How to Ace Market Sizing Consulting Case Study Questions

  • Last Updated December, 2019
case interview market sizing framework. This picture depicts a white desk with a laptop siting on it.

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You might have heard of the infamous questions that firms such as McKinsey ask during their interview such as: 

“How many golf balls can fit into a Boeing 747?” or

“How many coffees does Starbucks sell each day?”

These are known as market sizing questions.

Market sizing case questions are often the first type of case you’ll be asked in consulting interviews. 

These questions appear tricky because they’re structured to have a single correct numerical answer—but one that you’re very unlikely to know off the top of your head. 

No worries.

There are 2 approaches you can use to safely and accurately answer any market sizing question you might be asked in a consulting interview. 

In this post, we’ll show you what these 2 approaches are, as well as covering:

  • What Is Market Sizing?
  • Why Do Consulting Firms Use Market Sizing Case Questions?
  • The 2 Approaches to Answering Market Sizing Questions You Need to Know
  • 7 Steps to Answering a Market Sizing Case Question
  • Key Numbers to Know Before Your Management Consulting Interview
  • Tips and Tricks for Mastering Estimation Questions 
  • Market Sizing – a Case Study Example
  • How to Get Better at Market Sizing

If this is your first visit to MyConsultingOffer.com – you may want to head to Case Study Interview Prep to find out what a case study is and why consulting firms use them, or here to see examples of case interview questions. But if you’re ready to learn everything you need to know about market sizing, you’re in the right place.

Let’s get started!

Market Sizing Questions (also called dinner conversation cases)

Market Sizing Case Definition

Market sizing case questions are focused on establishing the size of a market in terms of annual revenue or the number of units sold rather than determining how to compete successfully in the market. They’re often asked early in the consulting interview process or in interviews of undergraduate students who may not have a deep business background. They can also be one component of complicated, multi-step cases in later-round interviews. 

They focus on making logical estimates, showing creativity, and doing basic math.

Sample Questions:

  • What is the market size for cell phone services in New York City?
  • How many piano tuners are in Chicago?

You’re not expected to know the answers, but instead to show a logical way to deduce it.

Check out this video to hear Davis Nguyen, Founder of MyConsultingOffer.org, talk about how to ace your market sizing case questions.

Why Do Consulting Firms Use Market Sizing Cases?

As with any type of consulting case interview question, your interviewer is interested in assessing whether you’re good at structured problem-solving. They want to know if your thought process is clear and logical.

Because of this, your approach to answering an estimation question is more important than the answer itself. Your approach needs to be reasonable, include key factors that would affect the size of the market, and your assumptions need to show good business judgment.

Interviewers are also judging your ability to communicate your thinking clearly.

The 2 Approaches to Answering Market Sizing Questions You Need to Know

Top down – Start from the total population and divide your way down to the relevant market.

Sample Question: How many laptop computers are sold in North America annually?

Top-down approach:  Start with the population of North America and work your way down to the group of people who need and can afford laptop computers, and how often they would buy them given the average useful life of the equipment.

Bottom up – Start with a single base unit (a typical customer or sale or business outlet) and multiply your up to the entire relevant market.

Sample Question: What is the market size for IT support services for retail customers in the U.S.?

Bottom-up approach: Estimate of the needs of a single user getting support one time, then roll that up to the total support needs of all retail computer users over a 12 month period.

Most questions can be solved with either approach, but one is usually easier than the other. For large markets with multiple customer segments, the top-down approach usually works best. For local markets with a homogeneous customer base, the bottom-up approach generally works best.

7 Steps to Answering a Market Sizing Case Question

7 steps to answering a market sizing case question
  1. Ask clarifying questions. Is the interviewer looking for revenues? Units sold? For what time period? And what geographic region?
  2. Create a structured process for finding the answer. Don’t just leap into the math. As with any case, take a moment to plan your approach. Start the math only after you’re confident about your approach and have walked your interviewer through it step-by-step.
  3. Estimate using round numbers. 10%, 25%, and 50% are easier to calculate than 12.7%.
  4. Ground your estimations with facts. Don’t just pick a number or percentage out of thin air. Base it on experience or facts that you know.
  5. Get the math right. It’s hard to do math right under the pressure of an interview. Practice will help.
  6. Sanity-check your answer. Do your numbers make sense? If not, go back and check your assumptions and math.
  7. Explain the “So what?” Remember, part of this exercise is about communication. Explain the significance of the answer you’ve arrived at.

