How to answer basic market sizing interview questions

market sizing interview questions


You typically get market sizing questions in interviews, whether they’re for technical, finance, marketing or consulting positions.
Companies such as Google and McKinsey are well-known for using Market Sizing questions in interviews to assess strong candidates.

The reasons why interviewers ask Market Sizing questions are to:

  • Assess a candidate’s thinking and problem-solving process.
  • Understand how a candidate breaks a problem down and supports their reasoning

For example, a basic Market Sizing question could look like this:

Interviewer: “How many households are in the United States?”

At this point, you might be saying to yourself “How could I possibly know this? It’s not like there’s a specific number of U.S. households out there on the Internet! I didn’t know you’d ask me this question – otherwise, I would’ve looked it up beforehand!”

Well, one tip is to see if you can use the human population as a starting point.

To answer this question, you could say something like:

You: “Well, I know that there are around 300 million people living in the United States. I personally live in a family of 3 people, so assuming that there are roughly 3 people living in 1 household, that leaves me with around 100 million households in the United States.”

According to Statista, there are approximately over 125 million households in the United States.

Pretty close, right? Here’s another one:

Interviewer: “How many cars are there in the United States?”

Take a moment to think about this yourself. While it seems like a big question that’s impossible to answer, it’s actually simpler than you might think.

You: “Well, I know that there are around 300 million people in the United States. I live in a family of 3 people, and we have 2 cars at our house. So assuming that there are roughly 3 people living in 1 household, that gives me roughly 100 million U.S. households. Assuming that each household has roughly 2 cars (some might have more, some might have less), that gives me roughly 200 million cars in the United States.”

Statista estimates that there are roughly over 260 million cars in the United States.

Again, considering this kind of thinking takes less than 30 seconds, we came pretty close to the answer starting from scratch!

And another one:

Interviewer:  “How many Starbucks stores are there in the United States?”

You: “Interesting question! Well, I need to break this down a bit. You see, I live in X-Town where we have roughly 100,000 people, and I estimate that we have anywhere between 3 to 5 Starbucks stores. I also know that there are 300 million people in the United States. Based on my town of 100,000 people, I know that I would need to multiple my town’s population by 3000 to get 300 million people (the U.S. population) – this means that I can pretty much fit 3000 X-Towns in the United States!
Thus, since I know that 1 X-Town has anywhere between 3 to 5 Starbucks stores, and that I can fit roughly 3000 X-Towns in the U.S, this gives me anywhere from 9000 (3 Starbucks in X-Town * 3000 X-Towns) to 15,000 Starbucks stores (5 * 3000) in the United States.”

Statista estimates that there are roughly 12,000+ Starbucks stores in the United States (company-operated AND licensed).

Interviewer: “Great! Thank you for sharing your thinking process!”

Overall, these are some of the basic kinds of market sizing questions one could expect in an interview.

As you can see, these kinds of market sizing question requires one to:

  • Break down the problem into smaller pieces.
  • Use AND justify assumptions. 

     
    Again, interviewers don’t expect you to get the “correct” answer. For the record, it’s highly likely they don’t know the answer themselves – for example, they probably don’t have the exact number of Starbucks stores in the U.S. written at the top of their notes.

What they want to see is your thinking process, and whether you can come up with reasonable assumptions to justify your answer.

Take 2 minutes to recognize questions where you can use the human population to help you answer market sizing interview questions! It can really be helpful for future interviews.

Hope this helps!

Source : Kelvin Luo’s Answer on Quora.

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