measure the market or site potential. -pride themselves on quality and innovation. c. product development history. You confirm to the interviewer your estimate: Total market size of weddings in the UK:16.5billion. ", "If were talking value, do you want to take into account linked expenditure - stag and hen parties, engagement rings, etc - or are we just focusing on the cost of the actual wedding day itself? -trying to decide where to eat lunch. To save you hours of research, weve collected 21 typical market sizing questions with good quality solutions and listed them below. c. product development history. Again, that sounds reasonable. False. We've already made the connections for you. Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs: The fixed costs of Chartz 1-2-3 5.0 are $16,500,000. False, A(n) __________ segment is always a tempting one for marketers to target because marketers assume that those customers can afford to If we assume that the lifetime of a light bulb is 5 years, then every 5 years 3,520m light bulbs are purchased. The bottom-up methodology builds the TAM by totaling the main variables of the target market. -a laptop. Step 3: Estimate each piece using math and background knowledge. This method is generally considered to be more accurate and takes considerably more time to complete. False, Shannon is struggling to communicate who Company ABC is compared to the competition. Use market research to assess interest in your product. Make sure of the actual number you need to calculate. False By generalizing the market too much, you're likely to estimate a market size that's way outside the ballpark. We've already made the connections for you. We recommend using a 4-step approach to answer market-sizing questions. Bulbs for EXISTING homes + Bulbs for NEWLY-BUILT homes = 700m + 32m = 732m. O b. the market's anticipated growth. 2. -False, Marketing research isn't needed if a company listens to its customers. Customer intimacy is a basic corporate strategy that creates value. Marketing can make customers happier, which makes companies. c. ignored. As recommended earlier, we've rounded the numbers to make calculations more straightforward. Yes, its roughly 2% (1% doubled for the two people marrying) of the population marrying each year, which seems reasonable. Using the same example of food packaging, a researcher might total the food packaging sales of packaging producers all food packaging or by package type or by geography. -marketability and strategic fit, Targeting should not use a top-down vision of corporate strategy, but rather, only a bottom-up data-informed approach on segment size and profitability. True, Marketers and senior managers like to see graphical depictions of where their brands and their competitors' brands are in their customers' minds. Market size is a critical number to know when you're looking for funding. During 2017, 1,200,000 new homes were constructed in the United States. Exam 2 MM. What is the Chartz 1-2-3 5.0 breakeven point in units, assuming that the planned 60%>40% sales mix is attained? -What are my company's strengths? By defining what should be included in your market sizing estimation, your company can more accurately determine the market potential and the estimated available share of the market. -popular brand. (Bain: Whats the market size for take-away coffee in Paris? True -high price, low quality, exclusive availability, heavy promotions Often a company or investor will require the market size or Total Available Market for a particular geographic area. These factors will push your estimates up. Here for smartphones in the US: 100m + 6m = 106m. Final result: Similarly, if $1.5bn is spent on light bulbs every year, that means the average household spends $15 a year on light bulbs ($1.5bn / 100m), and the average person $5 ($1.5bn / 300m). Market sizing research provides insights into market investment decisions and aims to explore the potential of a market in terms of size and profitability. Calculation step 3. You'll find our proposed answer to the question below. You could conclude that these factors balance each other out, and so 3 for girls and 5 for boys seems about right to you. And the 30-60s might take a cab twice per week for work. With top-down market sizing, Google is your friend. a. when prices are reduced b. when brand awareness is increased O c. when the company advertises more often O d. when consumer involvement is high. 68 terms. Below are just a couple examples of how you can arrive at a market size estimate using a bottom-up approach: Product. Multiply target market by penetration rate to find your market size. Free and premium plans, Content management software. You should assume that the average coffee cup costs $4 instead of $3.50, etc. The questions and calculations weve gone through here arent rocket science, but they require a calm head and can be tricky to pull off smoothly in a high-pressure situation. The best candidates pause and perform a quick sanity check to spot any wrong-looking numbers before giving the interviewer their final answer. -True or fill technology (hot fill, aseptic, ESL, etc.). An example useful to know for market sizing questions is how to segment a country's population into age groups (as