McKinsey Case Interview: Market Sizing Walkthrough
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- เผยแพร่เมื่อ 2 พ.ค. 2024
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Watch Lisa Bright, ex-McKinsey consultant, work through a McKinsey market sizing case. You'll see how she structures the case, talks the interviewer through her process, and comes to a final recommendation. Even better, you'll learn from the detailed feedback Jenny Rae has for Lisa at the end of the case. Enjoy this market sizing case walkthrough!
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What you'll see in this video:
◈ Ex-McKinsey consultant doing a live market sizing case
◈ Market sizing case structure
◈ Mental math
◈ Detailed feedback at the end of the case
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Highlight Timestamps:
01:19- Start of the case
03:50- Case structure
06:03- Mental math
18:12- Final answer
20:52- Feedback
If each diaper costs 2 cents, shouldn't she multiple 1400 diapers with 0.2 cents instead of dividing it?
its answered in the feedback section
Very authentic interview, unlike many "perfect" cases in other videos which seem totally staged. Especially appreciated the honest feedback at the end. Thank you for the effort!
Great comment. Would love to connect!
The calculation at 16th minute is fun, she is adding and subtracting 10% from each side and then wondering what the answer should be...36
she is so bad at simple math
exactly what i thought, doing the symmetrical 90/10 split was totally useless and overcomplicating, but i guess that in the moment she didn't see that. it would have mattered only if the previous split wasn't 50/50 though, so its a general calculation that would work in every case but in this particular incident is overzealous
are you familiar with a guy named Satyarth Jha
Hats off to Jenny. As the interviewer, keeping a track of the calculations is no mean feat. She did it so easily. Also, Even though Lisa stumbled, her presence and composure were very good.
Chinese currency is not Yen but Yuan. Yen is Japanese currency. It doesn't sound like a big difference in English but to people who are familiar, they are completely two things.
Caught that too, I work with Asian clients and that Yen/Yuan thing was really awkward, it kinda shows how little you know about the rest of the world outside of US. But for the rest of the case with quick hints she manages to recover from mistakes very well
I can’t believe they fucked up the name of the currency
plus 1
When I heard disposable diapers, I thought that maybe there could be 2 kinds of people who could use it....first and obviously the babies but second, maybe adult diaper market could also be considered. Now I know that it would not be a huge market or maybe even a significant market in comparison to the diapers market for babies, but I suppose to show MECE approach, one could have considered it and then later with the mathwork show that the adult diaper market is insignificant to the baby one. Just a thought.
Otherwise I thought the the structure was pretty apt
Super helpful. Thanks Lisa and Jenny for walking us through this exercise.
Super happy to help!
"Market Size" and "Market Value" are different. I thought this was a market size question so I ended up estimating how many disposable diapers are there in the Chinese market per year but as interviewees, we should clarify this question at the beginning.
Really like the fact that this was authentic; It shows that even the most experienced of us are still not perfect. This tells us that interviewers simply do not expect a perfect outcome but in fact a sound structure with 'common sesnse' and a structured approach
She handled it so well. This was tough!!
Just to add. You could have added adults as well (Age group : 60+ years)
Super helpful, thank you both!!!
I was expecting a better performance from a Mckinsey consultant. She did many math errors and wasn't able to do a sanity check for the final number. But great work thank you.
The content is really helpful. However, Yen is Japenese currency, Chinese currency is Yuan or just RMB. Big difference.
Logic is reasonable but math errors are keep distracting me: Spending on disposable diapers per week= 280/50 = $5.6 which can be rounded to $6 per week instead $4. Also the # of children within the age range (0-5): 1.2BN * 5/80 = 75M.
Using normal distribution, the 8/50 has different proportion.
This model was specific to an interview environment right? Because I think in a lot of metrics we can get help from the internet ie the census data and population distribution to the exact numbers. Great amalgamation of analytical thinking and with the feedback 👏🏻
I really like your channel! Pls keep it up
Thank you so much Jolanda!
5/80 is true if distribution is uniform, not normal. However, really well done case and get's the idea through.
Yeah it really distracted me, no one would ever use normal distribution in a consulting case interview lol
In demographic, it's the closest assumption to size a range of ages.
China has a strict one-child policy. In most countries, children in the age group of 0 to 5 years will be around 7% to 8% of the overall population and in this case, we can consider it as 5% due to political reasons and then do the math.
This channel is so helpful thank you!
Super impressed by how closely were the calculations tracked. For the preference of the disposable diapers vs reusable diapers, I would've probably asked for some research related numbers. When I did this case myself, I used a 50-50 split which luckily came out to be 35 million. However, the interviewee's numbers based on the rural vs urban population was probably a better way to work out this number.
Why is there a major time difference between the Bain Market Sizing case and the McKinsey Market Sizing case? Is this due to the difference in style between the two companies?
