Top Strategies for Mastering Market Sizing Questions
Interviews can be daunting at the best of times, but nothing can throw you off your game such as the question âHow many bicycles are in Beijing?â And that is essentially the nature of market size questions.
For those who are unsure of what market size questions are, it is pretty much a guessing game: The interviewer will ask you to estimate the size of something and will give you little to no context or data.
Does this sound like any consultantâs worst nightmare? Probably. But there are a few case study themes that are particular favorites. As long as you prepare and arm with the how-to knowledge and examples weâll dive into shortly. You donât need to enter the interview room fearing that they will ask 'how many turtles are on the beaches of Mauritius and how to solve the problem'.
What are the interviewers looking for?
Many consultants make the mistake in thinking that particular case studies that interviewers are the most fond of asking comes with ready-made answers that they can simply study and recite during the interview. But this is not what one should be doing at all. The entire purpose of asking these consulting interview questions is so the interviewer can evaluate your thought process.
You will need to:
Dissect
Break the question down into the various components needed to make the assumption.
Assume them all
Give the interviewer an assumption for each of these components.
Estimate
Finally, give an overall estimate to the question when taking all assumptions into account.
Supply vs Demand
One of the first things that you will need to establish is whether you need to answer the question from the supply or demand side. If it is from the demand side, you can use the Filter Formula in order to make your assumption. If it is from the supply side, you can use the Supply formula.
Filter Formula
Market Size = Baseline (Total population in location) x Ratio (Portion of baseline to be included in estimate) x Frequency of Purchase (Average purchases in set amount of time) x Quantity per Purchase (Amount of units bought each time) x Price (Price of product per unit)
Supply Formula
Market Size = Total Number of Suppliers (The total number of suppliers in the specific market) x Max. Capacity per Supplier (The production capacity of supplier in certain period of time) x Capacity Utilization Rate (The maximum production capacity that is actually reached by a supplier) x Price (Price of product per unit)
Ask Questions
Just because the interviewer is tasked with asking the consulting interview questions doesnât mean that you canât. In fact, interviewers are looking for applicants who can take initiative, spot gaps and have the knowledge to avoid pitfalls. These are some of the questions you can ask that may apply to your specific set of market size questions:
What is the unit of measurement?
There is a big difference between market volume and market value. Market volume relates to the amount of something and market value points to how much something is worth.
What is the time period?
The answer to âHow much fruit is being exported?â can drastically change in terms of a week, a day or a year.
Which location ?
Once again, the fruit export questionâs answer can change dramatically when looking only at specific regions, cities or countries compared to globally.
Whatâs the product detail?
Making estimates regarding handbags can be one thing, but any woman will be able to tell you that thereâs a big difference between buying a Gucci bag vs. a Walmart bag or a cotton bag vs. a leather bag. As the old adage says: the devil is in the details. Especially when it comes to consulting interview questions.
Whoâs the target audience?
Exactly who the product or service is intended for plays a major role. Are they selling to businesses or private individuals? Are they children or adults? Male or female? There are so many things to consider when defining a target audience and youâll need to consider this when answering consulting interview questions.
What are the distribution channels?
Are you considering only online or offline sales? Should you take only word of mouth marketing into account or just online paid ads? Are you focusing on wholesale or retail? All of these will also impact your answer.
Market Size Practice Questions
As we mentioned earlier, interviewers definitely have a few favourite themes when it comes to market size questions, so we have compiled a handy list of market size practice questions to help prepare you for your consulting interview questions:
Long-form Market Size Practice Questions:
The Big Breakfast Question
Your client has been fairly famous for their pub lunches, but lately they have been thinking of offering breakfasts too. They would like you to figure out whether there is a market for this. The only information/data that I have available for you is that 25% of the countryâs population eats breakfast, 30% of those eat at home and the other 70% eat out (50% grab breakfast on the go on their way to work and the other 20% bring it home).
The Dating Question
Your friend just broke up with her boyfriend. She is overwhelmed with how many fishes really are in the sea. Estimate how many eligible bachelors are out there for her.
Shorter Market Size Practice Questions:
- What is the market size of toothbrushes in the UK?
- How many Samsung mobile phones are sold every year globally?
- How many individuals in the US buy life insurance policies?
- What is the market size for contact lenses?
- Can you estimate how many sales an Apple Store makes?
Interviews donât have to be so stressful if you come prepared. Moreover, mastering market size questions doesnât need to be such a big deal if you come armed with knowledge and market size know-how. Follow our above mentioned advice and some of our other helpful interview tips and tricks for consultants here, and weâre sure that youâll blow the interviewer away!