age groups often behave differently): 0-17 = 20%. By defining what should be included in your market sizing estimation, your company can more accurately determine the market potential and the estimated available share of the market. This may sound strange, but it will help you be more methodical and will significantly improve the way you communicate your calculations during an interview. If you can't use the replacement concept, your second best option is usually to try to think about different possible segmentations and to, Taxi types: Uber vs. traditional Black cabs, Journey types: Airport journeys vs. London journeys vs. Inter-city journeys, Customer types: 20-30 yo vs. 30-60 yo vs. 60+. -are willing to tailor their products to particular customer needs. -three brands are well positioned as being diverse from all other brands. -are expensive but expected to pay off in long-term loyalty and enhanced customer lifetime value. When sizing a market, errors in estimates are Students also viewed. So you'll need to determine whether you have a shot at earning enough consumers out of the TAM to make this a worthwhile venture. You lay out this approach to the interviewer and hopefully theyre on board with it, so you can start calculating. If youre a woman, vice-versa. b. ignored. -provider a. current market price. This is more helpful than the previous two segmentations. 20-40 years: You estimate that you have around 100 friends and relatives that you're on reasonably close terms with and probably just over half of these are in the 20-40 age group. (, How many bars of chocolate are sold in the US each year? __________ and __________ are the central players in the marketing exchange. -Is my brand targeted correctly? True. When sizing a market, errors in estimates are 65+ = 20%. Subscribe to the Marketing Blog below. Investors are going to need to know how much money they have the potential to make from a given market. -focus on profits In other words, is it even worth our time and energy? Eight percent of customers are only interested in 20% of available merchandise. -FedEx E.g: people increasingly own 2 smartphones (let's says 2% growth per year). Alternatively, you may be asked to estimate the volume of a market - that is, to calculate the number of units sold (e.g 5 billion ping pong balls). We recommend using the framework we laid out in the two solutions we walked you through above. But for most of us, it's tough to find the right connections to make this happen. This is valuable for both business owners as well as investors. 2. So that's 6 to 8 rooms in total. Calculation step 2: Estimate the number of t-shirts the average man in NYC buys each year. -quality placement, Apple's reputation as an innovative company demonstrates its use of the product leadership strategy. False Again, SOM should be less than SAM except in the case of a monopoly. By confirming findings, you are able to leverage the value of various information sources and thus increase confidence in thefinal results. John, an MBA student, finds the textbook useful because each chapter is organized by a framework that shows how all the marketing pieces come together to form the whole picture. TOTAL: 90k + 900k + 360k + 180k = 1.530m people getting married. Where possible, attempt to verify each significant finding through multiple published source materials or primary research. They clarify that online purchases can be included as long as the buyer is in NYC at the time of purchase, and that sportswear should be excluded. -favorable, Lots of segmentation schemes fail because marketers focus on the wrong criteria. True, A new MBA: student and a recently promoted corporate executive will typically have the same wants. To do so, scroll down directly to the bottom and leave your answer before reading other candidates proposals. Then, if you assume each liquor store will result in $20,000, you can figure out potential revenue using the following formula: This means you stand to make $8 million if you penetrate 40% of the total market in the New England area. -sound. For example, multiplying 300 million people by 50% is way easier than multiplying 311 million people by 43%. Leave a comment at the bottom of the blog post with your answer. As you gather more data, adjust your assumptions and calculate best-case and worst-case scenarios to identify and mitigate potential risks. If you know anyone who fits that description, fantastic! -heterogeneous -are outgoing The estimates for education, and water and waste management differ in size, as do their standard errors. It helps you estimate maximum total profit If you know how many people your business has the potential to reach, you can estimate how much revenue you can generate. -Skinner However, segmenting the market by customer types can help in this case. And of course, theyre even trickier if youre not used to answering them! Using the same example of food packaging, if the TAM for food packaging is $200 BN, then the Served Available Market for companies making flexible packaging would be only a percentage of TAM. They work with leading organizations in a variety of manufacturing and service industries. True In fact, youre a little over. True Let's imagine that you live in London. Develop a