expert
Expert with best answer

Anton

100% Recommendation Rate

4 Meetings

756 Q&A Upvotes

USD 179 / Coaching

5

Market Sizing Q

Hi!
How to calculate number of users of internet at this moment?

Thank you

Hi!
How to calculate number of users of internet at this moment?

Thank you

Maybe do it per hour than divide by 3600 (Secs per hour) to get at this second. — Carl on Jun 29, 2020

To get the amount per hour I would at a high-level divide it at: Number of internet users * Avg time used per use (in seconds) * number of uses per hour, which you then can divide into something like: Average users, less users and people who use it a lot — Carl on Jun 29, 2020 (edited)

5 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Anton

100% Recommendation Rate

4 Meetings

756 Q&A Upvotes

USD 179 / Coaching

Hi,

I would suggest that you should present your own approach and I would be happy to review.

Meanwhile please see below my approach to segmentation in market sizing as well as examples of solved cases:

B2C:
- Demographics (Age, education, income, family size, race, gender, occupation, nationality)
- Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status)
- Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers)
- Geographic (Geographical boundaries)

B2B:
- Company characteristics (Industry, company size, number of employees)
- Geography (Geographical boundaries)
- Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship)
- Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
- Demographics (Type of agency, size of budget, the amount of autonomy)
- Geographic (Geographical boundaries)
- Government Tier (Federal , State, Local, Quasi-governmental, International)
- Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:

In this case you should follow demand-driven approach to market sizing. By market size I would assume value of credit card debt in the U.S. (not the number of Credit Cards issued).

First of all you can start by outlying an algorithm which would consist of 3 big steps:

1. Total addressable market

X

2. Product penetration

X

3. Average ticket size

Now let’s see how to calculate each of these blocks:

1) Total addressable market = US population X % bankable population

2) Product penetration = number of credit cards per capita in US X % of active cards

3) Average ticket size = average credit card limit X %limit usage

  • average credit card limit is usually estimated though debt-to-income ratio. In case of credit cards it is 5 monthly salaries on average
  • limit usage could be derived from your personal experience but on average it is 20%

Let’s plug-in the data:

1. Total addressable market = 330 mln x 80% bankable population = 264 mln

X

2. Product penetration = 2 X 50%

X

3. Average ticket size = 4k USD X 5 X 20% = 4k USD

Thus credit card market size is 264 mln X 1 X 4k USD ~ 1tn USD

Let’s double check with official statistics. STATISTA.COM provides the following data: Value of credit card debt in the U.S is 0,93 tr USD. Thus our answer is super close

You can also make your calculations a bit more sophisticated if you add segments (e.g. by income or credit score). In this case you would have to provide detailed assumptions on product penetration and average ticket size for each segment.

As for the sources for your assumptions you can use:

  • Input from interviewer, well known facts
  • Statistical data
  • Personal experience, e.g. from casual everyday situations
  • Workplace experience, e.g. from working on projects in the industry
  • An educated guess

Best,

Anton

Hi,

I would suggest that you should present your own approach and I would be happy to review.

Meanwhile please see below my approach to segmentation in market sizing as well as examples of solved cases:

B2C:
- Demographics (Age, education, income, family size, race, gender, occupation, nationality)
- Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status)
- Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers)
- Geographic (Geographical boundaries)

B2B:
- Company characteristics (Industry, company size, number of employees)
- Geography (Geographical boundaries)
- Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship)
- Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
- Demographics (Type of agency, size of budget, the amount of autonomy)
- Geographic (Geographical boundaries)
- Government Tier (Federal , State, Local, Quasi-governmental, International)
- Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:

In this case you should follow demand-driven approach to market sizing. By market size I would assume value of credit card debt in the U.S. (not the number of Credit Cards issued).

