expert
Expert with best answer

Vlad

97% Recommendation Rate

365 Meetings

5,409 Q&A Upvotes

USD 229 / Coaching

Is there a basic rationale behind sizing products that are widely used in commercial scenario?

Anonymous A asked on Nov 12, 2019 - 2 answers

For example, when estimating the number of capsule coffee machine, it's probably widely used in office buildings rather than households. How should I approach the segment?

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Vlad
Expert
replied on Nov 12, 2019
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
Book a coaching with Vlad

97% Recommendation Rate

365 Meetings

5,409 Q&A Upvotes

USD 229 / Coaching

Hi,

I recommend the following:

  1. Ask the clarifying question first: Are we looking only at the b2c segment or other segments as well. Mentioning this by itself will give you the extra points. In many interviews, the interviewer will allow you to neglect
  2. Make a B2B branch in your analysis. But start analyzing with B2C first since it's easier.
  3. There are many tricks on how to make a B2B calculation approximation depending on the industry. Here are some of them:
  • Personal experience (e.g. when I look on the street, every 10th vehicle is commercial. Thus there are (B2C / 10) commercial vehicles. Now you can calculate commercial gas stations, Tires, etc.)
  • Calculating the space. For example, if you need to calculate the commercial real estate, you can 1) calculate how many buildings you have in the city (using the estimation of what % of the land is occupied by them), 2) subtract the apartment buildings 3) multiply by the number of floors and space.
  • Calculating the number of businesses: (Working population - % working in public sector) / (SB, Medium, Enterprise split * avg number of employees in each). For each size of the business, you can calculate whatever you want, even light bulbs used.

To give you an example:

Once in the interview, I was Calculating the B2C tire market assuming that the new cars already have tires (sold via B2B channel). E.g. if the avg. lifetime of a car is 10 years, the replacement rate is 1/2 and the replacement rate per car is 4/10, since the first 2 years are covered by the tires from the b2b market.

Calculating b2b market included calculating the tires for the new cars (B2C market of the new cars * (4 tires + 1 extra)) + commercial vehicles * (avg number of tires per commercial vehicle).

Best

Antonello
Expert
replied on Nov 12, 2019
McKinsey | 10+ interviews passed (100% success rate) | 60+ candidates coached
Book a coaching with Antonello

100% Recommendation Rate

36 Meetings

377 Q&A Upvotes

USD 159 / Coaching

Hi,
identify different segments in a market sizing is great and often needed. In your example, you can divide the problem into 2 different parts or simply state that at work there will be x% of the total capsules.

Here you can find other examples of:
- commercial products vs household: https://www.preplounge.com/en/consulting-forum/how-much-would-you-charge-to-clean-all-the-windows-in-seattle-4965
- 2 different use of a product: https://www.preplounge.com/en/consulting-forum/market-sizing-milk-consumption-5087#a11020

Best,
Antonello

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!

1 Q&A

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)

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 40.6k times
4.4 5 1058
| 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 25.6k times
4.3 5 554
| 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 12.6k times
4.2 5 1150
| 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

Our client Pharma Finance just finalized its first investment round and received $ 40m to invest in the build-up of a pharmaceutical manufacturing company. The CEO is mainly interested in high margins and profitable markets, with a sustainable and green production. This is why he wants you to find o ... Open whole case