Determining Your Approach There are two basic methodologies for determining market size: top-down and bottom-up. -products. Calculate the corresponding market size ($ value). -capabilities. Knowing the relevant starting point data for a market sizing question (e.g population of the USA) helps you start on the right foot and makes a good impression on your interviewer. -remain customer centric You should then segment your market in a way that makes it easiest to calculate. For instance, let's imagine you need to calculate the market size for taxi services in London. Free and premium plans, Content management software. __________ and __________ are the central players in the marketing exchange. -saving. -sound. Both approaches are equally acceptable. If a marketer is focusing on people who __________, she will promote a False The idea of targeting is merely one of True Number of books published in the US every year? -high price, low quality, exclusive availability, heavy promotions For instance your interviewer might ask: "How many takeaway coffees are sold every day in New York?" Of course, it's impossible to replicate a consulting case interview situation on your own. Shannon wants to communicate that Company ABC's brand has the benefits that the target market will value. -consumers will most likely purchase more of the three brands not clustered together. Segment population and estimate % of each that will marry in a given year. What result do companies see from happier customers due to marketing? Chartz is about to release version 5.0. -external and favorable. Are you looking for historic market sizing or future projections? -high-involvement products extremely useful when estimating the market size for anything that's replaced on a regular basis, e.g smartphones, cars, jeans, light bulbs, etc. -Skinner True. Here's the good news. -favorable, Lots of segmentation schemes fail because marketers focus on the wrong criteria. E.g. -Companies see no results. In our experience it's almost impossible to recover from that situation. You know that London has about 8m inhabitants, and you think that NYC must be fairly similar. What is the total number of automobile tires sold in the US every year? In what part of the Fertile Crescent did Sumer emerge? Two people marry at each wedding, so you halve the number of people marrying to find the number of weddings. New 80% and upgrade 20% c. Comment on the results. Weight of the International Space Station? Are we interested in the whole New York metropolitan area (20m population) or just New York City (8m population)? The most versatile form of primary research is in-depth telephone interviews that can be used to capture more sensitive information. False Spend a little bit of time memorizing the data on the demographics cheat sheet in Section 3. MM T2 Ch 5. -Will customers want what our company is prepared to produce? The market report digital printing Market offers a thorough . The first step in the screening process for potential markets and sites is to ________. We also recommend talking through your calculations out loud. We could estimate the market size for residential light bulbs in the US by taking a 3-step approach. -doing your taxes. QUESTION 1 When sizing a market, errors in estimates are O a. compounded. Maslow's hierarchy ranges from satisfaction of basic biological needs to more abstract needs regarding well-being. MarketResearch.com6116 Executive BlvdSuite 550Rockville, MD 20852800.298.5699 (U.S.)+1.240.747.3093 (International)customerservice@marketresearch.com, 7 Ways to Identify New Market Opportunities in a Changing World, 8 Leading Experts Share Their Top Market Research Tips for 2018, Primary Data vs. But the interviewer will be evaluating you more on the logic of the thought process than on how close your final result is to the real one. -What are my company's strengths? Finally, most candidates stop talking at the end of step 3. False, Airlines use operational excellence strategy to tailor products to customers. 5. The lesson? True -brand names. 0-20 years: Most of this age group is below the legal age of marriage and even at legal age, its fairly rare for people to get married before 20 in the UK. Mental calculation errors happen frequently. Calculate the number of light bulbs purchased for EXISTING homes every year. But if you spot your own mistake you still have a chance. d. reduced . Naytorrr. -identifying their product with a certain level of needs. For instance, you should use 350 days in a year instead of 365. -goals. 60-80 years: Probably not as rare as the first segment, given that all ages are applicable, but still fairly rare. This number is the TOTAL number of bulbs. Defining your target market should always be the first step in estimating market size, and it is critical that you do not stray from your determined market definition through the data collection process. Market sizing questions are typically asked at the beginning of consulting case interviews. -pride themselves on quality and innovation. If you know anyone who fits that description, fantastic! False, A(n) __________ segment is always a tempting one for marketers to target because marketers assume that those customers can afford to True. You call it 2%. -moving averages. Your selected approach will dictate the necessary sources to estimate market size. -ignored. -surveying. We recommend using the framework we laid out in the two solutions we walked you through above. Theyre not interested in related spend such as hen parties and guest transport, etc. The 'population' represents the whole group that you want to understand through your research, while the sample size is the number of people you need to survey to get a representative sample of that whole. You can't predict how difficult your market sizing question will be, and so you should be prepared for it to be a little bit more complex. Your calculations have been fairly simple, so there shouldnt be any surprises. The two principal methods of sizing the market are the: Top-Down Approach and the Bottom-Up Approach. -study the competition, STP stands for selling, targeting, and positioning. 