All questions tagged Market sizing - Consulting Q&A - PrepLounge.com

Hello!

TBH I would go with something similar to #3.

Total population of the target markets (you can clarify this with the interviewer), total number of households, and then segment by puchase power and tastes to derive the ones htat have one.

However, this one seems too complicated for an MBB inerview tbh, where market sizings are embebeed in other questions too.

Best,

Clara

Hi,

First, calculate the area of the country (use a benchmark of your home country or the speed of a plane)

Then split the country into 3 buckets and allocate % of the area:

1. Urban areas
2. Rural areas
3. National parks / uninhabited areas

1. Urban - you take an average size of the block and find out the % of the av city block covered with roads (e.g. 15%). Then assume the % of the area covered with the big cities (personal experience, looking at google maps) and calculate the total city roads area

2. Rural - you just assume much lower density than in Urban (e.g. 50x lower)

3. National Parks - will be even lower, 1%

Sum up all the numbers to get the area of the roads and divide by the average width of the road. Alternatively, you can make it more granular and allocate different width by the road type

Best

It depends on the office where you are right that some offices often don't test basic market sizing/estimations. Having said that, it's a skill that is complementary to solving a case and so I would be prepared by familiarising yourself with different approaches (e.g., top-down vs bottom-up).

First, I would realize that this is not a market sizing.

The market sizing element is a very very small portion of it (one bucket).

Really, I have to:

1) Determine the value proposition Uber offers in the US

2) Compare the value offering to the current situation in France...i.e. do they face the same problems...i.e. need the value proposition

3) If yes, figure out of the specific Uber solution would work in Paris (roads, etc.) AND be adopted (culture, other similar initiatives, etc.)

4) THEN, estimate an actual market size IF 1-3 hold true

I would add a few points to your calculation to make it more robust:

• Distribution of people that go for lunch vs dinner might not be equally split which increases the number of restaurants, as most are empty for lunch
• It seems you're implicitly assuming that occupancy is 100% at peak hours for all restaurants，so you're calculating the minimum number of restaurants you need to serve the demand.

Other than that, I think your approach is solid and makes sense to me.

Hi there,

It's actually too complex!

You can't break down population by age segment, and then apply a flat # to the whole pop who can ride/want to ride etc.!

The whole point of segmenting is to then apply a % + frequency to those very segments!

The other problem, is you broke it down too much. Why would you go from "Can use a bike" to "Would use a bike" to "actually have a bike" to "just bought a bike"? Rather, you just need to estimate % without a bike pre-covid AND % of those who would THEN change their minds and go buy a bike. Split THIS by population segment...that's it!

Finally, can you make a reasonable estimate between age groups 21-30 and 31-40? Probably not...just go young, middle-aged, and elderly!

So, remember, break things down into logical segments from which you can actually make reasonable assumptions!

Final final point: sense check your final number...24,000 for a pop of 5million is most definitely way too small...

Hi there,

Before you do anything, you need to clarify what you're marketing sizing. So:

• Bikes produced
• Bikes (or bike hours) ridden
• Bikes sold/purchased
• New bikes or old bikes?
• In the whole world or a specific country/region?

This is very much a top-down approach regardess.

Hey, this is not a trick question and sometimes you might get these. Just common sense is enough in this case.. Area= Length x Width of the room or Length ^2 if square room, or if a circular room PixRadius^2...you know the drill :) If you are in the room, be creative, walk to two walls (length and width) and take a rough count of meter long steps.

Otherwise just use your height (in meters) to estimate roughly the length and breadth of the room.

Another similar question for you to try: It takes 6hrs by passenger plane from City A to City B. Whats the distance in KM between the two cities?

Hi there,

We need some clarifying questions answered here!

1. What market? (World? Specific country?)
2. Annualized?
3. Short haul is defined as what? Domestic flights? Flights less than 3 hours? Plans size less than xx passengers?
4. Short haul passengers only or also cargo?

Just like a case, you can't just jump into a market sizing without defining the box in which you're operating!

It is usually fine to assume that population is distributed evenly by age. However, some countries are well-known for having a younger or older demographics. If you get a sizing case for such a market, it is usually a good idea to tweak the assumptions slightly or atleast show the interviewer you're aware of these nuances.

• For example, sizing the smartphone market in India, and doing a segmentation by age, you can assume that age <30 is 50% of population (median age is 28), and assume an even split for >30 population. It might look something like <15 (25%), 15-30 (25%), 30-50 (20%), 50-70 (20%), >70 (10%).
• Similarly, if you get a question for Japan (median age is 50 i think), you can assume >50 population to be 50% and <50 to be remaining 50% and divide evenly within that.

The intent is to differentiate yourself in an interview by showing that you're aware of these nuances. It is perfectly ok for you to just mention these factors, and align with the interviewer that you are going to make simplifying assumption of dividing population evenly by age.

Was this helpful?

Hi Youjie!

You can do either top-down or bottom-up here.

Top-Down

Population of London/Surrounding areas residents...subset of which would be flying in/out

PLUS population of daily visitors (business / tourist)

# passengers per plan

Viola...# planes required per day...cut that in half to get take-offs only

Bottom-up

When you've been to a large airport, how many takeoffs have you see on the board at one time?

How many per hour?

How many peak hours per day?

How many non-peak hours per day and what % of peak would this be?

Is Heathrow probably larger or smaller than this sample airport (multiple by that factor)

And again, voila!

Hey there, please have a look at below threads for inspiration. Similar question has been solved before in the forum.

