Market sizing case (demonstration and commentary)

hi welcome back to consulting confidence live case demonstration series I'm Shawn glass from the CEO of consulting confidante my name is Robert yearsof I am the strategy intern with consultant confidant great so today what we're going to do is a live case demonstration for a market sizing case now I know a lot of you are thinking that market sizing cases are actually not as common as an entire case and that's true we don't see a lot of market sizing cases where that's the only part of the case however what we do find is the principles that will lead you to be successful in a market sizing case are the same principles that are going to lead you to be successful in any other case profitability growth strategy etc now these principles that keep in mind while going over these market sizing cases is that you want to use a structured problem-solving approach and you want to think about what are the drivers and how do you break down a more complex problem into smaller simple pieces that you can get to the answer more easily and more quickly so let's get started great let's do it all right so your client is the wise cheese connoisseur Steve Arkell and Steve was wondering what the market size for cheese's in the United States by revenue great um if I could just drop a framework really quick I'll circle back in 15 20 seconds that sounds great all right now would be a great time for everyone at home to pause the video and take about 60 seconds or less to drop a framework on how to figure out the US market for cheese in terms of revenue great so going over the framework I've drawn up if we want to start off with the number of people we have the quantity that in those number of people eat times the weeks and multiply that by the dollar amount we'll have the revenue amount for the cheese market in the United States now there's one thing I'd like to point out that Robert did very well here if you notice when he goes over his framework he talks about the entire equation holistically before diving into any of the individual variables for example he says we want to go over the number people multiply that by the amount she's at they're eating in a given amount of time multiply that by the price per cheese and that will give us the amount of revenue now let's contrast this with the other approach which is definitely suboptimal that is where you don't explain the entire equation before diving into the numbers so they might say all right we want to know how many people are in the United States that are eating cheese okay well there are deep wobb wobb wobb wobb la and they're going over this before they even outline the entire equation so you don't really know where they're going and the interviewer is probably sitting there a little bit confused hoping they're going to take it the right direction but really unsure of what's what's coming next only sense going into the number of people is the market beacon segment um we Robert does a great job knowing to segment the market at this point in every market sizing case well in almost every market sizing case you're going to get a large aggregate population that's going to be very difficult to estimate how much they do X how much they eat how much they purchase how much they sell etc and the best way to do this is to disaggregate it it becomes a lot easier to say well we have people who are lactose intolerant they probably eat this amount of cheese none and then you can find something that you're already familiar with you're probably familiar with the amount of cheese that you need and you say okay well I eat this amount where do I probably follow mine the middle range and mine the high range this way you're using real numbers and you're able to tie that back to the actual question gonna have you know those Steve Urkel's those people who have that high affinity for cheese that are eating at a ton these are going to be our cheese lovers this is our high market next we have our average joe's the guys that um you know eat their occasional pizza once a week this and that go to the grocery store or buy some cheese so this is a medium market our average joe's lastly we have our low market people who don't really like cheese or are lactose intolerant um so this market might be non-existent but we also still have that average market and those cheese lovers yeah so if you could give me a couple seconds to go over some numbers we'll circle it let's do it great so going into the high market we could safely assume that about 15 20 % so about 50 million people will be loved and cheese and you know eating at a ton that average market that you know I could definitely identify with let's say flea seeing that that's about 200 million people we think that's you know safe 75% of the market dynamics and that lactose-intolerant markets one that we can put our fingers on about at about 15 to 20 percent as well same Rabanne disease at high market and these people aren't really going to be buying cheese that's about 50 million people as well and we probably want to cross this off of our demographic because they're not buying cheese doesn't make them feel too well and we're not getting any revenue from this market yeah now that makes sense great so let's start off with the average market this one with the quantity of cheese I can identify was so I can put a number to it pretty easily um I could say I eat about a pound of cheese a week with the pizza and the cheese like at the grocery store things about that sense so I could put a palm for myself and we have fifty weeks in the year which gives me a quantity of 50 pounds per year notice how robber takes an extra step when figuring out how much cheese he eats in the year he doesn't immediately go off and say okay ie a hundred pounds of cheese per year I eat 50 pounds of cheeseburger although he gets to that second answer he puts it into a realm that is much easier to comprehend and visualize it's a lot easier to know how much you eat on a weekly basis then even on a monthly and especially on a yearly basis so this is almost a microcosm for the general principle of a market sizing case you're taking something bigger and more complex and you're breaking it down into simpler components that are easier to visualize and easier to estimate for myself and other people that average each ease such as myself yeah I'll make sense in the high market um we can safely assume that people who love cheese and have that affinity are probably eating twice as much as those average people going out for pizzas