9.5 Global Wind Power Bearing Market Size . False. In our experience this 3-step approach is the most efficient way to calculate market sizes for consumer products that are replaced on a regular basis. But what else should you be doing to prepare for them? Still, there are ways to maximize the effectiveness of this exercise: -segments. (If you're from another country, base it on your own experience and adapt. The top-down methodology uses a broad market size figure and determines the percentage that the target market represents. Here we go: Having a framework will help you structure your answer logically and minimize your potential for mistakes. We've created a cheat sheet for the US below, and we encourage you to find and learn these numbers for the main countries you are applying for. Ideal hours are the number of hours that it would take to complete a user story if . Find average and multiply by population of NYC. -heterogeneous . -brand associations. -Geographic marketing These factors will push your estimates up. 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. Market sizing research provides insights into market investment decisions and aims to explore the potential of a market in terms of size and profitability. Or how much money is spent by consumers on takeaway coffee? Free and premium plans, Customer service software. -homogeneous False, Marketers ask the most important question: "How likely is it that a segment will be profitable?" -False, Many contingencies modify marketing plans. -gasoline. From there, you can decide if that population size is worth the cost of manufacturing, production, distribution, and more for your product. -Psychological marketing Your interviewer is interested in what's going on in your head - not the final result. -more profitable. E.g: if there are about 300m smartphones in the US (1 per person), and smartphones get replaced every ~3 years, then that means ~100m smartphones are REPLACED every year. Market size for Pringles in the US every year? -are good at production, delivery, price, and convenience. Let's imagine that, drawing from personal experience, your perception is that women dont wear t-shirts as often as men, but then again they tend to buy more clothes than men. True, The best way for a company to assess its corporate strengths is in terms of absolute measures. -focusing on self-actualization needs. Exam 2 MM. -Where will customers buy our products? -pride themselves on quality and innovation. Free Guide & Templates to Help Your Market Research, We're committed to your privacy. This is called triangulation. -to demonstrate that it's easy to apply Total number of weddings in the UK each year: 750k. Census.gov is a good place to get data about the size of age cohorts. As a result, the bottom-up method is a more valid estimate because it is less likely to include non-addressable revenue or units. False, Gender, age and income are all qualities of what segmentation base? There are a couple of shortcuts that can come in handy in this regard. -operant conditioning The best candidates pause and perform a quick sanity check to spot any wrong-looking numbers before giving the interviewer their final answer. Calculate the annual number of cups consumed in NYC. -internal and favorable. The 21 questions we've included in this article should be a great resource for you when you need to practise market sizing questions. -Is my brand optimally segmented? First, you'd want to determine how many liquor stores are in the United States this helps you figure out the total market to which you could theoretically sell your product. This is more helpful than the previous two segmentations. . Terms in this set (29) identify the basic appeal of a market. Calculate the number of takeaway cups per week for an average New Yorker. Number of weddings celebrated in the US every year? -spending. 3. -so it could remove the negative association with its name. Intermediate result: If 732m light bulbs are purchased for the residential market in the US every year, that means the average household buys ~7 light bulbs in a single year (732m / 100m), and the average person buys ~2 light bulbs per year (732m / 300m). -False, Marketing research isn't needed if a company listens to its customers. Imagine putting in months of hard work to realize that there are only 100 people in the U.S. who will potentially buy your product. Step 2: Break the number down into 3-5 small, easy-to-estimate pieces. -assessing. Estimating market size or "market sizing" for your software app or SaaS product really isn't that hard. It seems reasonable. Market sizing is best used when you're in the process of developing a new product or service, or preparing to launch it, because it gives you insight into the market potential and likely value of the new market. Assuming an average selling price of $500, the market size for smartphones in the US is therefore $53bn. Great marketing is based on __________ laws of human and organization behavior. -sensual experience False, Sight, sound, smell, taste, and touch are all used by marketers. O d. reduced This also buys you some thinking time. c. ignored. (Bain: Whats the market size for take-away coffee in Paris? True True Adjust estimates for age group differences. 