How to estimate the market size of the European bicycle market?

Hello! Please see a few notes/suggestions below:

1. Calculation structure
   1. Age: You could consider splitting the population by age, as not everyone is buying bicycles / there are different bicycle needs at different ages
   2. Households: As bikes are usually used by each person individually, I wouldn't split the population by number of households (e.g., you can buy one car per household and everyone could use it, but if you have a kid's bike, adults cannot use, and neither kids who are significantly older, for example)
   3. % of people who own bikes per age group: If you do split the population by age and consider number of bikes individual people have, then you can also have an assumption for share of population in each age group that has a bike
2. Approach
   1. If you say 'market size of European bicycle market', I would assume this is based on number of new bicycles bought every year (vs. total number of bicycles in Europe). To be sure, you could confirm this with the interviewer (would also show them you considered both)
   2. You can also tell the interviewer what you are excluding (e.g., e-bikes and used bikes are excluded in order to keep the calculations relatively simple), and they can guide you if you need to include those

Good luck!

Hi there,

I would be happy to share my thoughts on your question:

• First of all, your approach seems valid, although there are always aspects that could make it more precise.
• Moreover, please keep in mind that except for Bain in the UK and few smaller consulting firms, most consulting firms have not used standalone market size estimations for a long time. While this does not mean it never happens, this type of case study question is typically not be very meaningful for both the candidate and interviewer, as only a few skills are being tested.
• That being said, simpler market size estimations may still be a part of a case study, for instance when estimating the revenues of the client is required.

You can find more on this topic here: How to succeed in the final interview round.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

You miss all the granularity that you should be considering in your answer.

1. 1 bike per household... no segmentation view. No segmentation on countries (you are assuming Europe usage is uniform...), no segmentation on household income, no segmentation on consumer preferences/lifestyle... You need some segmentation here, definitely. 

Also... it's an assumption that doesn't make much sense. Imagine a family of 3. Only 1 will have a bike? And the other 2 won't? A better approach would be to consider that x% of families will have bikes (~70%, ideally getting here through segmentation, but let's just argue that older people won't have bikes, and not all "younger" will have a bike), and that on those that do have bikes, they will have Y bikes on average (~1 bikes; some only the kid will have a bike, on other all 3 people have a bike; please notice this assumption is only for families with bikes).

So even if the assumption on average number of bikes is acceptable, how you get there makes the whole difference. One is a random guess, the other one is an informed and well thought guess.

2. Very generic and unrealistic assumptions. Do you really think that the useful lifetime of a bike is 5 years? An adult bike can easily last 10-20 years (unless it has a lot of use). Of course you can argue some obsolescence, but it will always be more than 5 years. On the other hand, kids bikes don't last as long, as they outgrow their bikes, but you still have hand-me-downs, so they'll have 2-3 owners in most cases (although in some other instances will just be kept in the garage as memorabilia...)

3. Price. Would rather have you argue that a basic bike is 150-200€, but you also have premium bikes that can go up to 1000€. While 300€ is fine... how you get there makes a difference.

You are directionaly ok,and get the very basic level of market sizing, but are still at a very basic level and need to add more structure.

You could consider age based segmentation. Bicycle ownership is more individual than household-based.

Children (3–15): High bike ownership (e.g., used for recreation). Lower average price
Young Adults (16–30): Moderate ownership (commuting, fitness). Moderate price. 
Working Adults (31–60): Ownership varies by region (e.g., high in the Netherlands, low in Greece); often higher-priced bikes, including e-bikes
Elderly (60+): Lower ownership, can ignore this population

Whenever you’re working on a market sizing estimation, consider incorporating segmentation. For example, you can segment by geography, socioeconomic factors, or behavior to improve accuracy.

Best,

Alberto