• https://www.preplounge.com/en/consulting-forum/how-to-estimate-the-number-of-taxis-in-koeln-889
• https://www.preplounge.com/en/consulting-forum/night-50-and-daytime-50-6396
• https://www.preplounge.com/en/consulting-forum/the-number-of-taxis-operating-per-day-in-dubai-1288

Hello,

Similar cases have been solved in the forum. Please have a look at these:

• https://www.preplounge.com/en/consulting-forum/estimate-how-many-traffic-signals-in-any-city-please-take-an-example-of-any-city-and-tell-how-to-do-market-sizing-4035
• https://www.preplounge.com/en/consulting-forum/market-size-number-of-traffic-lights-in-dubai-5031
• https://www.preplounge.com/en/consulting-forum/estimate-number-of-traffic-lights-in-a-london-5692

Hi there,

For Market Sizing, you will need to adopt a top-down or bottom-up approach, depending on the date you have at hand. In some situations, the top-down or bottom-up approaches are equivalent to approaching the problem through demand Vs supply!

In this situation, and if you do not have any data, you can assume an average GDP per country size & region. You can either classify the world countries in categories (developed, developing and third world) or you split them by continent. Then, you can ask (or take assumptions) about the average population (or % of the world's population) and you multiply it by an average GDP per person based on where they live.

I hope this helps, please do not hesitate to reach out to me should you have any question.

All the best,

Mehdi

Well this is were you start making assumptions.

There is no way to know this precisely, so all you need to know is find good arguments on how you put numbers into the gaps.

E.g. let's assume you segment travellers by short vs long haul /biz vs leisure, so spanning a 2x2 if you will.

First short haul:

• You typically arrive at the airport relatively on time, so little time to find your gate, then roam around, do window shopping, etc. You might then bring in your own experience to speculate further:
  • Biz travellers are the target group for some of these book stores, btu they are also efficient, annoyed by their schedule, on the phone etc...so assume a low rate of buying books - let's say 1 in 100
  • Leisure travellers in short haul might be arriving a bit earlier, they are not flying as often, so everything still exciting, asusme something a bit higher, maybe 3 in 100
• Now long-haul
  • Biz travellers probably go through the same argument as above, but they need to arrive a bit earlier - they are avid readers, have some time to kill. Maybe also 3 in 100
  • Leisure travellers for long haul are excited about their vaccation. They arrive 3 hours too early, are in a spending mood (vaccation time!!!) and are looking at a 6-10 hour flight so they are probably more likely buying a book. Here you can probably also bank on your experience as a leisure passenger. Is it a 5 in 100 or a 10 in 100? Who knows, but if you structure your arguements like this, you should get to a reasonable outcome.

Hope this helps! There are certainly a ton of other ways how to do it, and in these cases there is no right or wrong as long as you make reasonable assumptions based on the data you have (which is typically just your own experience or little bits of data you remember).

Hi,

Here is how you can improve your math skills:

1) Fast math - train, train, and train again

• Learn how to multiply double digit numbers (https://www.youtube.com/watch?v=6ndkkPZYJHo)
• Learn the division table up to 1/11 (i.e. 5/6 = 83.3)
• Learn how to work with zeros (Hint: 4000000 = 4*10ˆ6)
• Use math tools (Mimir math for iOS), Math tool on Preplounge website to practice

2) Quant part of the case

• Simply download all casebooks available online and go through all cases. Pls disregard the structuring part and just practice the quant part. The number of distinct math tasks types is not infinite and you can train all of them

3) Critical Reasoning (for PST)

• GMAT test CR and IR parts (Official guide and Manhattan prep)
• Mckinsey practice tests
• PST like tests from the web

4) Working with tables and graphs and deriving conclusions

• Study "Say it with Charts" book
• Check all available MBB presentations and publications. Practice to derive conclusions and check yourself with the actual ones from the article/presentation
• GMAT IR part (Official guide and Manhattan prep)
• Learn basic statistics (Any GMAT or MBA prep guides)

5) Case math

Practice common market sizing topics (Airport passenger flow, real estate volumes, subway passenger flows, car usage, etc.). You should become comfortable with making assumptions

Learn key financial topics (P&L and balance sheet and how to analyze them, Basic Valuation principles via NPV and comps) and case math:

• Interest rates calculations
• Compound margin
• NPV using the Rule of 72, Perpetuity
• CAGR using the Rule of 72
• Currencies exchange calculations
• Speed, time, distance calculations
• Equations, systems of equations
• Ratio & Proportions
• Solving the problems by calculating the area of the triangle
• Profit / breakeven formula
• Correlations, outliers (being able to spot on the graphs, tables)

Good luck with your interviews!

After clarifying the problem. You can approach this situation with 2 variables:

• The percent of people who play baseall in the US;
• The average life span of a baseball bat.

Hi PK,

Overall a good and logical approach!

Just some small points on assumptions.

(1) 70% penetration of ride-hailing seems high. While it could be possible in the big metropolitan cities like NY or SF, outside the handful of big cities the penetration rate would be rather low.

(2) Don't forget there is Lyft also. So besides the 70% penetration rate, you probably need to think about market share as well. At the moment Lyft probably is comparable or just a bit smaller than Uber?

Cheers,

Emily

Hi Anonymous,

Yes, I think this sounds like a pretty good approach and is well-tailored to the specifics of a Starbucks operation. Just remember to adjust somehow for the fact that the Barista would not be at 100% capacity during all of the opening hours.

-A