A common consulting case question: sizing the market

case coaching

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.

Diane studied history at Yale College, focusing on the acceptance of western medicine in East Asia. After working at a boutique consulting firm in New York, she went on to earn her MBA from the Yale School of Management.

Comments

topicTopics
academics study skills MCAT medical school admissions SAT expository writing college admissions English MD/PhD admissions writing strategy LSAT GMAT GRE physics chemistry math biology graduate admissions ACT academic advice interview prep law school admissions test anxiety language learning premed MBA admissions career advice personal statements homework help AP exams creative writing MD study schedules test prep Common Application computer science summer activities history philosophy mathematics organic chemistry secondary applications economics supplements research 1L PSAT admissions coaching grammar law psychology statistics & probability legal studies ESL CARS SSAT covid-19 dental admissions logic games reading comprehension engineering USMLE calculus PhD admissions Spanish mentorship parents Latin biochemistry case coaching verbal reasoning DAT English literature STEM excel medical school political science AMCAS French Linguistics MBA coursework Tutoring Approaches academic integrity chinese letters of recommendation Anki DO Social Advocacy admissions advice algebra astrophysics business classics diversity statement genetics geometry kinematics linear algebra mechanical engineering mental health presentations quantitative reasoning skills study abroad technical interviews time management work and activities 2L DMD IB exams ISEE MD/PhD programs Sentence Correction adjusting to college algorithms amino acids analysis essay art history artificial intelligence athletics business skills careers cold emails data science dental school finance first generation student functions gap year information sessions international students internships logic networking poetry resume revising science social sciences software engineering tech industry trigonometry writer's block 3L AAMC Academic Interest EMT FlexMed Fourier Series Greek Health Professional Shortage Area Italian Lagrange multipliers London MD vs PhD MMI Montessori National Health Service Corps Pythagorean Theorem Python Shakespeare Step 2 TMDSAS Taylor Series Truss Analysis Zoom acids and bases active learning architecture argumentative writing art art and design schools art portfolios bibliographies biomedicine brain teaser campus visits cantonese capacitors capital markets cell biology central limit theorem centrifugal force chemical engineering chess chromatography class participation climate change clinical experience community service constitutional law consulting cover letters curriculum dementia demonstrated interest dimensional analysis distance learning econometrics electric engineering electricity and magnetism escape velocity evolution executive function freewriting genomics graphing harmonics health policy history of medicine history of science hybrid vehicles hydrophobic effect ideal gas law immunology induction infinite institutional actions integrated reasoning intermolecular forces intern investing investment banking lab reports linear maps mandarin chinese matrices mba medical physics meiosis microeconomics mitosis mnemonics music music theory nervous system neurology neuroscience object-oriented programming office hours operating systems organization