Market Sizing Questions - 7 Steps to Ace Any Question!
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- เผยแพร่เมื่อ 20 เม.ย. 2022
- Why do consulting firms ask market sizing questions? Why would they care about these seemingly random facts?
In this video, you’ll learn:
- Why Consulting Firms Ask Market Sizing Questions.
- 2 Methods for Answering Market Sizing Questions.
- 7 Steps that Ensure You Ace Every Question.
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Super helpful, thank you so much!
Thanks for watching! You can check our free resources here: www.myconsultingoffer.org/resources/. If you need further help, we invite you to book a free strategy call with us here: bit.ly/3PGob78. Our team of experts is always here to support you in achieving your career goals.
Thank you very much for the video, it helped me a lot preparing but at 5:21 I've noticed that 3 and 4 have exactly the same description.
Thanks, Stanislaw for pointing that out. We're glad you enjoyed our video. If you need further help with your preparation, feel free to schedule a free 30-minute session with us here: bit.ly/3W4hhbx. We look forward to helping you achieve your career aspirations.
I love how elaborate this video is! Thanks for sharing it. Just one question though. I am not sure if I understand the mathematical logic behind calculating the percentage of the total population covered by our target age group (which came out to be 80%). Does this approach assume an even distribution of ages? And does this assumption generally work for target group estimation? Would be great if someone could explain this, please.
Hey Momina,
Great question!
Yes, this calculation does assume there’s an even distribution between the age groups. It’s fair to say that this might not be perfectly accurate. If there was a baby boom, like after WWII, then a higher percentage of the population would be in the 0-15 years of age group. Or if couples were putting off starting a family because of a recession for example, then that age group might be a bit lower.
Also, the sad fact is that people die. So even if the distribution of people born in different years was perfectly even, there would still be fewer people in the older age groups.
But, if you tried to create precise estimates of the percentage of the population in each of these groups, you could spend half the time allotted for the market sizing question thinking through the reasons each group might be a bit higher or lower. Because of this, we go with the 80/20 rule and make the distribution even. Getting the distribution EXACTLY RIGHT isn’t important. What’s important is doing a quick and dirty estimate that tells you what percentage of the population is in your target market - in this case, the coffee-drinking age range. Your interviewer is looking for you to show your structured thinking, and not get bogged down in assumptions.
But to be clear, the assumption here is that everyone lives to age 80.
0-15-year-olds don’t drink coffee.
16-80-year-olds do drink coffee.
That means the fraction of coffee drinkers is 64/80 (64 the people in the 16-80 age group) or 80%.
If it would make you feel better, you could say something like, “I know the population distribution is not exactly even, but for a first-level analysis, I’ll assume it is. If we find that this market looks like a good one to enter and that assumption is important to the profitability of the business, I’d pull statistics to make sure our market size was right on the mark.”
We hope that helps!
Best of luck with your casing practice!
Thanks, muy util
Glad you enjoyed it! If you need help with your preparation, feel free to schedule a free 30-minute session with us here: bit.ly/3W4hhbx.
Thank you so much for doing this exercise; you have excellently explained it. Could you please explain to me the Math at timestamp 16:30 and how did you arrive at 80% in that step? 😊
Hey Diwakar,
Thank you for your kind words! At the 16:30 min mark, we want to find what percentage of the US population drinks coffee. Now, we have assumed that people between the ages 16-80 would drink coffee out of the total population aged 0-80. Thus, % of the US population drinking coffee = (80-16) / (80-0) = 64/80 = 4/5 = 80%. Note - the total population is considered equally distributed across age groups. Hope it helps!
If you need further help with your preparation, we invite you to book a free strategy call with us here: bit.ly/3zeLAmO. Thank you for watching!
@@myconsultingoffer Thank you much for your detailed explanation! 😊
@@myconsultingoffer Still a bit of confusion here .... Are we assuming that there are equal number of people in all age brackets ? I suppose that the logic considered will only be applicable then ?? There is a certain average age of population where the coffee drinking population will also be higher ??
Brother went you do it look easyyyyy
Thanks, Phat! If you need help with your preparation, feel free to schedule a free 30-minute session with us here: bit.ly/3W4hhbx. We look forward to helping you achieve your career aspirations.
would say vast majority of people use %s instead of fractions & division equations. And numbers like 52 and 12 would certainly be rounded to 10 and 50 to avoid completely unnecessary precision with decimals. but otherwise great video
Great thinking, thanks!
Can you do how many barber shops in California (or any other location)?
Thanks for watching! The same method can be applied to determine the number of barber shops in California. You just need to adapt the approach by considering factors like the total population, percentage of people who use barber services, and the frequency of visits. Feel free to try it out and let me know if you have any questions! Good luck!
What if I'm very bar at math? You're not allowed to use a calculator?
No worries! While math skills can be helpful, being a math expert isn't a requirement. The focus is more on problem-solving, analytical thinking, and business acumen. While you can't use a calculator, basic math skills and mental calculations are important. Practice problem-solving and build your business intuition. You'll do great! Good luck!
did you ask for few min for step 5 ?
You can definitely ask the interviewer for a few minutes to gather your thoughts. If you need further help with your preparation, we invite you to book a free strategy call with us here: bit.ly/3zeLAmO. Thank you for watching!