Management Consulting Prep

Case Interview - Question types Market Sizing & Guesstimate

They are among the most popular question types you will get in a case interview. These questions ask you to estimate a quantitative variable relevant to the case you are solving.

  A quick glance

  1. What are Guesstimate and Market-sizing questions
  2. Understanding the logic
  3. Tips to ace these questions

1. What are Guesstimate and Market-sizing questions

These questions ask you to estimate a quantitative variable relevant to the case you are solving. A “guesstimate” question which you have to estimate the size of a market is called a “market-sizing” question.

You need to keep in mind that it’s the way you approach and solve the problem that matters, not the final answer that you give out.

In terms of approach, there are no differences between guesstimate and market-sizing questions. With that in mind, I will focus on the strategy or the logic behind solving these types of questions.

2. Understanding the logic behind the questions

To make this easier to understand, we will start with our above example.

The Guesstimate Question

How many people wear red in New York on a typical Monday?

Step 1: Clarify the question, make sure you and the interviewer are on the same page on every assumption. Even obvious words can have different meanings that you don’t expect.

Market: What exactly is the market?

  • What’s the product?
  • Who are the customers?
  • Are there any limitations or exceptions?

Size: How is it measured?

  • What’s the time-frame?
  • What’s the measure unit?
    • What does “wear red” mean?  – AT LEAST ONE piece of clothing with red color.
    • If a person wearing red goes out more than once, do we count them again? – No!
    • Does “New York” here refer to New York City or the state of New York? – New York City.

Step 2: Break the problem into smaller pieces in a MECE way. There are two major factors to consider: quantity & frequency.

    • The population of NY.
    • The probability of people wearing red in NY.
      • How many pieces of clothing people wear.
      • Their color preference.

Step 3: Use Estimation and Judgment to solve each piece.

    • Population: approximately 20 million
    • Probability: 5% staying at home, 70% going out once (after work), 25% going out twice (after work).
      • Those staying at home wear 2 pieces of clothing, and will not change during the day.
      • Those going out once wear 5 pieces, and if they go out again, they will change all their clothes. Hence, people going out twice wear a total of 10 pieces.
      • There is no specific preference on color. They have the same number of different color clothing: 7 rainbow colors + black + white + grey. On working days, they will wear mostly black and white (50% chance).

Step 4: Consolidate all of those data pieces into a final conclusion.

Staying at home Going out once Going out twice
Population

1,000,000 people

They will choose for 2 pieces of clothing.

14,000,000 people

They will choose for 5 pieces of clothing.

5,000,000 people

They will choose for 10 pieces of clothing.

Percentage of wearing Red

There are a total of 10 colors to choose from.

Chance of once piece being red: 1/10.

(Equal numbers of different color clothing)

Chance of having at least one red piece in the outfit:

2 * 1/10 = 1/5

The number of colors to choose from are similar to the first example.

On Monday, most of these people go to work. 50% chance will be black and white. Chance of picking one piece red: 1/2 * 1/8 = 1/16

Chance of having at least one red piece in the outfit:

5 * 1/16 = 5/16

Same as previous case.

In this case, the first trip is probably to work (1/16).

The second trip is the casual trip (1/10).

Chance of having at least one red piece in the outfit:

5 * 1/16 + 5 * 1/10 = 13/16

Total

1,000,000 * 1/5 + 14,000,000 * 5/16 + 5,000,000 * 13/16

= 200,000 + 3,750,000 + ~4,060,000 = 8,010,000

There are approximately 8,010,000 people “wear red” in NY on a typical monday.

To see an example of a full answer to this type of question, see our Market Sizing Example.

3. Tips to Ace The Questions

Practice Presenting

 

  • Try to speak out loud when practice by yourself to imitate speaking to a real interviewer.

Note: You get will get used to giving speeches and be less stress during the actual interview.

  • Make a habit of clarifying the question.

Note: Not only does it help clear out the gray areas but also improve your interview score.

  • Practice being structured in delivering speech and adding visual aids to your presentation.

Note: The interviewer will be able to follow your presentation better and  have a good impression.

Practice Analyzing

  • The key to answer these questions is to break them into smaller pieces: 1 or 2 layers down to reduce complexity.

Note: Mis-breaking or overdoing it may lead to unnecessary complexity.

  • Avoid making assumption by aligning with the interviewer.

Note: Most interviewers like candidates who align often as it is a good habit in real consulting jobs.

Practice with Numbers

  • Use close to correct or rounded number for answer. (see more on Consulting Math)

Note:  In special occasions where the interviewer really wants to test your quantitative skill, then you have to be precise. Most of the time, it won’t be necessary.

  • Make a habit of challenging yourself mathematically everyday. (“How much water does my laundry machine use per month?”)

Note:  In special occasions where the interviewer really wants to test your quantitative skill, then you have to be precise. Most of the time, it won’t be necessary.

  • Even though the final answer is not very important, unreasonable ones will raise questions. Do a sanity check to see if the numbers match up.

Examples: “How many Chinese use iPhone“ – 9 billion… Do you see something wrong here?

Practice Again and Alot!

  • And the last but most important tip is: Practice anywhere, a LOT. Case Interview is one of the most important things in Management Consulting Recruitment and should be the focus of your study. If you’re ready to go deeper, our website has plenty of resources for you to explore. 

  • Join millions of other in the Case Interview End-to-End Secrets Program MConsultingPrep exclusive training package for Case Interview candidates.

  • Practice your skill on Market-sizing Question Practice or go back to Case Interview Question for more insights on other question types!

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