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!!

# How to start with Market Sizing questions

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?

- identify what kind of question it is: population based
- 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
- 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
- I will assume that the average household has 4 chairs based off the 3.2 people per HH.. = 400million chairs
- 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
- Since it is August I will take 40million*(8/12 or 3/4) = 30million

- 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

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 Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.

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

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