Great technique. The only thing that was weird to me was the population estimation. A population pyramid is far from a normal distribution in terms of age and specially in a growing country such as China.
could you help explain why she needs to estimate the life expectancy (80 y-old) then have 5/80? does it mean if she wants to calculate the population of people under 15 y-old it will be 15/80? then what if she's looking for the population of people, say between 10-15? I'm super confused by this method
Anyways it was nice, i am just starting to learn this and it's helpful, good job people!!!
Glad it was helpful!
Thank you so much for the video! I guess one factor that has to be taken into consideration is that the penetration rate would be very different between urban and rural areas - for urban areas, probably 95% of babies would use diapers; but for rural areas, which accounts for a significant proportion of the overall population, the % could drop to 20% or even 10% (assumptions made based on their income level and access to disposable diapers).
The majority of China's population lives in urban areas. In fact it's around two thirds that live in cities
Good one! However, how about the adult disposable diaper market? Shouldn't she have clarified about it earlier? (Or did I missing the clarification of baby-only market?)
Anyway, subscribing!
That's a good clarification! Thanks for adding that in for the conversation
She went into it later
Excellent work. Thanks so much for your interesting videos on consulting.
Interesting! Keep it up :D
Thank you!
Why is it 1400/ 10 cents??
Can you explain as the estimated per diaper spent was 20cents???
The structure that I took was to divide the entire population (1.4B) into urban and rural (6/4 split) and then taking half of which for females. For the urban population, I assumed the age group typically suitable for childbearing to be from 30-40 which is around 15% of the population, and within those, I assumed 70% that would want to have children (relatively low due to urban population having more women working). Assuming even distribution of people having babies within the age range, I took 20% to reflect the population that had a baby in the past two years (taking the assumption that the majority of diapers are from babies from 0-2 years old and that the two-child policy is in effect). Finally, I assumed 60% of the urban population buys disposable instead of reusable due to better economic conditions. For the rural population, I assumed the age group typically suitable for childbearing to be from 20-30 which is around 30% of the population, and within those, I assumed 90% that would want to have children due to cultural reasons. Assuming even distribution of people having babies within the age range, I took 30% to reflect the population that had a baby in the past two years. Finally, I assumed only 30% of the rural population buys disposable instead of reusable due to worse economic conditions. After calculation, I arrived at around 10M babies requiring diapers for the target year. I assumed 6 diaper changes daily for the urban population and 4 diaper changes for the rural population and assuming 350 days a year and 10 cent per diaper price (cheaper than US) I got a final number of $1.05 Billion market size in the urban market and $0.7B for the rural market. That would make 1.75B in total annual market size.
Only started preparing for market sizing interviews so I apologize for making obvious mistakes or incorrect assumptions!
Can you explain the break down of 1.2billion? as you have estimated 5 out of 80
What about the diaper usage for population above 60?
We were supposed to do 1400*0.20 = $280 and not divide right?
Yeah I think she made a mistake because you would be spending 0.20 1400 times
Its a total waste of time seeing good consultants second guessing diaper mrp's. Its so much more efficient to rather Google the price & work on more important aspects
People should do approximations to simplify things. She overcomplicates even 5/80?! Uniform distribution not normal btw.
10% out of 36 mil + 90% out of 36 mil, hmm how much would that be.. 26 :)).. 32.4 :)) omg. It is 100%!
Why did you guys not include old people? In my calculation they were a bigger group than children!
superbb
Thanks! Glad you watched :)
Chinese yen?🤔
The way she rounded the population of 0-5 year-old is 'even distribution', not normal distribution...
she obviously studied business administration and not enginering haha
She used a uniform distribution. Which is simple, but not accurate. Population realistically distributed normally with a left skew (ageing population)
Would be interesting to ask a guy to take this interview lol
The population of China is 1.4 billion
Shes not the smartest but her thought processes are very good
China has a strict one-child policy and maybe one household will have only one child. So we can work around a number of people in the age group of 25 to 35 yrs (just married) and decide on the number of couples in this age group and find the number of kids within the age group of o to 5 years. Then move on with the calculation of urban vs rural, not using diapers at all, cloth diapers vs disposable diapers, and so on........Just another way to solve the problem but it might be a little difficult as told in the video.
They actually revised the one child policy in 2016 to 2 children .. although not as common it is possible to find a household with two children
adult diaper?
hunderd
🐾🐾🐾🐾🐾🐾🐾🐾
why she saying hundurd instead of hundred lmao
Could she pass the interview.
the assumption is totally unreasonable, for kids under 10 mom , at least 8-10 diapers a day, not 4. I think she should separate the ages into 6 month, 12 month, 18 month. .
Typical Mckinsey jargon
Seriously this is how you estimate a simple case like diapers?
Overcomplicated ladies
chinese yuan...
her math skills is poor
An MD who doesnt know the difference between yuan and yen lol