At the end of market sizing when you give the interviewer you estimate of (say) the UK buscuit market (for argument's sake let's say you said £6bn), and he/she says do you think that is high/low etc. What are the best ways to sense check your final answer?
I was thinking about comparing the number to the UK population - it doesn't seem unreasonable that 60 million people could spend £100 on biscuits in a year.
Thanks!
Hello,
Great question. So, I think it's important to mention that you should make it a habit to sense-check your numbers as you solve the case. This not only helps you make sense of what you're doing and ideally helps you drive towards the correct answer, but it also shows the interviewer that you're on top of your work/estimates. So whenever you estimate a number, ask yourself if it makes sense by putting it in context. and test the interviewer's reaction for whether it makes sense.
Now in terms of the final answer, here's what I would recommend sense-checking:
There might be other ways to sense-check depending on context, but I would say the above are safe approaches.
Hope this helps and best of luck with your prep.
Best,
Ibrahim
Hi,
This type of comment is exaclty what we are looking for during case interview. It's good to have the calculation right, but what matters in the end is how you interpretate your results.
Regarding the question asked two dimensions should be discussed :
- How accurate is likely to be the number you provided ? Basically you should point what are the weak / strong hypothesis you took givent the info available you had that could impact the calculation.
- How do you qualify the current number you have in terms of market attractivness ? You need to trust your gut feeling here and consider the context. But to be concrete let's take two example. 1. If you're looking for a mass market with most likely intensen competition and low margins anything below 500 M€ could be considered as unsifficient. 2. If you're looking at a niche market with limited competition and most likely high margin, the same 500 M€ number could be consider as attractive. In the end we need to consider the market size in regard of the opportunity to capture revenue it creates.
Best
Benjamin
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:
