Market sizing questions and brainteasers are designed to assess the thought process you follow and logic you apply in order to reach a final answer.
When answering market sizing/brainteaser questions, you are not generally expected to reach a final numerical answer that is particularly close (or equal) to the true value (although you must make reasonable/rational numerical estimations along the way). Ensure that you think out loud. Make the interviewer aware of your thought process and carefully explain all your assumptions and calculations throughout. These types of questions are also typically designed to test how well you react to unexpected questions under pressure, as this is something that consultants may have to do regularly when working with clients.
Examples of questions you may be asked
- What is the size of the potential customer base of a dating website?
- How many footballs could fill up Wembley Stadium?
- How many leaves are there on a tree?
- How heavy is the building we are sitting in?
- How many shoes are sold in India every year?
- How many cars are there on average at any one time in the UK every year?
- How much is the Houses of Parliament worth?
Strike a balance between pragmatism and accuracy. Round up numbers/work with averages when necessary to ensure you can make calculations mentally if required. Perhaps round some numbers up and some down in order to ensure you remain as accurate as possible. For instance, instead of including 19% in your calculations, round it up to 20% for the sake of simplifying the calculations, instead of taking 58 million as a size of the population, round it up to 60 million (again remember that it is not the final number that matters). If the interviewer will let you, validate your proposed process of reaching a conclusion with the interviewer before plugging in your estimations. You could also see if the interviewer is willing to validate your estimations along the way, as if the interviewer feels your estimations are fair, at least you know you are along the right track. A majorly inaccurate estimation at the beginning of a set of calculations could completely diminish the accuracy of your final figure, even if a majority of the subsequent estimations are realistic. Consistently make sanity checks to ensure your estimations are leading you towards a conclusion that is not wholly illogical.
- Sanity Check: once you have made a few estimations and started to make calculations, performing a ‘sanity check’ means assessing whether the results of those calculations vaguely relate to the figure that common sense would dictate could be correct. A sanity check could for instance indicate you have missed 0’s along the way, or massively over or underestimated the size of the market or its specific segment.
When you first arrive at a final number, you should use your business judgement to determine whether that number is realistic. Your intuition should tell you whether the number seems either too big or too small. You should then be able to verify your assumptions, indicate those that may have led to the final under/over-estimation and carefully consider whether more appropriate estimations can replace any of your existing estimations in order to give you a more realistic and logical final number. Once you have corrected and restated your assumptions to the interviewer, you may then be asked to perform the calculations again.
One way to approach market sizing questions is to break the question down into little problems and then input your estimations into a tree to structure your problem. If you have 20 minutes to solve a problem, do not make a couple of rushed calculations and give your estimation within the first 2 minutes. The more time you have, the more you should try to break down the problem and demonstrate to the interviewer that you are able to think flexibly, make informed assumptions and recognise and consider a wide range of variables. Note that the nature of market sizing/brainteaser questions can vary enormously. There is no way that you can possibly prepare for every type of question in advance. However, getting to grips with the different variables that exist in a variety of contacts can help you to develop your ability to think flexibly.
If you are asked how many chocolate bars are purchased in England annually, remember to take into account chocolate bars purchased by tourists within the UK rather than simply estimating the proportion of the English population that purchases chocolate bars. If asked how many jackets Tesco sells annually, consider the proportion of Tesco stores that sell clothing. If asked how many cars are sold by BMW in the UK every year, does this mean only cars branded with the BMW logo, or cars produced by BMW (for instance, Minis)? If asked about a hypothetical market, you could start by considering which industries already provide for a similar end-goal. For instance, if asked what the potential market for teleportation would be, you could consider the current market for long-haul flights as your starting point (as both teleportation and long-haul flights relate to people wanting to travel). You could then base your estimates on the market for long-haul flights, whilst acknowledging that factors such as price, accessibility and safety would impact upon the estimations.
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By Jake Schogger - City Career Series