Hi,

What is your framework for finding the total number of gas station, McDonald, Starbucks questions?

Thanks

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# Total Number of Gas Station/Restaurant Question

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Hello Victoria great break down. I am just curious how you got 4mln for each age group? I would think if we have a population of 320M and life expectancy is 80 years, we would have 8 sub groups ( 0-10, 10-20...70-80) and as such each group would have 320M/8groups which should be 40M/group. Contrarily, if we needed to know the amount of people that are say 5,10 or 15yrs old and we carry the same even split assumption, then 40M/10ages which will be 4M each.
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Hi,

What is your framework for finding the total number of gas station, McDonald, Starbucks questions?

Thanks

14 Answers

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Top answer

Vlad

on May 15, 2018
Coach

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Originally answered question:
Knowing which steps to take in case quant

Hi,

I am not completely sure **whether you are talking about the general calculations or a market sizing quant problem.**

If it is the **general math**, you follow these steps:

- Take a minute to think about the problem
- Provide the formula / your approach to calculations / equation
- Check with the interviewer whether it's correct
- Continue calculations, coming back to the interviewer with some intermediate numbers
- Come up with a final number and check it with the interviewer.

If it is a **marketย sizing problem**, there are several things you should know:

1) First of all, there are **two ways to calculate market size:**

- From supply side (e.g. vending machines spots)
- From demand side (e.g. vending products consumption)

2) 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

3) You should **use 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 real environment
- etc.

4) You should **learn and use 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 group)
- 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.

5) **Learn and use the 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.

Good Luck!

0 comments

Vlad

on May 24, 2017
Coach

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Originally answered question:
Hello I have a big problem with market sizing is there any structure to respect ? How can I improve my skills in market sizing ?

Hi,

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)
- Adjustingย numbers (NY is a busy cityย thus fewer people have dogs)
- Sanity check - try to apply your calculations to 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 group)
- 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

Feel free to PM for clarifications

Good Luck!

Francesco

on May 15, 2018
Coach

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (โก interviewoffers.com) | Ex BCG | 10Y+ Coaching

Originally answered question:
Knowing which steps to take in case quant

Hi Anonymous,

these are the steps I would suggest to be able to correctly structure a market sizing upfront:

**Learn the 4 key market-sizing frameworks**. Facing a market sizing case without structure is like facing a business case without it โ it becomes almost impossible to solve it. At the bare minimum, the interviewer will feel you are unstructured. For further information on market sizing structures, please feel free to look at my profile or just send me private message.**Take one minute of time to structure your thoughts.**Many candidates think about market sizing as something different from a case โ in the sense that it is not compulsory to take time to structure. Thatโs not the correct approach, since you should always take time at the beginning to structure. If you donโt take time upfront and immediately present a structure, even if your structure is correct, the interviewer will (i) think you have already done such case and (ii) wonder if you are able to correctly structure cases you are not familiar with. While if your structure is wrong, he/she will just think you are too impulsive.**First lay down the structure, then start using numbers.**Numbers are the last step in the process โ your overall structure is always the priority. Before using numbers, you should also align with the interviewer on the fact that the structure is fine.

Best,

Francesco

Dorothea

on Jun 25, 2018
Coach

Ex-Oliver Wyman with 100% interview success rate - specialized in female career coaching

Originally answered question:
Guesstimation Logic

Hi,

assuming that with the term โguesstimating questionโ you are referring to market sizing questions, please find bit of advice below:

- Most market sizing questions can be
**solved in more than one way**. What does this mean for you?**Just think it through by drawing a tree:**"What are the main factors determining the final answer?" "How can I split each of this factors further?" Go into as much detail as possible. Ideally, you have time to check your final answer by quickly applying a different approach ("do the two approaches give approximately the same answer?") **Make proper assumptions:**Once you have drawn the tree, take a look at the most detailed level of your tree. Are you able to quantify the factors on that level? You do not need to know the precise number, but most of the time, you can relate them to something you have seen / experienced, e.g. you need to determine the number of people living in aย given city. How does this city relate to one you have lived in and for which you know the number of inhabitants? Is it of equal size, is it approximately twice as large etc.? The biggest advantage of this approach is that you show your interviewer your reasoning: You do not just come up with a number, you try to derive it. And even if this approach does not work (because you have no idea how large that city you are talking about actually is) your interviewer is a lot more likely to help you.**Practice, practice, practice:**As it is the case with other case types, the more you practice, the easier it gets: You will see that drawing the tree will become a lot quicker and more intuitive. Do as many cases as you think are useful and until you feel more secure.- This will then get you to the point where you will
**lose your fear**and this is probably the most important part. Once you lose your fear and you start to like market sizing cases, you can show your interviewer that you in fact enjoy solving the problem at hand. Not only will this help to solve the case at hand but it will also contribute to the interviewer's positive overall impression.

Hope this helps!

Vlad

on Sep 12, 2018
Coach

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Originally answered question:
Market Sizing: How many X are there?

Hi,

First of all **marketsizing is not about geting the true numbers but rather about your approach**. So if your marketsizing results are different from the numbers that you can google - it doesn't really matter. **What matters is how you make the assumptions and justify them to the interviewer.**

Secondly - your approach is good as well. Most probably you've uinderestimated the number of gas stations per disctrics / did not include the surbubs with gas stations for the trucks.

Best!

Anonymous G

on May 22, 2017
Originally answered question:
Hello I have a big problem with market sizing is there any structure to respect ? How can I improve my skills in market sizing ?

Hi there,

My experience is that you need to practice andย in everyday life there are plenty of opportunities to do so.

when you are traveling to work/institute:ย how busses are there in the city, how many bus stations, how many bus lines, etc....

Out in the evening in some bar/cafe: how many people visit that place every day, every week every month, how much bewereges are consumed, how many similar palces are there in the city, etc...

etc. etc.

First time it will be kind of strange and you will think 'what the hell I know' but you will get better with practice. If you would do it with somebody else will be funnier and more effective :)

Oleksandr (Alex)

on Dec 01, 2017
Coach

Very experienced ex-McKinsey consultant with cross-country expertise

Originally answered question:
What's a good and consistent method to answer the non-market sizing questions such as: how many golf balls fit into X; how much does an airplane weight, i.e. questions of that type? Thanks and cheers

First, understand what is the "ocean" (e.g. assess the main dimensions of plane, etc.)

Second, understand the unit with which you deal (e.g. ball, ppl, table)

Third, understand the limitations & bottle-necks (e.g. has to be a space for the people to move back & force)ย

The last, do the math

Important: don't try to be precise. The way you think is much more important than the figures. But don't diminish meaning of figures as well.

Sidi

on May 15, 2018
Coach

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers

Originally answered question:
Knowing which steps to take in case quant

Hi Anonymous,

firstly, you should be aware that **it is okay to take a moment** in order to lay out the calculation steps. Just let the interviewer know that you are first taking a moment to outline the necessary calculatory steps, then sharing and aligning these steps with him, and finally executing the calculation (while taking the interviewer along).

This is a crucial skill that consulting interviewers look for in a candidate, becaus guess what - this is exactly how you need to walk clients through your thinking on a day to day basis.

Cheers, Sidi

Originally answered question:
Guesstimation Logic

Initially, most of my peers approached guestimates using the "general to particular" approach. For example, estimating the market size of Lipsticks in Country A will require to start with the number of women in the country, and then break it down by age, purchasing power, preferences, andย so on. In each level of your tree, you will "plug-in" assumptions which will be used to make the calculations and arrive to aย final answer.

This approach tends to be very safe since it makes easier to structure the information and allows you to start with some information you might now (population of your country or city, distribution in terms of genre and purchasing power, etc.). The problem is that it usually takes a lot of time and will require you to do a lot of calculations.

