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Emily

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6

Market Sizing Approach for London Eye

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

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

6 answers

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Best Answer
Book a coaching with Emily

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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

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

Book a coaching with Vlad

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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

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

Book a coaching with Clara

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Hello!

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

Cheers,

Clara

Hello!

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

Cheers,

Clara

Book a coaching with Thomas

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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.

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.

Book a coaching with Francesco

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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

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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