Market Sizing Approach for London Eye

London Market sizing
New answer on May 01, 2020
6 Answers
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Anonymous A asked on Apr 14, 2020

Hey PrepLounge Community,

What's your take on a good 'market sizing approach' for tourism attractions?

This is the question:

'How many people have a London Eye tour/visit/ride every year?'

I would answer like this: 'I would explore 3 approaches:'

1) Peak-Based Occupancy Analysis
- I try to estimate occupancy on different seasons/times/shifts
- After this, I try to calculate revenues (considering potentially a complex product-price mix)
2) Market-based analysis - generic
- I try to guess the total market (London Visitors) in which we compete
- I try to estimate a penetration rate for the two segments
3) Market-based analysis - segmented
I can also go with the approach 2 but based on specific product/customer segments (e.g. business v. normal rides or tourists v. citizens)

Is this a good structure?

Thank you for your help!

Anonymous

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Emily
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Content Creator
replied on Apr 15, 2020
BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University

Hi there,

Essentially there are 2 ways to think about it: Supply side and Demand side. Your 1) is based on Supply, while 2) & 3) is based on Demand.

Agree with Vlad that 1) is better, and actually easier to do.

If you use the Demand approach, you should combine 2) and 3). The total market should not only be visitors, but also include locals who might take the ride. Even though the locals are mostly likely to be a much smaller % compared to visitors, don't ignore it upfront entirely. The interviewer might think that you forget about it. It is better to tell him/her that there are these 2 segments, but the local segment is expected to be tiny compared to visitors and so you would focus on visitors. So the interviewer know you have thought about the complete picture, and then choose to prioritise.

Best,

Emily

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Vlad
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replied on Apr 15, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

The first one seems likely to be more accurate:

  1. You calculate the # of people at 100% occupancy
  2. Make an assumption about the actual occupancy (pls take into account weekdays, weekends, holidays, weather seasonality)
  3. Multiply it by the avg. ticket price (take into account bundles, etc)

Best

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Clara
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replied on Apr 15, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would 100% go with "occupancy", it´s much easier to envision.

Cheers,

Clara

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Thomas
CoachingPlus Expert
Content Creator
replied on Apr 16, 2020
150+ interviews | 5+ years experience | Kearney & Accenture | Sold consulting startup| London Business School

A demand approach is likely to be the most realistic in this case. My suggestion is to not tell the interviewer that you will use three methods. Instead, pick one, and use one as a vaidation.

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Francesco
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replied on May 01, 2020
#1 Expert for Coaching Sessions (3.700+) | 1.300+ Reviews with 100% Recommendation Rate | Ex BCG | 8+ Years of Coaching

Hi there,

I agree with Vlad and Emily, the supply based approach (number 1) would be easier to implement in this case, I would go for that.

Best,

Francesco

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Antonello
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Content Creator
replied on Apr 30, 2020
McKinsey | MBA professor for consulting interviews

Hi,
in addition to the solutions provided by the other coach I would like to suggest you other similar cases solved here in the platform:

  • https://www.preplounge.com/en/consulting-forum/how-much-would-you-charge-to-clean-all-the-windows-in-seattle-4965
  • https://www.preplounge.com/en/consulting-forum/market-sizing-milk-consumption-5087
  • https://www.preplounge.com/en/consulting-forum/how-would-you-calculate-the-value-of-a-cow-4982
  • https://www.preplounge.com/en/consulting-forum/estimate-number-of-traffic-lights-in-a-london-5692

Hope it helps,

ANtonello

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Emily gave the best answer

Emily

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BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University
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