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Market sizing question : subway passengers

Anonymous A asked on Oct 17, 2019 - 2 answers

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

2 answers

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Matthieu
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replied on Oct 17, 2019
Top performer at BCG, offer @Bain, RB, OW, ... - large exp. in coaching & recruiting
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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

Udayan
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replied on Oct 17, 2019
Ex McKinsey EM with 7 years of recruiting experience/ received all 3 MBB offers/Real MBB cases
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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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