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10

Market sizing procedure

Hi all, I have finished an interview but find the market sizing part quite challenging.

Would appreciate hearing some advice on these questions:

1. What to clarify after an interviewer ask you to do market sizing?

For instance, should I ask whether market sizing is a full case or just a quick market sizing quiz? Is it okay to ask for segmentations first?

2. What is the procedure of a market sizing question?

Is it always stating my structure (or function first), then ask whether interviewer has

related data? Or should I do the calculation based on my assumptions?

3. How detailed should the market sizing be? For instance, the market sizing could be

very detailed (ex: different segment according to age). On the other hand, I can just

list down a math function and allocate my assumption of numbers in it. Does it

depend on how much time the interviewer expects you to complete the market

sizing?

Thanks in advance!

Hi all, I have finished an interview but find the market sizing part quite challenging.

Would appreciate hearing some advice on these questions:

1. What to clarify after an interviewer ask you to do market sizing?

For instance, should I ask whether market sizing is a full case or just a quick market sizing quiz? Is it okay to ask for segmentations first?

2. What is the procedure of a market sizing question?

Is it always stating my structure (or function first), then ask whether interviewer has

related data? Or should I do the calculation based on my assumptions?

3. How detailed should the market sizing be? For instance, the market sizing could be

very detailed (ex: different segment according to age). On the other hand, I can just

list down a math function and allocate my assumption of numbers in it. Does it

depend on how much time the interviewer expects you to complete the market

sizing?

Thanks in advance!

10 answers

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Best Answer

I approach market sizing questions with the frameworks discussed in Case in Point by Marc Cosentino. For market sizing questions your answer should be based on logic and assumptions. Analyze the question and throw it into 3 categories: population based, household, or proposterous.

I have seen a lot of population and household cases so far and this is how I approach them:

You need to memorize SOME things about your country: population, life expectancy, how many people in a household (change number slightly so it devides out nicely into population).

Remember this golden rule - it is better to be good enough than to be precise. In market sizing questions you need to make A LOT of assumptions and you need to round numbers and percentages. You need to think about presenting this information to a client - how would I be able to present this information to someone in a very simple way.

EXAMPLE CASE: How many dining room chairs where bought in the United States (where I am from) this year?

  1. identify what kind of question it is: population based
  2. think about the information you will need to solve this problem: Population of the US: 320million, Average HH size: 3.2 (nice number to devide into 320million), 320/3.2 = 100million HHs
  3. Assumptions - this is where a lot of people get uncomfortable with market sizing questions because you need to make educated guesses. Educated guesses for market sizing questions need to be justifiable to some extent, but it can be more losely coorelated than one of a different type of case (THE INTERVIEWER DOESN'T CARE ABOUT THE ANSWER AS LONG AS THERE IS A GOOD PROCESS THAT CAN BE DUPLICATED): the assumptions that I am going to make in this case are as follows
    1. I will assume that the average household has 4 chairs based off the 3.2 people per HH.. = 400million chairs
    2. I will assume that the average life of a dining room chair is 10 years - based on the fact that none of my dining room chairs have needed to be replaced in 15 years, but I assume that is on the higher end of the spectrum - 400million/10years = 40million chairs
    3. Since it is August I will take 40million*(8/12 or 3/4) = 30million
  4. Answer - I estimate that 30million chairs have been purchased in the US this year.

Hope this helps! Feel free to schedule a practice case with me - I am a beginner at cases but I am putting a ton of time into them.

Best,

Jacob DeCoste

I approach market sizing questions with the frameworks discussed in Case in Point by Marc Cosentino. For market sizing questions your answer should be based on logic and assumptions. Analyze the question and throw it into 3 categories: population based, household, or proposterous.

I have seen a lot of population and household cases so far and this is how I approach them:

You need to memorize SOME things about your country: population, life expectancy, how many people in a household (change number slightly so it devides out nicely into population).