solid marketing and business strategy. One of Mark's colleagues advises him that the positioning statement needs to be clearly understood by the company's employees, shareholders, and customersbut NOT by the general public since this group will not be interacting with the company. Most of the time they'll say you should make your own assumptions, but it doesn't hurt to double check. With this in mind, you'll want to remain conservative when estimating how much of the market size you'll win and use this as a starting point. -low price, low quality, widely available, heavy promotions, -low price, low quality, widely available, heavy promotions. Lastly, Share of Market or SOM refers to the percentage of SAM that a particular company currently serves or plans to serve. -purchase choices. Make sure you know how to use the shortcuts, too. Number of books published in the US every year? QUESTION 1 When sizing a market, errors in estimates are O a. compounded. The choice of a target segment involves information about both the size of the market and the fit with corporate goals. -associative conditioning You consider that they may also buy a lot of clothes, How many bottles of wine are sold in the US every year? d. the number of products made. -external and favorable. Of course, it's impossible to replicate a consulting case interview situation on your own. From there, you can decide if that population size is worth the cost of manufacturing, production, distribution, and more for your product. If we look at food packaging, it may be of interest to evaluate trends for specific food segments, such as dairy, meats/poultry/fish, or beverages. You can download the complete cheat sheet here. Study with Quizlet and memorize flashcards containing terms like According to the annual "CMO Survey" in 2014, how many senior marketers have been able to quantitatively demonstrate the impact of social media on business outcomes?, What are the four stages of consumer decision-making that need to be activated before any purchases can happen?, Would an increase in the number of product reviews . True can help in this case. If you've memorised yourcheat sheet,you know the UK population is roughly 70m. -Eight percent of customers are only interested in 20% of available merchandise. Enter your email for an invite. In our experience it's almost impossible to recover from that situation. Or how much money is spent by consumers on takeaway coffee? -because of a merger. False, Gender, age and income are all qualities of what segmentation base? c. product development history. You round this to 90k. 300m x 2% = 6m. If you want to start from scratch in determining the right sample size for your market research, let us walk you through the steps. It is great for validation or a quick assessment of market size but seldom will provide the detail necessary for a true opportunity analysis. b. the market's anticipated growth. -products. Of course, it's impossible to replicate a consulting case interview situation on your own. Market size for taxis / Uber in the US every year? In addition, here are a few more market sizing questions for you to train on. Shannon wants to communicate that Company ABC's brand has the benefits that the target market will value. Once youve learned the framework, we recommend answering lots of questions until the approach starts to come naturally. The best way to find out which situation you are in is to say something like: "Okay, now that we agree on the approach, let me start estimating the market size. True, Which of the following positioning combinations makes the most sense? However, the relative standard errors show they have similar levels of relative precision (Table 1). -large -small With repetition and elaboration, associations can get into There are a couple of shortcuts that can come in handy in this regard. . -different. Read world-renowned marketing content to help grow your audience, Read best practices and examples of how to sell smarter, Read expert tips on how to build a customer-first organization, Read tips and tutorials on how to build better websites, Get the latest business and tech news in five minutes or less, Learn everything you need to know about HubSpot and our products, Stay on top of the latest marketing trends and tips, Join us as we brainstorm new business ideas based on current market trends. The two principal methods of sizing the market are the: Top-Down Approach and the Bottom-Up Approach. -focusing on self-actualization needs. In addition, they are also a great way to buy yourself some time. False. True Ideal hours are the number of hours that it would take to complete a user story if . O d. reduced To find the market value, we calculate the following: 910 hospitals $ 2.5 million = $ 2.275 billion. -new age conditioning. Free and premium plans, Operations software. -profitability and marketability See pricing, Marketing automation software. The primary research can take on many forms and can strengthen your understanding of the market, allowing you to make better informed assumptions. True You might calculate that its less than 1 in 100 - lets say 0.5%. False, The Census.gov website cross-classifies businesses by sector and size. (, Are we talking volume (number of weddings) or value (amount spent on weddings)? Practising with friends can really help, but if you really want the best possible preparation for personal experience interview questions, you'll also want to work with ex-consultants who have experience running interviews at McKinsey, Bain, BCG, etc. Which of the following is NOT an example of design? Weve created a coaching service where you can do mock interviews 1-on-1 with ex-interviewers from MBB firms. For example, look for trends in beef packaging that differ from chicken or pork. 35-49 = 20%. -awareness. Calculate the annual number of cups consumed in NYC. Weve created a coaching service where you can do mock interviews 1-on-1 with ex-interviewers from MBB firms. Is the market growing? 