How do you go about market sizing questions and setting up a logic tree?

The Issue Tree is a valuable tool for analyzing the causes of issues during a case interview. When faced with a complex issue, the Issue Tree helps you break it down into its components. By focusing on the most urgent aspects and employing a hypothesis-driven approach, you can progress more quickly—a skill highly valued in consulting. 🚀🔎 In this article, you'll learn how to effectively use the Issue Tree, understand the differences between problem-based and solution-based trees, and how to leverage this technique to excel in your case interviews. Problem-Based Tree vs. Solution-Based TreeIn case interviews, two main types of Issue Trees are utilized:Problem-Based Tree: This helps you identify and understand the root causes of the issue and why it occurred in the first place.Solution-Based Tree: This is used to develop recommendations and clarify how the issue can be resolved.Ensure that the issues are MECE (mutually exclusive, collectively exhaustive). Otherwise, it will be challenging to address each area effectively. Use a hypothesis-driven approach to tackle the most significant issues first (see Pareto Principle).In consulting, the preferred approach is "answer-first" or "results-first." This involves starting with the main solution or conclusion and then working out the rationale. This is closely related to the Pyramid Principle.💡 Prep Tip: Practice these and other essential frameworks with our drills! Issue Tree as a Foundation for Consulting ProjectsAt the start of a new project, your team typically creates an Issue Tree. Once you agree on all relevant sub-issues, you gain an overview and focus on the key questions based on your hypotheses (answer-first style). Since all branches of the Issue Tree are MECE, the project manager can efficiently distribute the workload across the team. Each branch leads to a separate workflow that can be worked on independently, avoiding unnecessary interfaces that could cause inefficiencies. This explains why a small consulting team can achieve a lot in a short time.Once the causes of an issue are identified, the team uses a solution-based tree to determine how the issue can be resolved. Example of an Issue Tree in a Case InterviewImagine you need to calculate how many people can stand simultaneously on an airport runway during a case interview.Step 1: Problem Analysis with the Top-Down ApproachIn the top-down approach, you start by structuring the main problem or the case question and systematically break it down into its individual components. The goal is to identify all relevant areas or factors that influence the problem.First, you consider the overarching components (e.g., the total area of the runway) and then break these down into more specific details (e.g., the width and length of the runway).Step 2: Solution Development with the Bottom-Up ApproachIn the bottom-up approach, you focus on concrete numbers and data at the most detailed level of the problem and work your way up. You estimate necessary values, such as the width and length of the runway, and use these in your calculations to solve the main problem.As you can see, the top-down approach allows you to systematically break down the main problem into its components and identify all relevant influencing factors. The bottom-up approach then helps to develop a well-founded solution to the main problem by analyzing specific numbers and data.💡 In our case library, you'll find over 200 cases on various topics that will help you practice creating an Issue Tree! Check them out. Key Takeaways on Issue Trees in Case InterviewsThe Issue Tree is a central tool for structuring your case and developing hypotheses.Differentiate between problem-based and solution-based Issue Trees.Use hypotheses to quickly identify the root causes of the issue.Ensure Issue Trees are MECE to avoid inefficient dependencies between branches.👉 Prep Tip: Practice your cases with peers and arrange meet-ups on our meeting board.

Questions about market size are frequently asked in case interviews in consulting because they require a blend of logic, mathematics, and common sense. They can be asked as standalone questions or as part of a larger case. Applicants who are familiar with market sizing questions can really perform here. What Are Market Sizing Cases?If you're applying to top consulting firms like McKinsey, BCG, or Bain, you're unlikely to escape a market estimation case. Market sizing cases are considered "back-of-the-envelope" calculations because they can be done on the back of an envelope. Despite the name, it's not just about estimating market sizes; other estimations may also be asked for.For example, if you're discussing a British clothing retailer's growth strategy, you could calculate on an envelope how large the online clothing market is and what percentage of the market the retailer already penetrates. If you perform these calculations quickly, the conversation with the client stays fluid, leaving a good impression.You can receive the question about market size as a standalone case (although this is less common) or as part of a more comprehensive problem, such as market entry. The good news: There's no right or wrong answer when it comes to the question of market size 🙂 The interviewer is less concerned about the specific number you come up with for the market than the approach you took to arrive at that number. Why Are Market Sizing Cases Commonly Used in Consulting Interviews?Market Sizing Cases are used to test your quantitative and logical abilities. The interviewer wants to ascertain whether you work well with numbers and if you can make informed assumptions and deal with ambiguities. Questions about market size aren't just about the size of markets; they also involve other types of estimations, such as the number of golf balls in a jumbo jet. As you may have noticed, math is crucial in tackling these questions since you don't have a calculator to rely on. Most importantly, you need to be comfortable dealing with large numbers like millions and billions as well as percentages. More on that later. How Do You Best Approach Market Sizing Cases?Now that we understand the theory behind Market Sizing Cases and their relevance to your case interview, let's take a closer look at the process.Segmentation – The Key to Market Sizing CasesIf you've done some reading on case interviews before delving into market sizing questions, you might have come across areas where segmentation is necessary. Segmenting data is a crucial skill you must master as both a candidate in a case interview and in your later career as a consultant. Segmentation generally refers to dividing a larger whole into smaller parts or segments. The principle you need to understand to do this correctly is the MECE principle.MECE stands for "mutually exclusive, collectively exhaustive." Simply put, segmenting a group of data according to the MECE principle means forming subgroups that do not overlap but collectively cover the entirety of the data, meaning no data is missing. An example useful for market sizing questions is dividing a country's population into age groups (as different age groups often behave differently).Below is a breakdown into Group 1 in the age range 0 to 14, Group 2 in the age range 15 to 64, and Group 3 for everyone over 65:Note that none of the groups overlap, so no age is counted twice, but also no age is overlooked. Now that the population is correctly segmented, we can treat each group differently. If we had divided the population of the United Kingdom into the aforementioned groups, we could estimate clothing expenditures per person in these groups in online retail. Common sense suggests that expenditures per person in the 0-14 age group are lower than in the 15-64 age group. We can justify this estimation by noting that the majority of 0-14-year-olds do not purchase their clothing online.