Market sizing

case interview preparation
New answer on Dec 01, 2022
4 Answers
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Anonymous A asked on Nov 30, 2022

Hey everyone, 

Can anyone help me form the structure for the below mentioned questions?

Estimate the UK market for the online streaming industry

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Ian
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replied on Dec 01, 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

You'll learn a lot more from this by trying it out yourself first! Why don't you post your approach here and we can provide commentary?

How to approach 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!

An Example

He's a Q&A for a great market sizing question here asking to estimate # of electric charging stations in a city in 10 years:

https://www.preplounge.com/en/consulting-forum/how-would-you-solve-this-market-sizing-question-from-roland-berger-7631

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.

Take a look here for additional practice! https://www.preplounge.com/en/management-consulting-cases/brain-teaser/intermediate/taxis-in-manhattan-market-sizing-229

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Emily
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replied on Nov 30, 2022
Ex McKinsey EM & interviewer (5 yrs) USA & UK| Coached / interviewed 200 +|Free 15 min intro| Stanford MBA|Non-trad

This is a great question! The way I’d approach it is:

  1. How many people in the UK? 70m
  2. I’d assume that each household has one streaming subscription per platform. How many people in a house? 3
  3. How many households? 70m/3 = 23.3m. I’d round to 25m
  4. What proportion watch TV through streaming? I’d break down the households into age categories and assume that people live to 80 on average and the population is evenly distributed. I’d also make assumptions on what proportion streams. So:
  • 0-20 you live with your parents. So actually in terms of household. So actually to break households by age I’d assume 1/6 of households account for each 10 years of age.   
  • 20-30. You live with friends. This is 10 years so I’d assume 1/6 of households are only people aged 20-30. As they are high streamers I’d assume 90% stream. So the number of streaming households is 25m*1/6*90% = 3.75m
  • 30-50. You live with your kids. This is 2/6 of households. I’d assume a slightly lower streaming rate - let’s say 80%. So the number of streaming households is 25m*2/6*80% = 6m
  • 50-80. You live without kids. This is 3/6 households and I’d assume a slightly lower steaming rate - let’s say 70%. So the number of streaming households is 25m*3/6*70% = 8.75m
  1. So in total we have 8.75 + 6 + 3.75 = 18.5m streaming households. 
  2. Assuming a subscription is £10 a month, that’s £120 a year per household, so the total size of the market is £120 * 18.5m = £2.22b

 

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Maikol
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replied on Nov 30, 2022
BCG Project Leader | Former Bain, AlixPartner, and PE | INSEAD MBA | GMAT 780

It is a very simple question. Try to estimate it on your own and then we discuss it together.

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Adi
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replied on Nov 30, 2022
Accenture, Deloitte | Precision Case Prep | Experienced Interviewer & Career Coach | 15 years professional experience

Better way to learn is to please post your solution and us coaches can comment :)

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Ian gave the best answer

Ian

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