How can I determine the market size of theme parks in the USA from the Capacity side and revenue perspective in a market sizing interview?
Hi there,
I would be happy to share my thoughts on your question:
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
Hey!
I just wanted to add that from my perspective, it’s best to approach it from the capacity side, which is generally more precise and aligns with interviewer expectations.
In this case, I would start by estimating the total number of theme parks in the USA, breaking them down into categories (e.g., large, medium, small). Next, estimate the average capacity of each type and calculate the annual capacity based on the operating days. Then, estimate the average ticket price and additional revenue per visitor (e.g., food, merchandise) to get the total revenue per park. Finally, aggregate the revenue across all parks to get the total market size.
This approach is structured, logical, and helps cover both demand and revenue perspectives efficiently.
Good luck! Alessa :)
Hi! At its most basic, any market sizing calculation is a Quantity x Price equation.
You can start by asking yourself what drives Quantity for theme parks, or what drives demand? It is people who go to theme parks, so population drives demand. So you determined that Quantity = Population. Price would then be what that population spends on theme parks. But not everyone goes to theme parks and not all the time. How do you determine the number of people that go to theme parks every year?
First, develop your formula, then you can fill in the numbers (I would suggest not mixing the two when you practice or during interviews).
Population: Notice that I split the population into groups. Most of the time, people of different ages will have different behavior, so when you start with population, it can help getting to a better answer if you first split the population into groups.
% of population that goes to theme parks: As you can see, there is a different % of population in each group that goes to theme parks, e.g., more children would probably go than adults, and more adults would probably go than older people (even if grandparents also join sometimes, some of them might have mobility/health issues and would not be able to join, for example). These % don't need to be precise, but more and approximation of behavior that you would expect (that sounds reasonable to you).
Average number of times per year that each person goes to a theme park: I assume here that people who go to theme parks choose to go maybe 1-3 times a year, or 2 times a year on average (e.g., kids could go on 4th of July with their parents, and then again on Thanksgiving or around Christmas; in short, they would likely go around some holidays or special weekends like their birthdays, but probably wouldn't go at every single holiday/celebration).
Average spend per visit: I picked around $75 (middle of a $50-100 range), which is lower than some of the larger theme parks and probably higher than small local theme parks. You can estimate this by thinking what could be included here (e.g., entrance ticket, a snack or a dessert; you can also think of typical prices for, e.g., museums, exhibitions, or similar venues that you have been to yourself so you can estimate a price for those).
Finally, you will likely have individual elements in your calculation that are wrong. You might be too high for some parts of the equation, and too low for others. These differences should balance in the final number, as long as you try to use reasonable assumptions for each part of the equation (e.g., would you expect everyone who goes to theme parks to go 50 times per year? that would mean once every week - do you know anyone who does that? if it's a very low % of the people you know, might be a low share of population too; of course, there are always exceptions, but this is a good guiding principle).
Happy to chat more in case you have additional questions!
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