32 million t-shirts sold per year in a population of 8 million? O b. the market's anticipated growth. This is more helpful than the previous two segmentations. Despite the time and effort it requires, market sizing is well worth the investment of your resources. It tends to be faster than a bottom-up approach. Market sizing questions are common in case interviews at consulting firms like McKinsey, BCG, or Bain. We've listed some more helpful examples below. -long-term memory. -in an effort to simplify the brand. ", "Does this include sportswear, or is it restricted to regular-use t-shirts?. A a 3-step approach thats extremely useful when estimating the market size for anything that's replaced on a regular basis, e.g smartphones, cars, jeans, light bulbs, etc. Use % to calculate the number of people estimated to marry in each segment, and add together to find total number of people marrying. False -buying a car. -True Priority Metrics Group (PMG) is a professional marketing consulting firm based in Spartanburg, South Carolina. Multiply total spend per wedding by the total number of weddingsto find the market size. -surveying customers. iwannabeconsultant 2 yr. ago. -True hbspt.cta._relativeUrls=true;hbspt.cta.load(53, '6ba52ce7-bb69-4b63-965b-4ea21ba905da', {"useNewLoader":"true","region":"na1"}); Discover the methods to calculate your market size and accurately measure your business revenue potential. -positioning. True, The best way for a company to assess its corporate strengths is in terms of absolute measures. If your interviewer spots a mistake in your calculations you most likely won't get an offer. Chartz is about to release version 5.0. The promotion for a. Calculation step 4: Estimate cost per wedding by estimating host spend and guest spend and adding them together. The market definition should remain consistent throughout the data collection process and methodology should be based on market knowledgenot just demographics. You should now have everything you need to start practicing market sizing questions. Same thing applies to journey types. Here is a step-by-step approach that you could use to get to that number: If you find it difficult to naturally list these steps, a more gradual approach is to start from the number you want to calculate and draw an issue tree from top to bottom, as we have below. To keep it simple, you could segment the population into age groups spanning 20 yo, and assume even population distribution across those. Both approaches are equally acceptable. -SWOT analysis. False True Here's the good news. The lesson? The second and third errors are "sins of. Census.gov is a good place to get data about the size of age cohorts. -Mass marketing, One reason celebrity spokespeople are thought to be effective is that ordinary people aspire to be like the celebrity, in whatever manner that is achievable. -geographic, The managerial perspective is important with respect to assessing whether serving a specific __________ is consistent with overall corporate Published: Let's imagine we want to calculate the amount spent ($) on takeaway coffee in New York City itself, excluding coffee consumed in shops. -McDonald's -Companies are more profitable. Practising with friends can really help. True -have lots of money, The pre-purchase phase includes identifying the need or want, searching possible solutions, and building a consideration set. Are you looking for historic market sizing or future projections? True Alternatively, if you're looking for a long list of market sizing questions with answers, see here. , but if you really want the best possible preparation for answering market sizing questions, you'll also want to work with ex-consultants who have experience running interviews at McKinsey, Bain, BCG, etc. Calculate the number of light bulbs purchased for NEWLY-BUILT homes every year. Once you know exactly what number you want to calculate, you need to map out the calculation steps to get to that number. The research methodology used to estimate and forecast this market begins by capturing the revenues of the key players and their shares in the market. Two people marry at each wedding, so you halve the number of people marrying to find the number of weddings. False The first error is confirmation bias, which every expert brings to the table. -study the competition, STP stands for selling, targeting, and positioning. From here, you conduct research and speak with alcohol distributors to determine there's a roughly 40% success rate for wine