Is an issue tree the best solution for all market sizing questions?

issue tree Market sizing
New answer on Aug 31, 2022
4 Answers
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Anonymous A asked on Aug 29, 2022

Hi all,

Looking at practising some market sizing questions and I came across the question 'How would you help your colleagues determine the number of baby strollers that are sold yearly in the United States?".

When approaching market sizing, I have been using issue trees to break the problem down however in this case it appears like that may be a far more complicated approach. Instead, and as done by the solution, using a top-down approach to break the population into babies born etc seems like an easy and logical way to do it. I have attached this structure at the bottom.

Am I missing an easy way to use an issue tree for this solution or is it true that using this stacked method can be more effective than an issue tree in certain cases?

To rephrase my question, why has this article used this method and not an issue tree?

Thank you in advance for your help

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(edited)

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Ian
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replied on Aug 29, 2022
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Hi there,

I think you're getting terminology mixed up :)

Issue trees have nothing to do with market sizing. Issue trees are primarily used for solving cases (and real life projects).

I think you're asking if you can break down the problem with sections/branches/trees. If that is the question, then yes you always should! You always need to setup the overarching math/calcs.

Depending on the market sizing, either top down or bottom up will be better…it depends!

How to Market Size

Remember that there's rarely a "best" answer with market sizing. What's important is that you break down the problem the way it makes sense to you. Importantly, break it down so that the assumptions you make are the ones you're most comfortable in.

For example, do you know all the major brands? Great go with that. Do you understand all the segments of that country's population (either age or wealth or job breakdown)? Go with that. Do you know the total market size of the tourism (or hotel) industry? Then break it down that way.

Some tips:

  1. Just like in a case, make sure you understand the question - what are you really being asked to calculate
  2. Decide whether a top-down or bottom-up approach is best
  3. Figure out what you know you know, and what you know you don't know, but could estimate
    1. This helps you determine how to split out buckets
  4. Stay flexible - you can start with a "high-level" market sizing, but gauge your interviewers reaction....if it looks like they want you to do more...then go along level deeper in terms of your splits

Here's some practice: https://www.preplounge.com/en/management-consulting-cases/interviewer-led-mckinsey-style/intermediate/taxis-in-manhattan-market-sizing-229

 

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Cristian
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replied on Aug 30, 2022
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Hi there, 

Indeed, there is no single way to address market sizing questions.

The ‘funnel’ approach taken in the exhibit is quite popular as well. The idea behind it is to start from a familiar high-level number and then to apply filters from there to get closer to what you're looking for. 

What I would recommend is that for the beginning you try and branch out and practice as many market sizing questions as possible. With time you're going to get a more granular understanding of why certain models work better than others and then also develop more confidence in applying them .

Best,

Cristian

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Clara
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replied on Aug 31, 2022
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Hello!

I am happy you are using the case, hope it's being useful!

In this case precisely, and for the image you are quoting, it's not an issue tree, just a visual representation of the top down of bottom up approaches one can use in a market entry. 

However, unfortunately, there is no magic key or way to solve all market cases, because it depends on the specificity of each. However, that example is one that comes close to many of the market sizings that I have seen in consulting cases. 

Hope it helps!

Cheers, 

Clara

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Lucie
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updated an answer on Aug 30, 2022
10+yrs recruiting & top BCG trainer & BCG Project leader & experienced hire & ICF coach

I wouldnt give you better description than Ian, just adding to that, dont stick to the process/methodology/framework, they will limit your thinking and you will likely fail. 

Just make sure you understand the question and then you break the market sizing opportunity in the way that is logic, even if you dont follow any official way. 

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Ian gave the best answer

Ian

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