Remember this golden rule - it is better to be good enough than to be precise. In market sizing questions you need to make A LOT of assumptions and you need to round numbers and percentages. You need to think about presenting this information to a client - how would I be able to present this information to someone in a very simple way.

EXAMPLE CASE: How many dining room chairs where bought in the United States (where I am from) this year?

  1. identify what kind of question it is: population based
  2. think about the information you will need to solve this problem: Population of the US: 320million, Average HH size: 3.2 (nice number to devide into 320million), 320/3.2 = 100million HHs
  3. Assumptions - this is where a lot of people get uncomfortable with market sizing questions because you need to make educated guesses. Educated guesses for market sizing questions need to be justifiable to some extent, but it can be more losely coorelated than one of a different type of case (THE INTERVIEWER DOESN'T CARE ABOUT THE ANSWER AS LONG AS THERE IS A GOOD PROCESS THAT CAN BE DUPLICATED): the assumptions that I am going to make in this case are as follows
    1. I will assume that the average household has 4 chairs based off the 3.2 people per HH.. = 400million chairs
    2. I will assume that the average life of a dining room chair is 10 years - based on the fact that none of my dining room chairs have needed to be replaced in 15 years, but I assume that is on the higher end of the spectrum - 400million/10years = 40million chairs
    3. Since it is August I will take 40million*(8/12 or 3/4) = 30million
  4. Answer - I estimate that 30million chairs have been purchased in the US this year.

Hope this helps! Feel free to schedule a practice case with me - I am a beginner at cases but I am putting a ton of time into them.

Best,

Jacob DeCoste

.Hey Jacob, good structure! I would like to point out two things though: 1. the demand of newly furbished households were not considered. 2. the commercial sector has not been included. It is more complicated but I think it might be able to be estimated based on typical restaurants sizes and number of chairs, — Chun on Jul 28, 2019

Originally answered:

Market Sizing

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Hi,

1) First of all, there are 2 ways to structure market sizing:

  • Formula - basically a math formula to come up with a solution. The problem with the formula is that it is easy to forget something or get lost.
  • Tree - same as with regular cases you build a tree. A very simple example: you need to calculate the number of dogs on manhattan. A number of dogs = share of households having a dog * # of households. # of households = population / average household size. In the end, you'll have a pyramid where you have to fill the numbers on the base of the pyramid. This approach is much easier and help you track all the numbers

2) You should learn the key market sizing techniques:

  • Making assumptions based on personal experiences (Use the example of your house where out of 100 apt-s 10 have dogs)
  • Adjusting numbers (NY is a busy city thus fewer people have dogs)
  • Sanity check - try to apply your calculations to the real environment
  • etc.

3) You should learn the key tools:

  • Using age even age split (suppose life expectancy is 80 years. Assuming even age split we have 4 mln people in US of each age)
  • Using 80/20 split (suppose 20% people earn 80% wealth and the average salary is xx...)
  • Using approximations (Length of NY-SF flight and plane speed to calculate US length)
  • etc.

4) Learn key numbers: populations, gas price, gas consumption, Boeing speed and nmber of seats, average salary, # of gates in the airport, GDP growth rate, inflation, etc.

5) Practice 10-15 cases and you'll be fine. Almost all casebooks have good market sizing examples and the solutions

Feel free to PM for clarifications

Good Luck!

Hi,

1) First of all, there are 2 ways to structure market sizing:

  • Formula - basically a math formula to come up with a solution. The problem with the formula is that it is easy to forget something or get lost.
  • Tree - same as with regular cases you build a tree. A very simple example: you need to calculate the number of dogs on manhattan. A number of dogs = share of households having a dog * # of households. # of households = population / average household size. In the end, you'll have a pyramid where you have to fill the numbers on the base of the pyramid. This approach is much easier and help you track all the numbers

2) You should learn the key market sizing techniques:

  • Making assumptions based on personal experiences (Use the example of your house where out of 100 apt-s 10 have dogs)
  • Adjusting numbers (NY is a busy city thus fewer people have dogs)
  • Sanity check - try to apply your calculations to the real environment
  • etc.