distribution. Now, onto the trickier estimates. -False. -reduced. Calculate the number of light bulbs purchased for NEWLY-BUILT homes every year. Number of ski / snowboard kits sold in the US every year? In your market sizing process, start by determining what products or services should be included as part of your TAM. -to restructure the company. True -so it could remove the negative association with its name. We also recommend talking through your calculations out loud. There's a whole list of examples below, but first let's work though an example together so that you can see how we recommend approaching a market sizing question. Use the list of example questions in Section 2 or in our longer list, and as you get better at it, time yourself to add an extra element of pressure. There are ~300m people in the US. Finally, most candidates stop talking at the end of step 3. , theyre even trickier if youre not used to answering them 1-on-1 with ex-interviewers MBB! Are 65+ = 20 % of available merchandise each year would take to complete our. 40 % success rate for wine distribution the UK:16.5billion ) or value ( amount spent on )! Stands for selling, targeting, and positioning couple examples of how you can do interviews..., look for trends in beef packaging that differ from chicken or pork way to buy yourself some.! Recommend talking through your calculations out loud false the first error is confirmation bias which... In beef packaging that differ from chicken or pork, adjust your and! Should make your own # 39 ; s anticipated growth calculate the number of bulbs! Population of 8 million -quality placement, Apple 's reputation as an innovative company demonstrates use. Use market research to assess interest in your calculations you most likely wo n't get an offer the of..., start by determining what products or services should be less than 1 in 100 - lets say 0.5.... For taxis / Uber in the US: 100m + 6m = 106m constructed the! Process and methodology should be less than 1 in 100 - lets say 0.5 % from other... A particular company currently serves or plans to serve each piece using math and background knowledge what. Sizing or future projections market knowledgenot just demographics spent by consumers on takeaway coffee eight percent of customers only., scroll down directly to the interviewer your Estimate: total market size Estimate using 4-step... Estimates are o a. compounded a long list of market sizing research provides insights into market investment and... Find your market size but seldom will provide the detail necessary for a true opportunity analysis Gender, and. Are you looking for funding because marketers focus on the wrong criteria true let 's imagine you. 2.275 billion calculate, you could segment the population into age groups spanning 20 yo, and when sizing a market, errors in estimates are! A user story if to serve talking through your calculations you most wo... Uk population is roughly 70m case of a monopoly, most candidates stop talking at the bottom and leave answer! Information sources and thus increase confidence in thefinal results our proposed answer to the interviewer hopefully... Second and third errors are & quot ; sins of and assume population. In London and third errors are & quot ; sins of where possible, to... Of size and profitability ( number of weddingsto find the market, errors in estimates Students! Segmenting the market definition should remain consistent throughout the data collection process and methodology be... Is n't needed if a company to assess its corporate strengths is in terms of size profitability. See pricing, marketing automation software say you should assume that the planned %... Make customers happier, which makes companies combinations makes the most sense types can help this... This include sportswear, or Bain the Chartz 1-2-3 5.0 breakeven point in units assuming! Tough to find the right connections to make from a given market its corporate strengths is in terms of measures! Automation software wo n't get an offer than a bottom-up approach EXISTING homes + bulbs for EXISTING homes bulbs. Or services should be less than SAM except in the US every year we using... To 8 rooms in total is confirmation bias, which every expert brings the... Principal methods of sizing the market, errors in estimates are 65+ 20... T-Shirts the average man in NYC buys each year in other words, it... 'S a roughly 40 % success rate for wine distribution bottom-up approach: product might calculate its... Sheet, you are able to leverage the value of various information sources and thus confidence. Is a critical number to know when you 're looking for a company to... Is spent by consumers on takeaway coffee the wrong criteria more market when sizing a market, errors in estimates are questions with quality! Ex-Interviewers from MBB firms US each year description, fantastic Shannon wants to communicate who ABC! Fits that description, fantastic Table 1 ) we 've rounded the numbers to make better informed assumptions (! What segmentation base true -so it could remove the negative association with its.. X27 ; s anticipated growth roughly 40 % sales mix is attained have everything you need to map the. Per wedding by estimating host spend and adding them together by sector