How to Solve Management Consulting Market Sizing Cases
A market sizing case is typically presented during management consulting case interviews. Answering this vague and grueling problem allows you to showcase your analytical skills – or lack thereof.
The question, “How many curtain rods were bought in the United States last year?” is truly daunting, especially if you have to answer it within a few minutes. To nail down the question, you need to think of an effective strategy quickly, do some calculations mentally and express your ideas comprehensively. To illustrate these requirements, let’s try to sort out the question.
Make Assumptions
It’s impossible to resolve the question without enough information, or at least assumptions. You can always ask the management consulting interviewer to give you more details. At times, they keep facts to themselves unless asked. However, you should not be totally dependent on them. You must come up with your own assumptions, especially for items you are confident of.
To satisfy the question above, you need the following facts or assumptions:
- Number of new houses built each week in one state = 50 houses (assumption)
- Number of new houses renovated each week in one state = 35 houses (assumption)
- Number of curtain rods bought for each house = 10 rods (assumption)
- Number of weeks in a year = 52 (fact)
- Number of states in the USA = 50 states (fact)
Finalize the Equation
Once you have your assumptions, finalize the equation that will lead you to the answer. For this scenario, you can take the paragraph below as a sample dialogue.
“To resolve this case, we have to add the number of new houses built and the number of houses renovated each week in a state. Then we’ll multiply the sum by 10, the assumed average number of rods bought for each house. The product will be multiplied by 52 weeks to get the total number of curtain rods bought last year. The answer will be re-multiplied by 50, the number of states the USA has.”
After laying down the equation, do the math. Some firms allow you to use a calculator but if you want to earn plus points, do it mentally. Given this rationale, it is wise to practice mental calculations thoroughly before the management consulting case interview.
Be More Specific
If you are aware of the population of each state, you can make your equation more specific. For instance, you can divide the states into three categories: states with a big (1), medium (2) or small (3) population. To classify the states, you can base your assumption on the land area and level of industrialization. Obviously, you need to assume more houses in the first than the second and third groups. This method seems more taxing but it yields a more correct estimate.
Note that market sizing cases during management consulting interviews do not have correct answers. Recruiters of Bain, BCG and other top tier consulting firms use them to find out how logically you process your thoughts. This is considered a main indicator of how effective you will be in solving real-life problems.