Later during my preparation, I had the chance to tackle guestimates with one of my McKinsey buddies and he gave me the following recommendations:

**Focus on the drivers:**Instead of going from the general to the particular, try to understand what would be the 2-3 factors that could determine the 80% of your answer (remember the 80/20 principle) and start breaking down from there. In the lipsticks example, the drivers could be the number of women between 15-60 years old, the average number of lipstick purchase per year per womenย (this is usually driven by culture, not by income), and the distribution and average price between mass, mass-premium, masstige, and premium lipsticks.ย**Close enough is more than good enough:**Remember that you don't need to provide an exact number. Usually, you have a margin of error that can go up to a fewย orders of magnitude (2x-3x). The key in here is to showcase your thinking process and your mathematical abilities, not how good you are at memorizing numbers. These are the skills you will use in your day-to-day as a consultant.**Leverage your interviewer:**Some interviewers play the bad cop and do not give any feedback during the interview. Nevertheless, most of the interviewers will respond to your rhythm. Share your thinking process and the logic behind your assumptions. If you are on the right path, the interviewer can give you a little push to refine your assumptions or can even give you the concise information.

Once you start approaching guestimates keeping these three things in mind, you will find yourself solving guestimates with ease and precision. I hope it helps and let me know if you want to practice some!

All the best,

**Patricio**

Anonymous

on Sep 13, 2018
Originally answered question:
Market Sizing: How many X are there?

Totally agree with Vlad - it's not at all about the true number, as long as your result is within the realm of possibility. If you say there are 7 or 70,000 gas stations in Paris I would question your judgment. But saying 120 or 300 and basing that on a solid set of assumptions is totally fine.ย

Ifย I was the interviewee, with this specific case, I would actually try to steer the conversation into a different direction - how the number is changing due to the changes in urban transport (public transport, ride sharing, e-mobility...). Because that is a **strategy** discussion. Trained monkeys can count gas stations, and elementary school children can do the math for your assumptions. But only smart people can have a thoughtful strategy discussion. If you're face to face with the right interviewer, that might score you some points. If he just wants you to do basic math, then you can still go back to doing that...ย ย

BTW: Paris, in particular, is tricky, because the 2.2 Million refer to Paris "inter muros", so the actual city. The agglomeration is of course vastly larger, so much of the supply for the city might just be outside of the walls of the city (cheaper real estate, lower taxes etc.). Just like you don't have that many gas stations in Manhattan or the City of London...ย

my approach would be to match supply with demand.

for the gas station case, on the demand side:

-Start with the total population of the area you're looking into

-get the number of households

-then estimate the number of cars per household (on average 1.5 cars for example)

-now you have the total number of cars

-get the consumption in liters of fuel per car on average

-then you can add an extra 20% for the commercial vehicles (buses, trucks, and so on)

- now you have your total demand of fuel per day or week or month or year.

Supply Side:

-start by sizing the gas station

-estimate the number of pumps (5 usually)

-the time the vehicle take to fill in the tank

-the average quantity in liters each cars fills in

-now you can get the total number of liters that can be filled in an hour, for example, if the pumps are operated at full capacity

-assume a certain capacity utilization of the gas station (say 50%)

-now you got your total supply of fuel per gas station per day or week or month

final answer: divide the total daily demand BY the total daily supply per gas station

Anonymous

on May 23, 2017
Originally answered question:
Hello I have a big problem with market sizing is there any structure to respect ? How can I improve my skills in market sizing ?

Hi,

Usually students struggle because no one has previously explained the basic principles. It makes you panic every time you see a arket sizing question and feel like it is a lot worse than it actually is.

The basic premise of these types of questions is: what is the ยฃ/$ value so demand or population size of using a specific product. I like the toothbrush example.

Let's say there are 10mn people in London and 90% use a toothbrush. That is 9mn toothbushes being used, now let's say at a price of ยฃ2 per toothbrush, London market size is ยฃ18mn.

