Hello,
I got an interesting case wherein I was asked to calculate the market size for the Instagram stories ad?
I am a bit confused - should I build a top-down or a bottom-up approach for this?
Any answers are appreciated!
Thanks!
Market Sizing: How would you set a product revenue goal for Instagrams stories ad?
Overview of answers
Upvotes
Best answer
Hi there,
You'll learn a lot more from this by trying it out yourself first! Why don't you post your approach here and we can provide commentary?
Hint: Do you think it's easier to think about your/your peers' usage of IG and extrapolate that out to the wider population, or think of US/FAANG marketing revenues/spend/budget?
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:
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
Was this answer helpful?
Hi there,
First, you should be clear on the scope of what you actually need to calculate. Only then you can set yourself on the approach. In general, I'd suggest you a bottom up approach however:
As I don't know the exact assignment you get: I imagine you get to calculate (1) the number of individuals who buy giving that they see the and (2) the ad is for a specific type of products (e.g. pet food) (3) in a certain area (e.g. the USA).
Now, I would define who will actually see the ad. In my example, consumers using Instagram living in the USA who are looking at dog related content. We could say all people who have dogs, and some who want to get one, or are heavily interested.
So we need to find: No. of Instagram Users in the USA x % of people looking at dog content
Now we need to deep dive on both factors with assumptions
No. of Instagram users: e.g. 80% of Americans between ages 16-40 (you can differentiate this further by age brackets if you want to)
Share of US Population between 16-40 with a dog: Let's assume 20% of people have a dog (or have one in the family they are in, they don't need to be the actual owners), and another 5% are interested or want one (you can verify this by guessing the number of dogs per person e.g. in your extended family, if you are not an outlier with many or no dogs)
Now you have the number of people seeing the ad. If you want a market size in value (i.e. $), further assume the share of people who buy given that they see the ad and their average shopping basket.
Now plug in the numbers and you are good to go :)
Was this answer helpful?
Hello!
I would always recommend you to give it a shot and then post it here, this would help you the most.
Given that market sizing cases were the topic of many questions in this Forum, I developped a market sizing case, that you can find for free in PrepL´s library
Furthermore, you can find a detailed market sizing (a complex one integrated into a case) in my latest case:
Swiss manufacturer market assessment, profitability and scenarios: https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/advanced/swiss-coffins-the-death-business-245
Let me know if you have any doubts with it, it contains a detailed explanation and methodology about how to solve this specific example, but you can extrapolate to many other market sizings!
Was this answer helpful?
Related Cases
Company case by Bain & Company
Style:
Topics:
LubricantsCo, a very successful Asian premium producer of lubricants in their native region, would like to further increase their revenue and profit. The product range ranges from lubricants in the automotive sector (e.g. motor and gear oil) to industrial applications (e.g. fats, heavy-duty oils).Ac
... (Open whole case)
197.1k
Times solved
Beginner
Difficulty
Company case by Oliver Wyman
Style:
Topics:
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)
111.3k
Times solved
Intermediate
Difficulty
Company case by Bain & Company
Style:
Topics:
You have inherited the “Old Winery” from your grandfather, a winery that 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 a conventional way, i.e. they
... (Open whole case)
101.4k
Times solved
Intermediate
Difficulty
Company case by Roland Berger
Style:
Topics:
LumCO, a company producing injection-molded components for lighting applications, has operated successfully in its native European market. The company wants to open up one production facility each in China and the United States and establish their own distribution network in both countries to serve
... (Open whole case)
85.1k
Times solved
Advanced
Difficulty
Company case by Consulting@Deloitte
Style:
Topics:
Duraflex is a German footwear company with annual men’s footwear sales of approximately €1 b.They have always relied on the boot market for the majority of their volume. In this market they compete with three other major competitors.In the fall of 2019, Badger – one of Duraflex’s competitiors – laun
... (Open whole case)
81.2k
Times solved
Intermediate
Difficulty
Content Creator
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep
849
Meetings
56,932
Q&A Upvotes
168
Awards
104 Reviews
