2

How to start with Market Sizing questions

Dear all,

Any suggestions for market sizing questions except the ones on the bootcamp (3 golden rules)?
I'm struggling with understanding the structure and assumptions used at different cases. All I get is the replacement method but I obviously can't use this one all the time.
My strategy would be to read through a few case solutions to get certain patterns how to solve such a case...can't think of a different strategy.
I often don't know how to start and when I read the solution I would have never thought of it. Maybe its not my strength even though I have a rather quanitative, analytical background (economics with focus on econometrics).

Many thanks!!

Dear all,

Any suggestions for market sizing questions except the ones on the bootcamp (3 golden rules)?
I'm struggling with understanding the structure and assumptions used at different cases. All I get is the replacement method but I obviously can't use this one all the time.
My strategy would be to read through a few case solutions to get certain patterns how to solve such a case...can't think of a different strategy.
I often don't know how to start and when I read the solution I would have never thought of it. Maybe its not my strength even though I have a rather quanitative, analytical background (economics with focus on econometrics).

Many thanks!!

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer

I approach market sizing questions with the frameworks discussed in Case in Point by Marc Cosentino. For market sizing questions your answer should be based on logic and assumptions. Analyze the question and throw it into 3 categories: population based, household, or proposterous.

I have seen a lot of population and household cases so far and this is how I approach them:

You need to memorize SOME things about your country: population, life expectancy, how many people in a household (change number slightly so it devides out nicely into population).

Remember this golden rule - it is better to be good enough than to be precise. In market sizing questions you need to make A LOT of assumptions and you need to round numbers and percentages. You need to think about presenting this information to a client - how would I be able to present this information to someone in a very simple way.

EXAMPLE CASE: How many dining room chairs where bought in the United States (where I am from) this year?

  1. identify what kind of question it is: population based
  2. think about the information you will need to solve this problem: Population of the US: 320million, Average HH size: 3.2 (nice number to devide into 320million), 320/3.2 = 100million HHs
  3. Assumptions - this is where a lot of people get uncomfortable with market sizing questions because you need to make educated guesses. Educated guesses for market sizing questions need to be justifiable to some extent, but it can be more losely coorelated than one of a different type of case (THE INTERVIEWER DOESN'T CARE ABOUT THE ANSWER AS LONG AS THERE IS A GOOD PROCESS THAT CAN BE DUPLICATED): the assumptions that I am going to make in this case are as follows
    1. I will assume that the average household has 4 chairs based off the 3.2 people per HH.. = 400million chairs
    2. I will assume that the average life of a dining room chair is 10 years - based on the fact that none of my dining room chairs have needed to be replaced in 15 years, but I assume that is on the higher end of the spectrum - 400million/10years = 40million chairs
    3. Since it is August I will take 40million*(8/12 or 3/4) = 30million
  4. Answer - I estimate that 30million chairs have been purchased in the US this year.

Hope this helps! Feel free to schedule a practice case with me - I am a beginner at cases but I am putting a ton of time into them.

Best,

Jacob DeCoste

I approach market sizing questions with the frameworks discussed in Case in Point by Marc Cosentino. For market sizing questions your answer should be based on logic and assumptions. Analyze the question and throw it into 3 categories: population based, household, or proposterous.

I have seen a lot of population and household cases so far and this is how I approach them:

You need to memorize SOME things about your country: population, life expectancy, how many people in a household (change number slightly so it devides out nicely into population).

Remember this golden rule - it is better to be good enough than to be precise. In market sizing questions you need to make A LOT of assumptions and you need to round numbers and percentages. You need to think about presenting this information to a client - how would I be able to present this information to someone in a very simple way.

EXAMPLE CASE: How many dining room chairs where bought in the United States (where I am from) this year?

  1. identify what kind of question it is: population based
  2. think about the information you will need to solve this problem: Population of the US: 320million, Average HH size: 3.2 (nice number to devide into 320million), 320/3.2 = 100million HHs
  3. Assumptions - this is where a lot of people get uncomfortable with market sizing questions because you need to make educated guesses. Educated guesses for market sizing questions need to be justifiable to some extent, but it can be more losely coorelated than one of a different type of case (THE INTERVIEWER DOESN'T CARE ABOUT THE ANSWER AS LONG AS THERE IS A GOOD PROCESS THAT CAN BE DUPLICATED): the assumptions that I am going to make in this case are as follows
    1. I will assume that the average household has 4 chairs based off the 3.2 people per HH.. = 400million chairs
    2. I will assume that the average life of a dining room chair is 10 years - based on the fact that none of my dining room chairs have needed to be replaced in 15 years, but I assume that is on the higher end of the spectrum - 400million/10years = 40million chairs
    3. Since it is August I will take 40million*(8/12 or 3/4) = 30million
  4. Answer - I estimate that 30million chairs have been purchased in the US this year.

Hope this helps! Feel free to schedule a practice case with me - I am a beginner at cases but I am putting a ton of time into them.

Best,

Jacob DeCoste

.Hey Jacob, good structure! I would like to point out two things though: 1. the demand of newly furbished households were not considered. 2. the commercial sector has not been included. It is more complicated but I think it might be able to be estimated based on typical restaurants sizes and number of chairs, — Chun on Jul 28, 2019

Book a coaching with Vlad

97% Recommendation Rate

379 Meetings

5,969 Q&A Upvotes

USD 189 / Coaching

Hi,

It's less about different types of the problems but rather about the tools that you use:

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,

It's less about different types of the problems but rather about the tools that you use:

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!

Related BootCamp article(s)

Market Sizing

Market Sizing Questions are used to test your quantitative & reasoning skills. Learn more on how interviewers evaluate your given answer!

2 Q&As

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

1 Q&A

Related case(s)

Oliver Wyman case: Full Electrons Ahead

Solved 75.0k 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 5495
| 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 48.9k 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 1269
| 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 32.2k 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 5 687
| 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

TKMC Case: Elevators

Solved 15.5k times
TKMC Case: Elevators Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in bigger city centers. His next target is Manhattan and he wonders how big the potential is.
4.2 5 1225
| Rating: (4.2 / 5.0)

Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in ... Open whole case

DB MC Case: Einstieg in das internationale Fernbusgeschäft

Solved 4.4k times
DB MC Case: Einstieg in das internationale Fernbusgeschäft Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Erst vor wenigen Jahren ist ein Start-up mit Know-how im Online-Vertrieb nach der Änderung des Personenbeförderungsgesetzes in den deutschen Fernbusmarkt eingetreten, welches schnell ein großes Netzwerk an Subunternehmen aufgebaut und damit große Marktanteile gewonnen hat. Dies hatte erheblichen Einfluss auf das Kerngeschäft der Deutschen Bahn. Mit dem Ziel Synergien zu nutzen und die Bedürfnisse des Kunden ganzheitlich zu erfüllen, konzentriert sich die Deutsche Bahn nicht allein auf ihre bisherigen Geschäftsmodelle, sondern kooperiert mit anderen „Mobility-Unternehmen“. Von Ihrem Kunden aus dem Topmanagement wurden Sie als Consultant von DB Management Consulting beauftragt, einen Business Case zu bewerten und zu prüfen, ob die Deutsche Bahn ihr bisheriges Geschäftsmodell öffnen sollte, um durch die Kooperation mit einem etablierten mittelständischen Busunternehmen in das internationale Fernbusgeschäft einzusteigen. Die Deutsche Bahn bietet bereits wenige internationale Verbindungen der Marke „IC Bus“ an, jedoch hat die DB-Tochter in der Vergangenheit große Marktanteile verloren. Im Rahmen der Einführung soll dem Kunden zunächst die Verbindung Hamburg – Lund (Schweden) ohne Zwischenstopp in 7 Stunden angeboten werden. Die Distanz zwischen Lund und Hamburg liegt bei 385 km. Bei erfolgreichem Start ist ein schnelles Roll-out auf andere internationale sowie deutschlandweite Strecken geplant. Im Fokus stehen die Erhöhung des Marktanteils, die Bewertung der Nachfrage des Kunden, der Kosten und Erlöse sowie das prognostizierbare Wachstum im Fernbusmarkt.
4.3 5 97
| Rating: (4.3 / 5.0)

Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Er ... Open whole case