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Market Sizing Approach for London Eye

London Market sizing
New answer on Dec 31, 2021
7 Answers
4.2 k Views
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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Anonymous replied on Apr 15, 2020

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
Expert
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
Expert
Content Creator
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
Expert
Content Creator
replied on Apr 16, 2020
150+ interviews | 6+ years experience | Bain, Kearney & Accenture | Exited 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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Ian
Expert
Content Creator
replied on Dec 31, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Providing some market sizing thinking for anyone revisiting this Q&A:

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:

  1. Just like in a case, make sure you understand the question - what are you really being asked to calculate
  2. Decide whether a top-down or bottom-up approach is best
  3. Figure out what you know you know, and what you know you don't know, but could estimate
    1. This helps you determine how to split out buckets
  4. 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
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Francesco
Expert
Content Creator
replied on May 01, 2020
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ 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
Expert
Content Creator
replied on Apr 30, 2020
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

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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