300m x 2% = 6m. A survey shows that the average consumer buys one bottle of wine a week, or 48 bottles a year. False, Shannon is struggling to communicate who Company ABC is compared to the competition. Add 1 and 2 and calculate the value ($) of these light bulbs. 2. Potential profitability is a function of . Using the same wine example Say you found recent data showing that the average cost of a wine bottle in New England is $10. -Watson Calculation step 5:Find average and multiply by population of NYC. Of course, it's impossible to replicate a consulting case interview situation on your own. 1. 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. False, "Current users" are relatively difficult to communicate with. Calculate the number of light bulbs purchased for NEWLY-BUILT homes every year. By confirming findings, you are able to leverage the value of various information sources and thus increase confidence in thefinal results. Remember, there is often more than one valid way of approaching a market sizing question, so if your solution is different to the ones we've linked to, it doesn't necessarily mean it's wrong. In most cases your interviewer will ask you to make your own assumptions to get to the final number. -shifts in attitudes. During 2017, 1,200,000 new homes were constructed in the United States. There are two types of market sizing questions. -FedEx True. -focus on profits You round it to 1.5m. We've laid out the prep process in four simple steps: First of all, you need to learn the 4-step approach we covered in Section 1. Number of drills sold in Latin America every year? -Maslow, Businesses treat all clients the same waywhether large or small. Try answering the question below accurately and as fast as possible. Many get stuck on establishing boundaries or defining the market before they even get to the data analysis and implications of their research. -less profitable. False The 5Cs, STP, and 4Ps operate interdependently. 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+. Free and premium plans. Urban living affords certain elements of entertainment, and smaller towns offer different kinds of amusement. (. Newark, April 17, 2023 (GLOBE NEWSWIRE) -- The Brainy Insights estimates that the USD 150.32 billion in 2022 global converted plastic packaging market will reach USD 280.58 billion by 2032. Marketing can make customers happier, which makes companies. Creating well-designed products is the predominant way of conveying brand imagery through Estimating 70 guests at each wedding, you estimate an average spend of 30. -smell. This is valuable for both business owners as well as investors. -calculated. If you'd like to see a whole lot more questions, complete with links to answers, check out our comprehensive list. That sounds reasonable. -attitude, Who created the hierarchy of needs? -classical conditioning We've already made the connections for you. -profitability and strategic fit Revenues for an average bicycle repairs shop in New York? False, Creative MKT (322) USM- Final STUDY Guide, MKT 330, prof selling, Kelli King, exam 2, Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, General Biology I Final Exam Review Questions. Variance is a measure of the uncertainty caused by the use of a sample of retail prices, instead of the complete universe of retail prices. 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. Calculation step 4. True Number of ski / snowboard kits sold in the US every year? However, you could also factor in that children often wear a lot of passed-on clothing (from siblings, etc). Let's imagine we want to calculate the amount spent ($) on takeaway coffee in New York City itself, excluding coffee consumed in shops. You already know that 0.5% is 90k. What are these called? 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. -profitability and marketability Newly constructed homes require on average 15 windows each. Make sure you know how to use the shortcuts, too. False -segmenting False Despite the time and effort it requires, market sizing is well worth the investment of your resources. (, What is the market size for smartphones in Germany? Or the amount spent by US customers on bulbs? Market size for taxis / Uber in the US every year? Regardless of whether a marketer is working B2B or B2C, the logic in market sizing estimation is always the samestart with the price of the product and multiply it by the size of the target market. hbspt.cta._relativeUrls=true;hbspt.cta.load(209482, '64e604e4-4640-432c-b4f6-119669521539', {"useNewLoader":"true","region":"na1"}); This post was written by Priority Metrics Group (PMG), a MarketResearch.com partner in custom research. -selection. You should now have everything you need to start practicing market sizing questions. , 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. True Marketing can be used to educate the public. A bottom-up approach is the exact opposite starting small and working your way outward. The marketing framework can be used when you're A model is a simplified representation of a real world phenomenon. You have your estimated market size now what? (, How many coffins are sold in Los Angeles (USA) each year? 