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Market Sizing Questions with no Prior subject knowledge?

Case Interview
New answer on Jul 11, 2019
1 Answer
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Anonymous A asked on Jul 11, 2019

Hi all,

I have an unstructured case interview coming up. I understand that the point of these is for me to organize my thoughts and crititcally think through a problem. I struggle heavily with some questions that have some previous general knowledge especially since I am new to this country.

An example being: How many traffic lights are in NYC?

I was looking for assistance to this problem and problems such as this one. I have only been here 3 months and come from a country to be honest where traffic lights are not really followed. Is there any framework I can follow for brainteasers such as this?

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Best answer
Vlad
Expert
replied on Jul 11, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

It's about the different tools that you use:

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!

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