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Market Sizing Beginner Level

Cédric asked on Aug 08, 2018 - 1 answer
Looking for solid partners to practice primarily real cases. Preparing for OW, ATK and Bain interviews

Hey there, I struggle with this basic market sizing reasoning:

Assume that, on average, a Chinese woman has 2 babies in her lifetime (pregnancy: 18 months = 1½ years). If we assume a life expectancy of 75 years, then we have on average 2% of all female population pregnant at a given time (1.5 years/75years).

What I get: 2 percent of her lifeTIME spends a Chinese women being pregnant on avg.
What I don't get: why can we equal this 2% of an average lifetime with 2 percent of the female population pregnant at a given time.

I really don't get the reasoning behind it. Are there implicit assumptions not stated here? I would be very happy for some easy, clear (and alternative) examples to get the reasoning.

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Sidi
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replied on Aug 08, 2018
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 100+ candidates secure MBB offers
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The implicit assumption that is missing from your outline is that the female population is evenly distributed over the the life expectancy. From that assumption you can conclude that the probability of any random woman in the sample being pregnant is 2% (hint: this is true independent of whether we assume a constraint in the possible age of pregnancy or not - the statement will be true in either case if we base it on the entire female population).

Cheers, Sidi

Dear Sidi, first of all: thank you for your fast and great response. To make sure I understood it correctly: given the even distribution, the probability of a 75 year old woman being pregnant (randomly picked) is the same as the probability of a 25 year old woman being pregnant - ofc this is not the case, but it follows this reasoning? — Cédric on Aug 08, 2018 (edited)

No! The probability of a randomly picked woman to be pregnant is 2%! The probability of her having a certain age is factored into these 2% already! So if for example you assume that only women between 15 and 50 can get pregnant, then of course the probability WITHIN this age bracket is higher. But based on the ENTIRE female population it is still 2%. — Sidi on Aug 09, 2018

Okey..still struggle with it... I only get that for every age we have the same amount of people (i.e. the probability is 1/75 to pick someone who for example is 25 years old). Also I get that on average a Chinese woman spends 2% of her lifetime pregnant on average. But I don't get have we can link this together to come up with the conclusion that 2 % of chinese women are pregnant right now. Do you have any tipps how to get this reasonsing? Maybe other examples? Highly appreciated... Best, Cédric — Cédric on Aug 10, 2018

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