The above is very basic and there are lots of factors to add. But hopefully this helps as the starting point. The rest is additional info and 'colour' to the story (growth, etc.).

Hope this helps, let me know if you want to practise these.

Vlad

on Jun 25, 2018
Coach

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Originally answered question:
Guesstimation Logic

Hi,

Depending on what you call a Guestimate. I've seen that some books using the word "guesstimates" for market sizing, for brainteasers and for the mix of both (weight of the Boeing). The basic recommendations to practice are the following:

**Market sizing**ย - You should solve yourself the market sizingย cases on the most popular topics: Car usage (tires, gas stations), passengers in the airports, real estate, subway,ย luxury, size of the particular area on the map (e.g. volumes of fish in the sea), etc.**Brainteasers**ย -ย To prepare you simply read the 2-3 most popular books with the brainteasers (Are you smart enough to work at Google?, How would you move mount Fuji?).

Best

Guennael

on Sep 25, 2018
Coach

Ex-MBB, Experienced Hire; I will teach you not only the how, but also the why of case interviews

In a market sizing exercise, there are 2 broad ways of starting: either top down, or bottom up. __ Top down__ will be more high level, โbaby mathโ (my former boss, an ex-McK, used to run a $5B business w/ back of the envelope / baby math calculations -> very powerful actually).

The other way is ** bottom up**, which can quickly become very complex due the multiple assumptions and calculations. Then again, you will mostly do multiplications here, whereas top-down would largely be divisions.

My own recommendation onmarket sizing exercises is usually to start w/ the top down, and only do the bottom up if your interviewer makes it clear thatโs whatโs expected. Doing the bottom up from the get go might take longer than you are supposed to take, and also quickly become very tedious / error prone / precisely wrong vs. roughly right. Put it another wayโฆ donโt give me a 2x4 to beat you up with, trust that your interviewer is smart enough to make your life miserable

PS: To address your question more specifically now, and assuming you do indeed have to do a bottom-up exercise. I would typically start from the demand (how many people drive how many miles how a vehicle with what kind of efficiency; how many people eat how many burgers / drink how many overpriced lattes); I would then move on to the supply (how many people / cars can one gas station/restaurant serve), before ultimately dividing one with the other