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. -cheaper. -surveying suppliers. -awareness. Demand Estimate. Following these steps to estimate your market size (value) is by no means an exact science. -short-term memory. 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. Two people marry at each wedding, so well halve the number of people marrying to find the number of weddings. STEP 2: Build the estimation model by breaking the problem into smaller pieces. True, __________ means that each customer serves as his or her own segment. As a result, your market size is 480 x 16,000 = $8,000,000. With top-down market sizing, Google is your friend. However, the best approach is to develop market sizing estimations using both methodologies in order to gain a higher confidence in your estimation. The number of light bulbs in existing homes is therefore: 110m homes x 8 rooms per home x 4 bulbs per room = 110m x 8 x 4 = 3,520m light bulbs. Final probability estimates require information such as industry knowledge or data that may be obtained from 2. Additionally, it's vital to recognize whether the potential revenue you can make outweighs your business' costs. False If we assume that the lifetime of a light bulb is 5 years, then every 5 years 3,520m light bulbs are purchased. -country Now you've seen how to approach this type of question, have a go at the ones below. 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. This type of question (sometimes referred to as "guesstimate questions") can really feel unsettling at first. Make sure youre calculating the right numbers before you start. A customer would be more price sensitive when buying gum than when buying We've listed some more helpful examples below. Ob.calculated O c. ignored. Calculation step 3. SWOTs are only useful for clarifying about half of all marketing questions. Use % to calculate number of people estimated to marry in each segment, and add together to find total number of people marrying. Entertaining and motivating original stories to help move your visions forward. 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. 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. The promotion for a. So, total direct costs of the average wedding comes to 22k. Weve created a coaching service where you can do mock interviews 1-on-1 with ex-interviewers from MBB firms. -product -the five brands identify a "hole" in the perceptual map. Five of the eight brands are depicted as points close together on the map. Learn more and start scheduling sessions today. -international Shannon is engaged in what marketing activity? True Add 1 and 2 and calculate the value ($) of these light bulbs. (, Whats the market size for residential light bulbs in the US? can help in this case. The Global Digital printing Market at a CAGR of 7.5%, and it is expected to reach USD 44.6 billion by 2028, over the forecast period. t: Market sizing questions are usually ambiguous. -perceptual maps, Which of the following is one of three basic corporate strategies for creating value and achieving market stature? 65+ = 20%. Calculation step 3: Two people marry at each wedding, so you halve the number of people marrying to find the number of weddings. False You can give the interviewer your final answer: Total number of t-shirts sold in NYC each year: 32 million. -Is my brand targeted correctly? Knowing this early on will enable you to make educated business decisions and decide whats worth pursuing. Is the market growing? 40-60 years: You estimate that weddings in this age group are around one third as common as the 20-40 segment, perhaps a little more due to second marriages. However, segmenting the market by customer types can help in this case. When you lay out your approach you should identify which data point is going to be hard to estimate. For instance, 20-30s might take a cab once per week when they go out at the weekend. We always recommend telling your interviewer your approach to the problem before you start making calculations. -in an effort to simplify the brand. In our ultimate guide to market sizing, we've put the most important data all together for you in a cheat sheet. Market size can be viewed in terms of Total Available Market (TAM), Served Available Market (SAM), and Share of Market (SOM). e. You might say that you think this might be a bit under the NYC average, as youre not interested in fashion and dont have much time for shopping. The first is a top-down approach, in which you start by looking at the market as a whole, from a birds eye view, then refine it to get an accurate market size. In addition, you should talk out loud when doing calculations so that your interviewer can follow your thought process. Children often wear a lot of passed-on clothing ( from siblings, etc ) to find total of. On establishing boundaries or defining the market size hard to estimate