How to validate the final number in market sizing question

Market sizing
New answer on Apr 30, 2020
6 Answers
670 Views
Anonymous A asked on Apr 15, 2020

Wondering once a market size is estimated in a stand alone market sizing question, what are the typical ways to validate the final number? ie. you can compare a country's market size to global market size. What if you don't have any benchmark number you can compare to on top of your head? Appreciate your thoughts here.

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Thomas
CoachingPlus Expert
Content Creator
replied on Apr 15, 2020
150+ interviews | 5+ years experience | Kearney & Accenture | Sold consulting startup| London Business School

Hi there,

In addition to what is already mentioned (sense checking and comparing to another industry) it would be good to reflect on the assumptions made / variables use. Specifically, look at how sensitive some of these might be. In other words, if you were to do the same sizing but you would assume a sales price of e.g. $90 vs $100, how would it affect the outcome?

Was this answer helpful?
Emily
Expert
Content Creator
replied on Apr 15, 2020
BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University

Hi there,

Other than global market size, depending on the exact question, you can try to compare in other ways that come a bit closer to your life. E.g.

- Compare to another industry you roughly know in the country, and see intuitively whether it makes sense (should the estimated market be bigger or smaller than this benchmark industry?)

- If the estimate is for B2C business, compare that number to the population and check the per capita number, does it make sense?

Try to see if you can use some of the common sense understanding in life to sense check. Even if you couldn't find a good benchmark, don't worry too much. You are tested more for whether you can think logically in a systematic approach. If you get that accomplished, but just make a wrong assumption because you are not familiar with certain industry, you would still get the most credit.

Best,

Emily

Was this answer helpful?
Clara
Expert
Content Creator
replied on Apr 15, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

This validations are very very common, specially as you come to the end of a case.

Usually you can leverage the following -take for instance that you were calculating a cost and you want to stress-test the number):

  • Benchmark with historical client´s data: looking at changes from the past is always going to give you hints
  • Benchmark against competitors in the cost´s breakdown

Hope it helps!

Cheers,

Clara

Was this answer helpful?
Anonymous replied on Apr 30, 2020

Hey,

look through your assumptions and try to make a comparison with a similar industry.

Develop your business judgement, whether it all makes sense.

Hope it helps,

André

Was this answer helpful?
1
Luca
Expert
Content Creator
replied on Apr 30, 2020
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hello,

THere are different ways that are strictly correlated with the specific case. FOr example, once that you have calculate the volume of american sneakers market, you could divide your number by the American population to get the "Expenditure per capita" KPI.

Feel free to text me a specific example if you want to discuss it.

Best,
Luca

Was this answer helpful?
Antonello
Expert
Content Creator
replied on Apr 30, 2020
McKinsey | MBA professor for consulting interviews

Hi,
it depends on the question and on the remaining time for the case. Usually, common sense is enough, otherwise, you can try to quickly set up a different approach to the case (e.g. bottom up if you did a top down)

Best,

Antonello

Was this answer helpful?
Thomas gave the best answer

Thomas

CoachingPlus Expert
Content Creator
150+ interviews | 5+ years experience | Kearney & Accenture | Sold consulting startup| London Business School
24
Meetings
466
Q&A Upvotes
10
Awards
11 Reviews