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Market sizing case questions

Market sizing
New answer on Oct 19, 2022
4 Answers
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Anonymous asked on Oct 11, 2022

Hi,

I keep encountering a similar problem in my market sizing cases. I will explain this using the case I just did.

When asked “how many TVs are sold a day in the UK” I asked is this just consumer (household) TVs or would you like me to consider commercial TVs (hospitals, pubs etc) as well, to which the interviewer replied both would be great.

Now I am happy to work out the consumer use section using (population, household, tv per household) * replacement rate. However I find commercial use much harder as a)there are so many places where commercial TVs are bought and b) this leads me into a structure of having to estimate how many hospitals, pubs etc there are and then TVs per hospital/pub which is another market sizing question in itself. To do this I went quick form and did theres 3 hospitals in my area of 100,000 people then scaled this up to the hospitals for the population. This situation happens regularly such as for radios, cars, lamps, taps etc. 

Therefore my question is firstly, how can I stop my market sizing cases leading into me having to market size stuff like number of hospitals or pubs which are very hard to work out without going into a much deeper structure and secondly how should I structure the commercial part of this exercise.  

 

Many thanks for your help

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Florian
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replied on Oct 11, 2022
1300 5-star reviews across platforms | 500+ offers | Highest-rated case book on Amazon | Uni lecturer in US, Asia, EU

Hi there,

The answer depends a bit on the type of market sizing case.

1. Short market sizing within the context of another case

  • You can do this quick and dirty by just adding a % on top of your estimation
  • “I would say for every private TV, there is at least one public TV, for instance in pubs, hospitals, etc. Hence, I would like to double my initial estimate.”
  • Be prepared to defend your choice and increase or decrease the % if pressed

2. Long market sizing standalone case

  • You need to identify one area, then extrapolate for the country as a whole
  • In that area think of segments that have TVs, list every area you can think of, and then make assumptions, essentially exactly as you mentioned in your answer
  • The focus should be on the way you think and defend your assumptions, not on being 100% accurate
  • Interviewers want to see a directionally correct answer that is well-defended and interpreted

The funny thing is that short and efficient market sizing usually yields the same “accurate” results as longer and more complex approaches. Try it for yourself and see where you end up. :-)

Cheers,

Florian

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Pedro
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updated an answer on Oct 11, 2022
Bain | Roland Berger | EY-Parthenon | Mentoring Approach | 30% off first 10 sessions in May| Market Sizing | DARDEN MBA

You have to be 80-20 there. Other answers are suggesting using a % on top of domestic/consumer, but what you should actually do is to find the industry that uses most TV screens (e.g. Food Service) and then using a % on top of that to estimate for the other industries. 

This will lead to a more accurate estimation, because you would be using a segment within commercial to extrapolate to another commercial segment. Makes sense? 

So you have 3 parts:

(1) Estimate market size for domestic

(2) Estimate market size for food service (restaurants, coffee shops, pubs, and the like)

(3) Add a % on top of (2) based on your perception of how many TVs you see in other places vs. food service*

*Of course, you can offer an option to the interviewer: say you could approach each industry one-by-one, but that you believe that the bulk of the market will be already sized with (1) + (2) and therefore a high level assumption for the remained - i.e., option (3)  - will still leave you in the righ ball park number.

(edited)

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Cristian
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replied on Oct 19, 2022
#1 rated MBB & McKinsey Coach

Hi there, 

If this is still relevant, happy to share a case book with market sizing questions that could provide some extra practice and guidance. 

Best,

Cristian

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Anonymous A on Oct 25, 2022

Hi Cristian, I’m still unsure on how much to multiply the domestic estimate by to get a commercial estimate — do you have any advice? Many thanks

Udayan
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Content Creator
replied on Oct 11, 2022
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /12 years recruiting experience

The simple answer is - for commercial use a multiple of consumer. So if consumer is 100 TVs then commercial should be a multiple (either less than 1 or greater than 1) of 100 depending on your rationale - for example if there are more use cases for TVs, if you need more than one TV per person etc. Usually its a percentage of consumer but it really depends on what you are looking at.

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Florian gave the best answer

Florian

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