Hope this helps

ย

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Advanced practitioners (and those who have practiced with our Mental Math Tool will be advanced) also round not the numbers in the calculations, but only the result.Useful FiguresA stumbling block in many market sizing questions is the starting figure. Often, the question asks for a subset of a larger group or a number in relation to the larger group, such as weekly swimmers in the UK or refrigerators in India. It's helpful to know the starting population, which in this case would be the population of the United Kingdom or India. The following figures are useful before answering market sizing questions:US population = 330 millionPopulation of the United Kingdom = 67 millionGerman population = 83 millionFrench population = 68 millionEU population = 450 millionChinese population = 1.4 billionIndian population = 1.4 billionAustralian population = 26 millionPeople per household (developed countries) = 3People per household (developing countries) = 4 Practice Questions for Market SizingWith these practice questions, you can test your skills in Market Sizing Cases and develop the right mindset to solve the cases:How many mattresses are sold annually in the USA?What is the size of the US market for diapers?How many gas stations are there in Paris?How large will the market for 3D televisions be?What is the size of the European shoe market?How many fast-food meals are served annually in London?How many people go swimming each week in the UK?How many mobile phones are lost each year at music festivals in the UK?How many mobile phones are manufactured weekly in China?How many houses are sold annually in the United Kingdom?How many pretzels are needed to build a tower as tall as Big Ben?What is the sofa market size in the UK?Estimate the revenue generated annually from ticket sales in all US sports stadiums.How many people wear a tie on Mondays in the state of New York?While some of these questions may seem strange, consultants are often asked by clients in brainstorming sessions or casually. A structured approach and the ability to analyze the underlying purpose of such estimation questions are essential for a useful and convincing response.Although the approach you choose to arrive at the market size is much more important than the result itself, you should still be aware that your interviewer may intentionally provide assumptions that lead to a much larger or smaller market size than reasonable. In this case, you should object that the market seems much larger/smaller than you expected. Your interviewer may want to test your ability to question your results (AKA sanity checking). The Biggest Challenges in Market Sizing QuestionsMarket Sizing Cases come with many challenges. Let's take a look at the perceived hurdles together and how you can overcome these challenges.StructureIn Market Sizing Cases, structure is crucial. See a good structure as your guiding principle, helping you even when you lose focus โ you can always orient yourself along it, reducing your nervousness.๐ Prep Tip: Regularly applying the methods (issue tree and table) to examples can give you a lot of confidence here and thus also self-assurance for your case interview.CalculationsAccurate calculations, alongside a structured approach, are one of the biggest challenges. Don't let larger values like billions or millions unsettle you! The challenge lies in calculating quickly but accurately.๐ Prep Tip: Here, too, you have many opportunities to prepare ideally. Use mental math tools or review basic arithmetic and percentage calculations. So, make use of your preparation to handle numbers confidently.Making AssumptionsMaking assumptions will be one of the skills your interviewer will want to see. Convince them by making assumptions that are as reasonable as possible โ based on all the facts you know.๐ Prep Tip: Use your intuition and apply logic. "Moderate" your thoughts and talk to your counterpart about how you arrive at certain assumptions.Finding the Right BalanceFind the right balance between being concise but not skipping any steps in the solution process. Time in the case interview is precious and passes quicker than you think.๐ Prep Tip: Practice your cases with like-minded individuals and arrange meetings on our meeting board to learn how to articulate your thoughts without digressing. Follow the "Answer-first" principle.To master the many challenges of a Market Sizing Case, we strongly recommend following our three golden rules of Market Sizing. The Three Golden Rules of Market SizingThe three golden rules of Market Sizing help you structure and present your approach, prevent calculation errors, and verify whether you are correct in the end.The three golden rules of Market Sizing are:Use the appropriate framework to structure your problem.Find the balance between pragmatism and accuracy.Verify your (interim) results with a sanity check. Examples of Market Sizing Cases1. How many diapers are sold per day in the USA?If you want to estimate the number of diapers sold in the USA per year, the assumptions for the first level might look something like this:# Number of babies in the USA on a given day multiplied by# Number of diapers a baby needs per day multiplied by# Number of days on average in a yearAs you can imagine, the tree can have a different number of levels for each of its branches. While you can estimate the average number of days in a year fairly accurately, you may need to further break down this box to estimate the number of babies in the USA.2. How many gas stations are there in Paris?The following illustration shows how we can draw a tree to estimate the number of gas stations in Paris.Also, here you should proceed in two steps: First, sketch the structure of the tree, and then enter and calculate the data. Always remember to discuss your intermediate steps with your counterpart.๐ Practice the full case in our case library. Market Sizing โ Key Insights:Market Sizing Cases showcase your quantitative skills and logical thinking. Seize the opportunity to convince your interviewer of your abilities! You can train these skills excellently, for example, with our Mental Math Tool. Additionally, when collecting numerical data, always ask if rounding is allowed. Remember the three golden rules of Market Sizing: structuring the problem using a tree diagram or table, finding a balance between pragmatism and accuracy, and continually verifying the correctness of the estimates. Are You Looking for More Market Sizing Cases to Practice?Check out our recommended practice materials or search our case library for more cases on this topic.๐ Corporate Case by EY Parthenon: Horse MRI Machines๐ Expert Case by Thomas: Market Sizing Case Music Streaming๐ PrepLounge Case: Nutripremium

McKinsey PEI (Personal Experience Interview)

The McKinsey Personal Experience Interview is one of the most talked-about features today in consulting applications. It differs significantly from the personal fit interview conducted at BCG, Bain, or any other consulting firm. While the content of the interview has not changed in many years, most candidates are still a bit lost when it comes to preparing for it.

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