Hi,

There are some good process responses already mentioned by other coaches. I'd add some nuance here by giving you some additional context and insight based on how the job really works

Market sizing is something that is still done today in consulting, especially in strategy cases and due diligence cases. Clients are paying for us to share a perspective/answer based on robust analytical thinking. On the job - nobody is going to ‘give us the answer’, so as a manager if I task my consultant to size a market, I expect them to come up with the approach and then align that approach before building it out/doing the calculations

The approach in the case interview is very much similar (as others have mentioned). By laying out your approach first and then solving through it independently - this is a proxy for several key skills that consulting firms are looking for

• your ability to bring structure to open ended/ambiguous questions
• your ability to think and reason quantitatively
• your ability to have ‘common sense’ and business judgment

Consulting firms are not looking for people who can ‘respond to questions’. We are looking for independent, analytical problem solvers who can drive towards the answer. Understand this mindset and you'll be able to approach not just market sizing, but other key components of the case interview in a way that differentiates you

All the best!

Hi there!

That's a great question. I like how you positioned it. 

Basically, here's the technique that I recommened for market sizing:

1. Make sure you are clear on what you need to size. Write the question down. Validate with the interview what the number needs to be expressed in e.g., units, dollars, percentage
2. Ask for some time and come up with an approach. This should either be a set of filters or a structure resembling an issue tree. Regardless of the shape, it should represent the set of steps that you need in order to reach an answer
3. Communicate this approach to the interview. Once they agree you can move on to…
4. Start to plug in the numbers. If you don't have the number, ask specifically if the interview happens to have it. Offer at the same time to make an assumption. If you have to make an assumption, explain what that assumption is based on. Acknowledge if the assumption is shaky and mention what you would do in real life to improve the level of confidence in it
5. Work along the approach pluggning in numbers and doing computations until you arrive at the final number. Validate it with the interview. Once they confirm it, you can…
6. Reflect on what the number means. In a case, you can usually compare that number with some other data point you were given in the prompt. For market sizing you don't have that luxury. So instead you should comment on what are some of the assumptions that you've taken that your approach is most sensitive to (basically, numbers that you've plugged in and which if proved false will change the final number dramatically) and explain what are the next steps that you would take to increase your level of confidence in that number. 

That's it. 

Best of luck!
Cristian

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Hi there,

Never ask for data.

The whole point of market sizing is that you are supposed to ESTIMATE the market size.

If you don't have an idea of a number (e.g. you're guessing) then, well, you've done your market sizing wrong!

Break down the problem into digestible chunks that move you FROM GUESSING and towards ESTIMATING. 

That's the magic/trick with market sizing :)

Happy to help you learn this via coaching.

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

Hi there,

Q: Do you structure your own structure first and show it for review or do you ask for data points first and structure the case accordingly?

In theory, your structure should allow you to complete the estimation regardless of whether they provide data points or not. As a consequence, structuring first works best.

The process I would recommend is the following:

1. Ask for time
2. Present your structure
3. Add the numbers, using a rationale for them
4. If there are metrics you believe you are not supposed to know, you can ask the interviewer if they have information on that. Most of the time this won’t be needed / the interviewer will ask you to make your own assumptions
5. If they don’t have data, use a justifiable assumption for that metric
6. Complete the math
7. Perform a double-check

Best,

Francesco

Hello,

Market sizing is usually an estimation question, so you don't need to ask the interviewer for data. So I would go with your first option (come up with a structure, present it to the interviewer, proceed with the estimation).

In a market sizing question, it is generally recommended to structure your own approach first and present it to the interviewer for review. This demonstrates your ability to think critically and develop a logical framework. However, it is important to adapt your approach based on the available data points. Here's a suggested approach:

Begin by presenting your initial structure: Lay out your framework for estimating the number of laundrettes in France, including relevant factors such as population, washing machines per laundrette, and any other key variables.

Ask for available data points: After presenting your structure, politely ask the interviewer if they have any specific data points available that could help refine your analysis. This shows your willingness to incorporate relevant information into your analysis.

Fill in the relevant buckets: Based on the data points provided, incorporate them into your framework and adjust your estimates accordingly. This demonstrates your ability to adapt and make informed decisions based on available information.

Remember, the goal is to showcase your problem-solving skills and ability to think on your feet. While it's important to have a structured approach, being flexible and adaptable is equally important in real-life consulting scenarios