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Market Sizing Answer is off but structure and thought process is fine

Case Interview Prep Market sizing
New answer 30 minutes ago
7 Answers
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Anonymous A asked on Apr 29, 2024

I have found that every time I am approaching a estimation question, let’s say estimate the annual revenue for the diabetes medication market in the u.s, I have no problem laying out the structure, in this case number of population * % of diabetic *medication per day etc. However, my answer would be a little different in the end because my estimation (in the is case let’s say % of diabetic) is a little different from answer. Assuming everything else with my structure makes sense, is my current approach fine even though the number is a little off?

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Ariadna
Expert
replied on Apr 29, 2024
BCG | Project Leader and Experienced Interviewer | MBA at London Business School

Yes! Approach is fine, even if number is a little bit off. 

A few extra tips to make sure things actually work out well during the case interview (after you have laid out the structure and go into the numbers): 

  • Ask the interviewer if there is any data for that variable or you should make an assumption
  • If you make an assumption, state that this is your assumption and what you based it on (can be personal experience, professional experience, an article you read) 
  • If appropriate, you can qualify the assumption saying something like “this is probably on the high side”; then make sure that not all your assumptions go into the same direction (e.g., being overly optimistic) 

By applying the steps above, you show the interviewer that not only you have a good structure, but you are comfortable working with numbers you are not 100% sure of (very important in consulting) AND you can differentiate between facts and assumptions. 

Hope this helps, 

Ariadna 

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Pedro
Expert
replied on Apr 29, 2024
Bain | Roland Berger | EY-Parthenon | Mentoring Approach | 30% off first 10 sessions in May| Market Sizing | DARDEN MBA

Market estimations ARE NOT about getting some “exact number”.

It's all about:

  1. Your thought process (can you structure in a way that makes sense and show business judgement?). 
    1. For example, your answer is sub-optimal, as you have no segmentation in your suggested answer. As such, it is quite unlikely that you will get to a good estimate, as you are dependent on 1 (or 2) critical assumptions. If your perception on the diabetes incidence on the overall population is completely off, you'll have an issue (and the issue is not getting the wrong number, but rather setting up a structure depends on getting a single number right). 
    2. If you have multiple segments you will be able to estimate with more precision. 
    3. In this case: you have diabetes type 1 and type 2; type 2 is, for example, age related, so using age-based segmentation would make sense, etc.

       

  2. Being able to understand what a number means. This implies a couple of things. 
    1. One is that you understand when something is within the “right order of magnitude”. Broadly speaking, is understanding whether your number has the right number of zeros vs. being 10x bigger or smaller than what you would expect
    2. Being able to translate it into a business insight or business implication. For example, does the number represent a large market? Is there a segment that is more relevant?

If you get all of this right, but your estimate is +/- 30% of the expected value (or even further away), most likely it has no impact on how your performance is evaluated.

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Gero
Expert
replied on Apr 29, 2024
Ex-BCG │200+ Interviews & Interview Coachings @ BCG │ 25+ candidates coached into MBB │WHU/LSE/Nova │ Teacher & Trainer

Hi there,

Your structure, communication pragmatic calculation is much more important than the final number, so principally you should be fine.

Becoming more precise
Addressing your issue, if you want to get closer to the real number one way obvious from your suggestion would be to add detail and nuances. E.g., the % of people with diabetes could be different for age groups or other population segments (e.g., overweight vs non overweight population). Do not forget to bring in your knowledge and experience for the actual estimation, e.g. % of people with diabetes among your friends and family.

Other advice
Moreover, make sure to build the whole calculation structure before presenting it in a clearly understandable manner. When estimating, make sure to take the interviewer along and round numbers proactively. When done and, if possible, along the way, try plausibility checks.

Hope that helps!

Best,

Gero

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Alberto
Expert
Content Creator
replied on Apr 30, 2024
Ex-McKinsey Associate Partner | +15 years in consulting | +200 McKinsey 1st & 2nd round interviews

if your approach is correct and your estimations follow a solid logic, even if you deviate a little from the real numbers, you are more than fine.

Best,

Check out my latest case based on a real MBB interview: Sierra Springs

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Dennis
Expert
Content Creator
replied on Apr 30, 2024
Ex-Roland Berger|Project Manager and Recruiter|7+ years of consulting experience in USA and Europe

Hi,

I agree that the approach and thought process are more important here than the final number. The elements you factor into the derivation highlight your critical thinking ability. The way you make estimations (e.g. using reasonable round numbers for quick straight forward calculations) illustrate your goal-orientation and comfort with 80/20 principles.  

However, you should be able to judge whether a number passes at least the smell test or if you just came up with some ludicrous order of magnitude.

Best

 

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Cristian
Expert
Content Creator
replied on Apr 30, 2024
#1 rated MBB & McKinsey Coach

The approach is what matters, not the number. 

However, what you could improve (based on how you describe your situation) is how you identify the assumptions and then align them with the interviewer. 

If you do that right, that should then bring you in the same ball-park. 

Best,
Cristian

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Hagen
Expert
Content Creator
replied 30 minutes ago
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

I would be happy to share my thoughts on your question:

  • First of all, it's common for your estimates to differ from given answers, especially in market size estimations, where assumptions play a critical role.
  • Moreover, however, please keep in mind that most strategy consulting firms have not used stand-alone market size estimations for a long time. While this does not mean that it never happens, this type of case study question may not be very meaningful for both the candidate and the interviewer, as only a few skills are being tested. That being said, simpler market size estimations can still be part of a case study.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

 

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Ariadna gave the best answer

Ariadna

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