Market sizing questions are commonly asked in consulting case interviews. These questions may range from topics such as “what is the retail apparel market size in France?” to “how many pounds of trash will get composted every year?” The important thing to remember is that the interviewer is not looking for an exact correct answer. Instead, they are evaluating how you think—whether you are comfortable working with numbers, as well as making smart assumptions over open-ended questions. Remember, nobody (even your interviewer!) knows exactly how many school teachers are in Massachusetts, but you should be able to land a guess-timate in the right ballpark.
Let’s walk through a market-sizing question together:
How many coffee cups are sold in a Starbucks within the US annually?
Before diving into the math, I’d first want to make sure that I’ve understood the question. For instance, I may want to know whether the calculation would include both online and in-person orders, whether the cups may be paper and or plastic, or whether specialty drinks are also counted, etc.
In this case, we can assume that it’s all paper coffee cups sold by Starbucks in the US, including both retail and online orders, which would include all cup sizes and any beverage type.
For this question, I’d like to start out with a single Starbucks store first, and then work my way up to incorporate the total number of Starbucks in the US in a year.
For a single Starbucks store, I would make a few assumptions to get my math started. I would assume that averaging out both urban, suburban, and rural areas, about 200 paper cups of Starbucks coffee are sold every day. This estimate would include coffee and any specialty drinks, but would exclude plastic cups used in iced coffee, frappuccinos, etc.
Now that we have 200 cups of coffee sold every day, I want to multiply that by 7 for the number of days in a week. 200 times 7 will get me 1,400 cups of coffee sold in a single Starbucks in a week. Multiplying 1,400 by 52 weeks in a year will get me 72,800 cups of coffee sold in a year by one store.
Starbucks is one of the biggest companies in the world, so I want to go with a high number in order to encompass most of its US footprint. In order to get to the total number of coffee cups sold by Starbucks in the US annually, I estimate that there are 15,000 stores. Therefore, I multiply 72,800 by 15,000 to get close to 1.1B coffee cups sold by all US Starbucks stores in a year.
It’s important to do a sense-check with your math! Even once you land on a calculation, be sure to think out loud and ask yourself if this number makes sense. For this answer, given that Starbucks is a highly popular and well-known brand of coffee company, it would be reasonable to have sold 1.1B coffee cups in the US for a year.
Remember, a market sizing question is not meant to trick you, but rather to test how well you can handle ambiguous situations, which you often do in real-life consulting projects. It’s important to be clear in your thought process and walkthrough, so even if you may be a bit off, you can adjust some estimates to arrive at a better answer.