First of all you can start by outlying an algorithm which would consist of 3 big steps:

1. Total addressable market

X

2. Product penetration

X

3. Average ticket size

Now let’s see how to calculate each of these blocks:

1) Total addressable market = US population X % bankable population

2) Product penetration = number of credit cards per capita in US X % of active cards

3) Average ticket size = average credit card limit X %limit usage

  • average credit card limit is usually estimated though debt-to-income ratio. In case of credit cards it is 5 monthly salaries on average
  • limit usage could be derived from your personal experience but on average it is 20%

Let’s plug-in the data:

1. Total addressable market = 330 mln x 80% bankable population = 264 mln

X

2. Product penetration = 2 X 50%

X

3. Average ticket size = 4k USD X 5 X 20% = 4k USD

Thus credit card market size is 264 mln X 1 X 4k USD ~ 1tn USD

Let’s double check with official statistics. STATISTA.COM provides the following data: Value of credit card debt in the U.S is 0,93 tr USD. Thus our answer is super close

You can also make your calculations a bit more sophisticated if you add segments (e.g. by income or credit score). In this case you would have to provide detailed assumptions on product penetration and average ticket size for each segment.

As for the sources for your assumptions you can use:

  • Input from interviewer, well known facts
  • Statistical data
  • Personal experience, e.g. from casual everyday situations
  • Workplace experience, e.g. from working on projects in the industry
  • An educated guess

Best,

Anton

(edited)

Book a coaching with Clara

100% Recommendation Rate

39 Meetings

4,341 Q&A Upvotes

USD 209 / Coaching

Hello!

As a general rule, is best for you to give it a try and ask for the communities feedback later, is much more insightful!

In any case, I would calculate:

  • Total internet users arround the globe
    • Ditinguishing between developped and developping countries
  • Total number of hours a person uses it
  • THen we adjust it for the time frame, since "at this moment" can mean second, minute, hour... and this is something that we should clarify.

Hope it helps!

Cheers,

Clara

Hello!

As a general rule, is best for you to give it a try and ask for the communities feedback later, is much more insightful!

In any case, I would calculate:

  • Total internet users arround the globe
    • Ditinguishing between developped and developping countries
  • Total number of hours a person uses it
  • THen we adjust it for the time frame, since "at this moment" can mean second, minute, hour... and this is something that we should clarify.

Hope it helps!

Cheers,

Clara

Book a coaching with David

100% Recommendation Rate

22 Meetings

780 Q&A Upvotes

USD 149 / Coaching

I would assume

  • Total number of internet users
  • Average usage frequency (daily, weekly, monthly)
  • Average connection time (in minutes)
  • You will have average number of users / minute

Best

I would assume

  • Total number of internet users
  • Average usage frequency (daily, weekly, monthly)
  • Average connection time (in minutes)
  • You will have average number of users / minute

Best

Book a coaching with Udayan

100% Recommendation Rate

46 Meetings

732 Q&A Upvotes

USD 179 / Coaching

Hi,

A slightly alternate approach below :

- Number of people with access to internet (% of global population)

- Places where most people are currently awake, and their population

- Assumption on their internet use (e.g, 80% probability of people using the internet in some form (mobile, netflix, work, shopping etc. from 9-7)

- You could vary that number by region if you want to be more detailed - e.g., Korea will have a higher internet use than Indonesia etc.

Now its just a matter of multiplying it all out

Best,

Udayan

Hi,

A slightly alternate approach below :

- Number of people with access to internet (% of global population)

- Places where most people are currently awake, and their population

- Assumption on their internet use (e.g, 80% probability of people using the internet in some form (mobile, netflix, work, shopping etc. from 9-7)

- You could vary that number by region if you want to be more detailed - e.g., Korea will have a higher internet use than Indonesia etc.

Now its just a matter of multiplying it all out

Best,

Udayan

Book a coaching with Ian

100% Recommendation Rate

53 Meetings

2,763 Q&A Upvotes

USD 239 / Coaching

Hi there,

Very clear top-down sizing :)

1) World population

2) Population across continents

3) % of population in each continent with internet access (of course, remove those <10 years old etc)

4) Avg hours of usage across each continent (perhaps split by young, middle-aged, and old)

5) Divide by hours in the day

6) Do a weighted average to see how many active at any given time

Hi there,

Very clear top-down sizing :)

1) World population

2) Population across continents

3) % of population in each continent with internet access (of course, remove those <10 years old etc)

4) Avg hours of usage across each continent (perhaps split by young, middle-aged, and old)

5) Divide by hours in the day

6) Do a weighted average to see how many active at any given time

Related BootCamp article(s)

Market Sizing

Market Sizing Questions are used to test your quantitative & reasoning skills. Learn more on how interviewers evaluate your given answer!