of ton each week and you know buying them excess and pounds in the grocery store yeah so we can have 2 pounds here times the 50 weeks as well and going back to that low lactose-intolerant demographically cross it out since these people aren't buying cheese and not really for that that make sense great so starting off with the high market this one we have first we have 50 million people and these people are eating 100 pounds of cheese yeah per year so 50 times 100 gives us that five billion dollar amount or five billion pounds of jihad years yeah in this high market going into the dollar amount we could safely assume that these people are spending about $5 for their cheese and we can have you know higher price range for the organics and the lower quality at less but when I go to the store and I buy the average cheese it's about you know $5 per pound yeah I'm so going at five billion in the terms of quantity and pounds per that for that high group right ah times that five dollar amount a price point we end up with twenty five billion dollars in terms of the revenue amount for this high group yeah that makes sense great going into the average Joes we have two hundred million people who are eating 50 pounds of cheese per year and that comes from the one pound and fifty weeks so we have 50 pounds and that will take us to ten billion yeah for that 200 million population and the 50 pounds per year and we could safely assume that these people are saying paying the same price as their cheese lovers yeah counterpart so if we take 10 billion and multiply that by the $5 price point we have about 50 billion here yeah adding that market and excluding those lactose-intolerant groups we have 75 billion dollars for the cheese market in the United States um including the you know Steve Arkell cheese lovers and the average group as well yeah no I think that's not that makes sense now does 75 billion dollars seem to a foot does that seem a little high to seem a little low um after you finish the math portion of any case market sizing or otherwise it's always a good idea to take a step back and do the sniff test this is where you look at the number and you say is this kind of high is this kind of low is this right in the realm of what I would expect for example if he came out with a multitrillion-dollar answer for the amount of cheese that Americans purchased per year then you would take a step back and go whoa there's definitely some kind of problem or it could have been yeah Americans eat $5,000 worth of cheese per year now you know that you're a little bit on the low side so getting into the habit taking a step back looking at the number and thinking about if this makes sense or not is a great way to go about it seems maybe just a tad high I would safely assume that the cheese market to be somewhere between you know twenty and fifty to sixty billion dollars um so seventy-five does seem a bit high maybe in terms of that sense we can take the high amount of cheese eaters down to maybe one point five pounds per year to get a more realistic demographic but I think we're around the ballpark here now one thing I'd like to point out is a certain skill that's going to be very valuable in your interview and in your consulting career so what is this skill let's take a step back and think about what consultants do consultants solve complex problems in a relatively short period of time now how do they do this they use a structured problem-solving approach they're hypothesis-driven and third they prioritize they prioritize their time very very stringently because that's going to make or break whether they're going to get the answer on time or not so how can you show that you have this ability to prioritize during a case well you might be able to get the answer you might have to conclusion it's backed by data and then you can take a step back and say well look if I had more time we might want to dive a little bit deeper into this variable because if this were to change this could change our answer a little bit more than the other ones Park here yeah I think orders of magnitude that makes a lot of sense great great thank you and that's our case great job Robert that was overall a very solid performance so let's go over some of the things that went well first he used a structured approach he laid out his plan of attack and then he executed in a very logical fashion it was very easy to follow next he identified what the most important driver was that he needed to segment and in this case it is the customers and when he segmented those customers he didn't just call it high medium and low he actually gave kind of fun names to it now this is a small nuance that is definitely not necessary but adding a little bit of color and humanity to your case performance can help you stand out next he was easy to follow with his calculations I knew where he was going and it was just easier as an interviewer because he was so structured and logical when he went through his calculations and lastly one thing that he did it was very good was for some of the numbers that are a little bit more difficult to pull out of the air he broke them down into smaller pieces so that you can visualize it and he was able to take something from his own life as a data point and use it in the case so for example with how much cheese do people eat in a year that's a very difficult number to just come up with off the top of your head without any background in it but if you break it down to amount of cheese eaten per week and then you say how much cheese do I eat in a week it becomes a much easier problem so breaking those things down into simpler pieces that are easier to visualize and relate to your own life was a great move so thank you for joining our live case demonstration for market sizing if you'd like to see more videos please subscribe to our YouTube channel lastly if you're curious about how you'd stack up against consultant candidates from the perspective of a consultant at a top firm then check out consulting confidante here you can schedule a live case or a mock fit interview with a consultant from a top consulting firm like BCG Bay in McKinsey Deloitte the list goes on and then after the case you'll get customized feedback that you can use to take your case performance to the next level so thank you and good luck

Channel: Consulting Confidant Case Prep

Views: 159,561

Keywords: market sizing, consulting interviews, consulting case interview, consulting, interviews

Id: W-uxyglwDiY

Length: 12min 52sec (772 seconds)

Published: Mon Dec 28 2015