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Market sizing question : subway passengers

guess-estimates Market sizing
New answer on Dec 31, 2021
3 Answers
4.2 k Views
Anonymous A asked on Oct 17, 2019

Hello,
How would you estimate the number of passengers who take the subway in one day in Paris ?

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Best answer
Matthieu
Expert
replied on Oct 17, 2019
Ex-BCG (+ 6months recruiting specialist @BCG) => more than 350 intw + >100 coachees

Hello,

I would propose several ways:

1) You start from the population of the city (12M) and make assumption on a theoritical structure of the demographics : XX% are workers, YY% are students , ZZ% are retired ... Then you take hypothesis on the % share of each part of the population using the subway everyday

2) it is also interesting to think about the capacity of the subway: you can assume that the subway is operated at almost full capacity all day long (which is kind of true) and then you count # of lines (14 subway lines) + number of train operated per line + hypothesis on the capacity for each train + frequencies of the trains

For market sizing, the idea is not to find the right answer but to show how you can break down and structure a problem. You need to find a way to break it down into smaller problems and take hypothesis with your interviewer on each parameter.

Hope this helps

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Udayan
Expert
Content Creator
replied on Oct 17, 2019
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey recruiting experience

Hi,

An alternative approach would be to do this from a supply perspective as it avoids the problem of identifying how many people take the subway that do not live in the city

1. Look at all the subway lines in Paris

2. See how many trains run per hour in total across all lines - you can divide this into peak (7 am to 11am/4pm to 7pm and off peak)

3. Estimate maximum capacity per train based on for example avg number of cars and capacity per car (e.g., 10 cars at 200 per passenger car)

4. Multiply this out to get total capacity of trains in one hour

5. Multiply by a factor of 3 (assuming 20 mins avg train ride) to get number of people that are in the trains per hour

6. Then calculate this number for total riders in a day (based on the number of trains running in peak and off peak times)

7. Lastly, you can take a discount factor for when trains don’t run at full capacity

Hope this helps,

Udayan

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Ian
Expert
Content Creator
replied on Dec 31, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

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:

  1. Just like in a case, make sure you understand the question - what are you really being asked to calculate
  2. Decide whether a top-down or bottom-up approach is best
  3. Figure out what you know you know, and what you know you don't know, but could estimate
    1. This helps you determine how to split out buckets
  4. Stay flexible - you can start with a "high-level" market sizing, but gauge your interviewers reaction....if it looks like they want you to do more...then go along level deeper in terms of your splits
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