2 Q&As

Important Facts

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

1 Q&A

Related case(s)

Oliver Wyman case: Full Electrons Ahead

Solved 79.4k times
Oliver Wyman case: Full Electrons Ahead 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 them on how to adjust the product offering.
4.6 5 5646
| Rating: (4.6 / 5.0)

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

Bain Case: Old Winery

Solved 52.6k times
Bain Case: Old Winery 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. they are not organically farmed and certified. The vine stocks are in a good condition regarding age and care. Overall, only ¼ of the harvest is made into wine by the winery itself; the rest is sold. Your grandfather never wanted to change the image of the winery and left the managerial and administrative task to a young and energetic wine-maker. Due to the not so well-known brand , the demand for the “Old Winery” wine is currently rather low. You do not intent to run the winery operatively, given your limited knowledge of wine making, but find the idea of owning a winery exciting. Your plan is to give the winery some fresh impetus.
4.4 5 1367
| Rating: (4.4 / 5.0)

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

Roland Berger Case: Onlinestar

Solved 35.1k times
Roland Berger Case: Onlinestar Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special business) in Eastern Europe. The company sells its goods via Amazon and ebay, and recently via an online shop on its website. Despite this development, the financial ratios have deteriorated in recent years. In particular, gross profit margin decreased significantly. Combined with a significant increase in shipping costs, this led to a negative result for the first time in the recently ended fiscal year and a resulting strained financial situation. Against the background of expected stagnating sales for the current financial year, short-term action is required. The board of Onlinestar asks you for an analysis of the reasons for the negative result as well as a derived recommendation for action. As a consultant, you should bring in your knowledge in online trading and develop solutions. In addition, the management board would like to receive a sales and gross profit plan from you for the current financial year.
4.3 5 741
| Rating: (4.3 / 5.0)

Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case

TKMC Case: Elevators

Solved 16.9k times
TKMC Case: Elevators Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in bigger city centers. His next target is Manhattan and he wonders how big the potential is.
4.2 5 1258
| Rating: (4.2 / 5.0)

Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in ... Open whole case

DB MC Case: Einstieg in das internationale Fernbusgeschäft

Solved 5.1k times
DB MC Case: Einstieg in das internationale Fernbusgeschäft Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Erst vor wenigen Jahren ist ein Start-up mit Know-how im Online-Vertrieb nach der Änderung des Personenbeförderungsgesetzes in den deutschen Fernbusmarkt eingetreten, welches schnell ein großes Netzwerk an Subunternehmen aufgebaut und damit große Marktanteile gewonnen hat. Dies hatte erheblichen Einfluss auf das Kerngeschäft der Deutschen Bahn. Mit dem Ziel Synergien zu nutzen und die Bedürfnisse des Kunden ganzheitlich zu erfüllen, konzentriert sich die Deutsche Bahn nicht allein auf ihre bisherigen Geschäftsmodelle, sondern kooperiert mit anderen „Mobility-Unternehmen“. Von Ihrem Kunden aus dem Topmanagement wurden Sie als Consultant von DB Management Consulting beauftragt, einen Business Case zu bewerten und zu prüfen, ob die Deutsche Bahn ihr bisheriges Geschäftsmodell öffnen sollte, um durch die Kooperation mit einem etablierten mittelständischen Busunternehmen in das internationale Fernbusgeschäft einzusteigen. Die Deutsche Bahn bietet bereits wenige internationale Verbindungen der Marke „IC Bus“ an, jedoch hat die DB-Tochter in der Vergangenheit große Marktanteile verloren. Im Rahmen der Einführung soll dem Kunden zunächst die Verbindung Hamburg – Lund (Schweden) ohne Zwischenstopp in 7 Stunden angeboten werden. Die Distanz zwischen Lund und Hamburg liegt bei 385 km. Bei erfolgreichem Start ist ein schnelles Roll-out auf andere internationale sowie deutschlandweite Strecken geplant. Im Fokus stehen die Erhöhung des Marktanteils, die Bewertung der Nachfrage des Kunden, der Kosten und Erlöse sowie das prognostizierbare Wachstum im Fernbusmarkt.
4.3 5 113
| Rating: (4.3 / 5.0)

Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Er ... Open whole case