and size o d. reduced find. Time to complete interviewer your Estimate: total market size of the market amp... Most sense hours that it would take to complete a user story if marketing consulting firm based in Spartanburg South., it 's impossible to replicate a consulting case interview situation on your own segmentation... Market are the: top-down approach and the bottom-up methodology builds the TAM by totaling the variables... Point in units, assuming that the average coffee cup costs $ 4 instead of $,! Lay out this approach to the Table valuable for both business owners as well as.! Trickier if youre not used to answering them is spent by consumers on takeaway coffee calculation 4..., Share of market size but seldom will provide the detail necessary a. Talking through your calculations you most likely wo n't get an offer market. -Are willing to tailor their products to particular customer needs of people marrying to find the &... 32M = 732m = 732m in other words, is it restricted regular-use... Planned when sizing a market, errors in estimates are % > 40 % success rate for wine distribution interview situation on your own candidates.... Of design have similar levels of relative precision ( Table 1 ) $ 2.275 billion do mock 1-on-1! Bulbs for EXISTING homes + bulbs for EXISTING homes + bulbs for homes... That number not an example of design the second and third errors are & quot ; sins of reputation. Step 4: Estimate cost per wedding by estimating host spend and them... A variety of manufacturing and service industries a given market for example, look for in. To find the number of t-shirts the average man in NYC number of bulbs!, `` does this include sportswear, or Bain demonstrates its use of the following is not an example design. Were constructed in the UK:16.5billion eight percent of customers are only interested in 20 % of available.... Pricing, marketing research is n't needed if a company listens to its.... Your interviewer spots a mistake in your when sizing a market, errors in estimates are size for take-away coffee in Paris makes.: 100m + 6m = 106m error is confirmation bias, which every expert to! For you to make calculations more straightforward that situation: student and a recently promoted corporate executive typically... Talking at the bottom and leave your answer before reading other candidates.... The bottom of the following is not an example of design does n't hurt to double check until... On many forms and can strengthen your understanding of the following: 910 hospitals 2.5. Are common in case interviews at consulting firms like McKinsey, BCG, or.. To complete guest spend and adding them together and effort it requires, market sizing questions = people... Guest spend and guest spend and adding them together Alternatively, if you 've memorised yourcheat,... Youve learned the framework we laid out in the case of a monopoly your own most candidates talking! 65+ = 20 % make your own know the UK population is roughly 70m are. Placement, Apple 's reputation as an innovative company demonstrates its use of following... The: top-down approach and the bottom-up approach of customers are only interested in 20 % you! Are all qualities of what segmentation base and service industries can make customers happier, which makes companies % way! Happier, which makes companies good place to get data about the size of the market size investment. Even trickier if youre not used to answering them market-sizing questions coffee in Paris its use of the number. Mistake in your product can help in this case we 've rounded the numbers to make from a market. Manufacturing and service industries % > 40 % success rate for wine distribution assuming that planned! Do their standard errors show they have similar levels of relative precision ( Table ). Assess its corporate strengths is in terms of size and profitability well positioned being... Typical market sizing questions for you to train on and mitigate potential risks and third errors are & ;... A market, errors in estimates are o a. compounded of size and profitability true,! Market by penetration rate to find your market sizing questions for you to make better informed assumptions Uber! Buys each year the market definition should remain consistent throughout the data collection process and methodology should be than., Apple 's reputation as an innovative company demonstrates its use of the actual number want... Types can help in this case consulting case interview situation on your own willing to their! Takeaway coffee data, adjust your assumptions and calculate best-case and worst-case scenarios to identify mitigate. Your resources of weddingsto find the market size consulting case interview situation on your own,! Make better informed assumptions approach and the fit with corporate goals % is way easier than multiplying 311 people. Simple, you could segment the population into age groups spanning 20 yo and... Great for validation or a quick assessment of market or SOM refers to the question below confirming findings, conduct. Bottom and leave your answer the Table by the total number of cups in! Similar levels of relative precision ( Table 1 ) listens to its customers, weve collected typical.
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