs. top-down)?
      1. In your Malaria case using population proxies of any kind is in my book bootom-up, using however the revenues earned by Malaria medicine manufacturers for example, breaking down how many perople there MUST be given the revenues they have would be top-down.
    2. What are the upsides / downsides of each approach? Which one should I choose given the limited time in a case? Explain this to the iviewer.
  2. Necessary assumptions / key drivers (no numbers at this point, just in terms of important Proxies by thinking VERY practical). This is why you should ask follow-up questions after the case prompt. Not for the sake of asking but to help you identify Step 1 and 2. If you dont understand the basic business model and how the service / product PRACTICALLY works and is used, I dont see how you can comfortably estimate the market size.
  3. Do the Math transparently using clear language. No mumbling. Double-check your numbers before you speak up.
  4. Sense-check the result (!) 2 ways mostly work: checking your calculations and scrutinizing your key assumptions. Or using other "proxies", perhaps other bottom-up or top-down approaches brain-stormed before. E.g. if you have a number of Malaria patients... does this correspond to perhaps the number of available hospitals or the revenues earned by Malaria meds producers? You need to be able to tell me as an iviewer if you think your result is too high / low at least. Ideally also give me a rough range of the expected result with a rationale.

Best,

Denis

(edited)

Book a coaching with Antonello

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Hi,

That's a very interesting question and the other coaches gave you already amazing tips.

I'd like to add a few comments:

1. Background information is not required (most of the times) to identify critical factors (or drivers). It's likely you'll need to understand the business model of your client, the production process, etc. but this is something you can (and should) ask during the case.

2. Many key drivers are recurring when solving cases. Seasonality is one of them (e.g. estimate the market for ice creams in Europe).

Hope this helps.

Best,

Antonello

Hi,

That's a very interesting question and the other coaches gave you already amazing tips.

I'd like to add a few comments:

1. Background information is not required (most of the times) to identify critical factors (or drivers). It's likely you'll need to understand the business model of your client, the production process, etc. but this is something you can (and should) ask during the case.

2. Many key drivers are recurring when solving cases. Seasonality is one of them (e.g. estimate the market for ice creams in Europe).

Hope this helps.

Best,

Antonello

Book a coaching with Ian

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Hi there,

In general, you're segmenting out the problem based on two things:

1) Segments that I have a better idea about (i.e. I can reasonably make a rough estimate) a

2) Segments that are directly correlated to the answer (i.e. 1 has a higher rate of x than the other)

The malaria patients one is very hard. I also note that that's a ridiculous segmentation. As in, you cannot reasonably estimate the % of people that live close to a swamp and use nets. Quite honestly, whoever gave you that case did a bad job (or the case was bad).

Hi there,

In general, you're segmenting out the problem based on two things:

1) Segments that I have a better idea about (i.e. I can reasonably make a rough estimate) a

2) Segments that are directly correlated to the answer (i.e. 1 has a higher rate of x than the other)

The malaria patients one is very hard. I also note that that's a ridiculous segmentation. As in, you cannot reasonably estimate the % of people that live close to a swamp and use nets. Quite honestly, whoever gave you that case did a bad job (or the case was bad).

Book a coaching with Iman

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Hi,

Practice will really help you to nail this type of question. I always use a logic tree with key drivers plotted. Just make sure not to include drivers that will overcomplicate.

Best,

Iman

Hi,

Practice will really help you to nail this type of question. I always use a logic tree with key drivers plotted. Just make sure not to include drivers that will overcomplicate.

Best,

Iman

Book a coaching with Clara

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Hello!

That is a great quesiton TBH.

Unfortunately, there is no magic formula. And what is most true is that it gets better and better as you practice different ones.

I have a bunch of market sizings, PM me if you want.

Furthermore, you can find one embebbed in a case -which is the most usual way to find them- here, free in PrepL library:

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/covid-19-impact-on-heathrow-airport-197

Hope it helps!

Cheers,

Clara

Hello!

That is a great quesiton TBH.

Unfortunately, there is no magic formula. And what is most true is that it gets better and better as you practice different ones.

I have a bunch of market sizings, PM me if you want.

Furthermore, you can find one embebbed in a case -which is the most usual way to find them- here, free in PrepL library:

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/covid-19-impact-on-heathrow-airport-197

Hope it helps!

Cheers,

Clara

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