Market Sizing WITH SOLUTION - Coffee Shop Revenue

Top-down approach: This method involves starting with individual units or smaller segments and gradually building up to the total market size. This approach is often used when estimating unit sales or market shares, such as the number of smartphones sold worldwide.

The candidate should not use a top-down approach for this particular market sizing. Trying to take a top-down (population, area, etc.) approach would be guessing and would not lead to an accurate answer.

Some common pitfalls in this market sizing include:

1. Using a top-down approach
2. Oversegmenting the problem - breaking down small/medium/large coffees, breaking down all food items, breaking down every hour of operation, etc.
3. Looking at a set period of time at the store (# of people in the store) instead of looking at flow

The candidate should sense-check their answer by annualizing the number. If the answer is between half a million and 1.5 million, they have likely estimated correctly (highly dependent on location and coffee shop of choice)