3) You should learn the key tools:

  • Using age even age split (suppose life expectancy is 80 years. Assuming even age split we have 4 mln people in US of each age)
  • Using 80/20 split (suppose 20% people earn 80% wealth and the average salary is xx...)
  • Using approximations (Length of NY-SF flight and plane speed to calculate US length)
  • etc.

4) Learn key numbers: populations, gas price, gas consumption, Boeing speed and nmber of seats, average salary, # of gates in the airport, GDP growth rate, inflation, etc.

5) Practice 10-15 cases and you'll be fine. Almost all casebooks have good market sizing examples and the solutions

Feel free to PM for clarifications

Good Luck!

Originally answered:

Market Sizing

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Hi,
there is no a gold rule to structure every market sizing. For sure you are going to solve it with a formula, sometimes a logic tree will help to better estimate and explain it.
Here some helpful examples of good market sizing:

I have specific sessions to crack it, feel free to text me for more details.

Best,
Antonello

Hi,
there is no a gold rule to structure every market sizing. For sure you are going to solve it with a formula, sometimes a logic tree will help to better estimate and explain it.
Here some helpful examples of good market sizing:

I have specific sessions to crack it, feel free to text me for more details.

Best,
Antonello

Originally answered:

Market Sizing

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Hi Anonymous,

both could be fine, however I usually recommend to use a tree or a table for market sizing questions, simply because they make easier to add numbers and calculate the final result. If you struggle with market sizing please feel free to give an example of what you find challenging.

Best,

Francesco

Hi Anonymous,

both could be fine, however I usually recommend to use a tree or a table for market sizing questions, simply because they make easier to add numbers and calculate the final result. If you struggle with market sizing please feel free to give an example of what you find challenging.

Best,

Francesco

Originally answered:

Market Sizing

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Hello!

I agree with the approaches posted below.

Only would add that this is like every other case, only comes better with lots of practicing -not so much with a recipy-.

Good luck!

Clara

Hello!

I agree with the approaches posted below.

Only would add that this is like every other case, only comes better with lots of practicing -not so much with a recipy-.

Good luck!

Clara

Book a coaching with Luca

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Hello,
Market sizing is the most common typology of cases, so it's important to have the process clear in your mind. Answering your points:

  1. No, you shouldn't ask. 90% of the times the market sizing will be your case. Even if you are in the other 10% you have to take time, write down a structure for the solution process, and then the interviewer will stop you if he wants to do another case.
  2. The first thing to do is to write down your solution process so that you know the data that you need and how to handle them. Then, for each data, you can either know it (g.e. US population) or asking the interviewer if we have that data. If not, the interviewer will ask you to estimate the number doing some assuptions. In this phase remember to think out loud and involve the interviewer
  3. You have always to be as much detailed as you can writing down the structure. Then, for each step, the interviewer will tell you if you can do some assumptions to simplify the process.

Feel free to write me if you want to discuss it further,
Luca

Hello,
Market sizing is the most common typology of cases, so it's important to have the process clear in your mind. Answering your points:

  1. No, you shouldn't ask. 90% of the times the market sizing will be your case. Even if you are in the other 10% you have to take time, write down a structure for the solution process, and then the interviewer will stop you if he wants to do another case.
  2. The first thing to do is to write down your solution process so that you know the data that you need and how to handle them. Then, for each data, you can either know it (g.e. US population) or asking the interviewer if we have that data. If not, the interviewer will ask you to estimate the number doing some assuptions. In this phase remember to think out loud and involve the interviewer
  3. You have always to be as much detailed as you can writing down the structure. Then, for each step, the interviewer will tell you if you can do some assumptions to simplify the process.

Feel free to write me if you want to discuss it further,
Luca

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