How would you approach this case?

# Market sizing case: how many petrol stations are there in the US?

Hi Anonymous,

As mentioned earlier, there are many different ways one can approach this problem. I typically approach this following way:

1. What is the total demand for gas stations?

2. What is the demand for one gas station?

3. -> Find the total number of gas stations

To start with number 1, while I have no idea about the real numbers, let's assume that population is 400M, and there is 1 car per 4 people. Thus we would have 100M cars.

Now we need to estimate the total demand for a day/week/year, let's go ahead with day. From my personal experience, I visit gas stations once every two weeks. Assuming this is the case for the entire population, 100M cars would visit gas stations every two weeks. This means that about 7M cars visit gas stations every day. -> This is the total demand.

Now we are at number 2, we need to understand the number of cars visit a gas station during one day. To keep it simple, we can assume (again, based on personal experience) that there are always 3 cars occupying the gas station for 5 minutes throughout 18 hours (and the remaining of the time, the gas station is empty). This would give us ~600 cars every day. -> This is the demand for one gas station.

We can find the number of gas stations by diving total demand (7M) by local demand (600), and reach ~12000 as our final answer.

I have quickly checked on google, and the real answer is about x10 higher than my answer. HOWEVER, it really is not important to get a precise answer to impress the interviewer. It is all about sharing your train of thought and laying out your assumptions very explicitly.

I hope this was helpful.

Have a good day,

Deniz Ahmet

There are infinite ways to size it so the following is by no means an exact answer. My preferred method would be to initially segment by locality, given that the drivers of demand for a petrol station are significantly different between rural areas and population centers.

Stations in rural areas are driven by the average range of a car when they need to refuel, so you could derive a number through the station density and area of America.

Stations in population centers are driven by the demand (i.e. the number of cars) in each city. I would actually segment this down further into Metropolises/Cities/Towns given the large difference in population size between them. Also, you would need to factor in that these stations are nowhere near running at full capacity.

I appreciate any feedback on this approach.

I would think how many petrol stations are in a specific region. For example, you know that in the city you live in there are 6 petrol stations. Let's say the city has 30 000 people, so that results to about 5000 people per petrol station. US has about 300million people, so divide 300m/5000 and you get 60 000 petrol stations.

## Related BootCamp article(s)

## Case Studies

The case study is the most important element of the case interview, which you'll have to nail in order to get into strategic consulting. Here you can learn the specific skills and concepts necessary to solve them.

4 Comment(s)## Market Sizing

Market Sizing Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.

15 Comment(s)## Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

9 Comment(s)## Related case(s)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e ... Open whole case

Nutripremium is a very well-known premium nutrition food company in Europe (€1 billion revenue last year). It is based in Spain and has an excellent market share not only in its home country but also in Portugal, France, Italy and Germany. Nutripremium has two main lines of products: Vitam ... Open whole case

Beyer, one of the biggest pharmaceutical companies in the world, just invented a very reliable vaccine against Chickenpox, a disease that affects children in the age from 2 to 16 years. Beyer came to you wondering what their potential sales in Europe in the first year would be if they launched th ... Open whole case

How many gas stations are there in Paris? Suppose a friend of yours wants to open a gas station in Paris. What aspects should he consider? Open whole case