Key Numbers to Know Before Your Management Consulting Interview

Market sizing question pdf

This chart will help you learn the right magnitude for markets of different sizes. Knowing the sizes of these markets will ensure that when you’re answering a market sizing question, you are in the right ballpark with your estimates.

While you do not need to know the exact size of every possible market, it shows good business judgement to at least have the right order of magnitude.

Tips and Strategies for Mastering Estimation Questions

  • Keep your assumptions simple. While you don’t want to make things overly simplistic, you don’t want to overcomplicate them either. A good rule of thumb is to use 3 different market segments or types of customers.
  • Use round numbers to keep the math straightforward.
  • Walk the interviewer through your approach before running any numbers.
  • Remember that people could have more than 1 of something. In our example above on estimating the size of the laptop market in North America, remember that 1 individual might have a work laptop and a personal one. Or they might use one at school or the library.
  • Take replacement cycles into account. Laptops have a useful life of more than a year, so you need to account for how many people are actually replacing their laptop in any single year. For example, if you assume that laptops get replaced every 3 years or so, then whatever number you come up with for the size of the laptop market needs to be cut by 3. Another way to think about this is to assume that if laptops are replaced every 3 years, then each person will replace their laptop by ⅓ each year.

Market Sizing Case Study

When Davis was preparing for interviews, he frequently brought up estimation questions at dinner and used them to practice. One night, a good friend challenged him to estimate the number of eligible bachelors for her (she was boy crazy at the time). This was his approach to that estimation. (To see the actual math calculations on eligible bachelors for Davis’s friend, see Consulting Math.)

“My friend attended Yale with me. She was an international student and I knew she wanted to marry someone who could give her American citizenship, so I started with the US population.”

“Then I cut the population in half to focus on men since she was interested in only men.”

“I cut the population of men into age groups so I could rule out men who were too old or too young for her.”

“I considered focusing on the segment of the male population that’s taller than her, but actually, my friend is pretty short. Almost all men in the right age range are taller than her so there was no need to factor that into my calculation.”

“Next, I considered attractiveness: both the portion of the target male population that might be attractive to her and what percentage of those guys would find her attractive.”

“My friend is pretty picky. She was only interested in guys who were 9’s or 10’s on a scale of 1 to 10, so about 20% of the population if I assume an equal distribution of attractiveness.”

“In considering what percent of that population would consider her attractive, I decided to be conservative and assume only 10% of the population she thought was attractive would also find her attractive.”

“I also knew my friend was only interested in guys that had a good income, so I decided to focus on people who were attending or who had graduated from college. In fact, she was really picky, so I decided to focus on top colleges like the Ivy League schools or Stanford.”

“Finally, I assumed that some portion of the guys who were in the right age range and who she found attractive and who found her attractive and who went to a top college might already be taken. I cut the number I’d come up with in half, figuring a lot of those highly eligible guys would already be off the market.”

“It turned out that the number of eligible bachelors for my friend wasn’t huge. My ‘so what’ based on this analysis was that she might want to be a little less picky.”

How to Get Better At Market Sizing

The best way to get great at market sizing is to practice. Turn dinner conversations into opportunities to practice.

You can turn just about any item around you or any business you walk by into an estimation question. Give it a try. Here are a few to start with:

  • How many cups of coffee does your local coffee shop serve each day?
  • How many people sat in the same chair in the cafeteria as you are sitting in now over the past year?
  • How many lawn mowers are sold in the U.S. annually?
  • What is the market size for frozen hamburger patties during the summer months?
  • How many hot dogs are sold at a Red Sox game?

After reading this page, you’re well on your way to preparing for the market sizing case interview questions you’ll be asked in management consulting interviews. Why don’t you try one with your friends and family over dinner?

In the comments below, tell us your favorite market sizing question. 

Don’t forget, we have lots of other resources you can use to prepare for your interviews. People who are working on their market sizing skills often find the following pages helpful: 

Help with Case Study Interview Preparation

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