How to estimate number of windshield sold in a year?
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Market Sizing
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Hi there,
You'll get the best out of this exercise if you try it yourself and post here for feedback.
How to think about Market Sizing
It's very simple: Do the approach the is the easiest for you given the question.
Are they asking you to estimate something where you don't even know where to begin from the top (maybe you have 0 clue as to the market size of the industry, the GDP of that country, etc. etc.)? Then do bottom-up!
Alternatively, does it seem impossible to do a realistic from-the-ground-up estimation of something (perhaps it requires just far too many steps and assumptions)? Then do top-down!
Fundamentally, you need to take the approach that just makes the most sense in that circumstance. Quickly think about the key assumptions / numbers required and whether you 1) Know them or 2) Can reasonably estimate them. If you can, go ahead!
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:
- Just like in a case, make sure you understand the question - what are you really being asked to calculate
- Decide whether a top-down or bottom-up approach is best
- Figure out what you know you know, and what you know you don't know, but could estimate
- This helps you determine how to split out buckets
- 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
An Example
Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229
And here's a practice Q&A:
This one could be answered top-down (as I did) by estimating population of the city, # of drivers/ cars, etc. etc.
OR, it could be answered bottom-up by estimating # of stations you see per block (or # of gas/petrol tanks), % increase this might be over time (or # of EV stations that would be needed per gas tank given EV stations take 10 times as long), and # of blocks you'd estimate the city to have.
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Depends on the level of interview, but if we count total windshields, including new cars and replacements, I'd proceed:
1. determine type (car, truck, plane, boat, etc.), let's use cars for example.
2. determine total # new cars/year in target area (USA, Europe, etc.)
3. # will be total new units sold (cars in 2.) + # replacements
4. Around 10 percent of used cars (assume) require a replacement a year due to damage from flying stones, etc.
5. Total windshields = (#new cars from 2. + # in 4.)
As a bonus you can use a dollar amount / windshield for total market size or tack on service market as well.
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Hi there,
agree with Ian here - best will be for you to share proposed approach and the coaches will comment.
That said, this is a typical demand-sided (top-down) sizing. Try to think about the use cases of such windshield and then break down estimated penetration for different customer segments for both commercial and personal use, as well as replacement rates.
If you'd like to learn more about how to tackle any given sizing question, feel free to reach out via PM - there is a quite fool-proof technique you can use to identify and solve any sizing question. Happy to discuss further.
Regards, Andi
(edited)
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