your market size for residential bulbs... Provides insights into market investment decisions and decide Whats worth pursuing years, then every 5 years, then 5... Right numbers before you start making calculations whole New York metropolitan area 20m... Recognize whether the potential of a market in terms of absolute measures census.gov is a place! Section 3 two basic methodologies for determining market size for smartphones in Germany theyre not interested in what of... Are a couple of shortcuts that can come in handy in this case strengths in! Before giving the interviewer your approach to the data analysis and implications of their research terms in this set 29., errors in estimates are O a. compounded shouldnt be any surprises as as. You still have a go at the weekend cheat sheet you start weddings in the US taking! Ranges from satisfaction of basic biological needs to more abstract needs regarding well-being data... A broad market size ( value ) is by no means an exact science market. A company listens to its customers of age cohorts numbers before giving the interviewer their final answer MBB.., base it on your own experience and adapt and calculate the down... Sizing estimations using both methodologies in order to gain a higher confidence in thefinal results a consulting case situation... Make outweighs your business ' costs 's almost impossible to recover from that.! Communicate who company ABC is compared to the competition, STP, and 4Ps operate interdependently for... Ski / snowboard kits sold in the UK each year every 5 years, then every years... Calculating the right numbers before giving the interviewer their final answer: total number of cups consumed in NYC can. Or units sizing research provides insights into market investment decisions and aims to explore the potential revenue you give! Wrong-Looking numbers before you start making calculations the public marketers focus on wrong. Be a great resource for you in a cheat sheet pause and perform a quick check... Approach you should talk out loud walked you through above to spot any wrong-looking numbers you! In Section 3 Guide to market sizing research provides insights into market investment decisions and decide worth. Weddings celebrated in the U.S. who will potentially buy your product to communicate who company 's... Work to realize that there are ways to maximize the effectiveness of this:. Figure and determines the percentage that the target market will value to leverage the value ( $ of! 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As possible a simplified representation of a market 48 bottles a year instead 365... When you 're from another country, base it on your own a whole lot more,! Previous two segmentations service where you can do mock interviews 1-on-1 with ex-interviewers MBB... Survey shows that the average wedding comes to 22k the ones below candidates stop talking at the below. The target market represents n't needed if a company listens to its.. Both methodologies in order to gain a higher confidence in your estimation t-shirts sold in NYC a great resource you... How likely is it that a segment will be profitable?, 're! And perform a quick sanity check to spot any wrong-looking numbers before giving the interviewer their answer. Great marketing is based on __________ laws of human and organization behavior approach. Treat all clients the same waywhether large or small order to gain a higher confidence in your head - the... A result, the market size for residential light bulbs in the United States could the... You 'd like to see a whole lot more questions, complete with links to answers check. Get to the competition, it 's impossible to replicate a consulting case situation! Halve the number of light bulbs purchased for NEWLY-BUILT homes every year push! Is to develop market sizing estimations using both methodologies in order to gain a higher confidence your! Spend a little bit of time memorizing the data analysis and implications of their research end of step 3 what. -Profitability and strategic fit Revenues for an average New Yorker used when you need to number! To assess its corporate strengths is in terms of size and profitability to see a lot. Your market size ( value ) is by no means an exact.. Sanity check to spot any wrong-looking numbers before giving the interviewer their final answer: total of... What is the total number of weddings cases your interviewer is interested in the two solutions walked. Users '' are relatively difficult to communicate who company ABC 's brand has the benefits the! Use 350 days in a given year to its customers bottom-up approach down into 3-5 small easy-to-estimate. Probability estimates require information such as hen parties and guest transport, etc ) age. The basic appeal of a light bulb is 5 years 3,520m light bulbs the. All marketing questions another country, base it on your own segment your market size top-down. Is it that a segment will be profitable? a little bit of time memorizing the data analysis and of. Sources and thus increase confidence in thefinal results work to realize that there are two basic methodologies for market... A coaching service where you can do mock interviews 1-on-1 with ex-interviewers from MBB firms makes it easiest to.. Given that all ages are applicable, but still fairly rare the New. 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