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Market size. How big is a given market? How big could it grow? Look for boasting in press releases Look for news reports Look for government statistics.

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market size
Market size
  • How big is a given market? How big could it grow?
  • Look for boasting in press releases
  • Look for news reports
  • Look for government statistics.
  • Some reality should intrude: growth of 100% per year almost never happens (the Internet was briefly an exception). You run out of people in the world or dollars very quickly.
product life cycle
Product life cycle

Commercialization

Introduction

Takeoff

Growth

Slowdown

Maturity

Decline

boston consulting group
Boston Consulting Group

What to expect in a BCG interview

At BCG, we look for something beyond intellect. In the interview, we want to learn who you are as well as how you think. So each interview has two parts: the personal discussion and the case.

The personal discussion is our way of getting to know you. There is no fixed format or agenda, but interviewers often focus the discussion on an experience or a period of your life. There is very little that can be done to prepare, so relax and use the time to help us get to know you better.

The case interview makes up the greater part of the interview time. The best preparation is to familiarize yourself with types of analysis you may employ and practice generating sound, defensible hypotheses. To help you, we\'ve assembled several resources as well as some tips to prepare for the case interview.

(From their Career advice on their website)

market size bcg
Market size (BCG)

Q: How many pay phones are there on the island of Manhattan?

A: A logical place to begin your analysis might be to ballpark the number of pay phones on Manhattan street corners. If you think of New York City as a grid of streets, you might guess it is about 300 streets long (north to south) by ten streets wide (east to west), so it has approximately 3,000 intersections. You might then assume there is one pay phone for every two intersections, for a total of about 1,500 pay phones.

If you’re feeling really creative, you might subtract the number of intersections that are “invalidated” because they fall in the area of Central Park. Say Central Park is ten blocks long by two blocks wide, or 20 intersections. Using your one-pay-phone-for-every-two-intersections assumption, you would want to subtract ten pay phones from the original 1,500.

You might then add to the 1,490 the number of pay phones that might be found in restaurants, hotels, schools, hospitals, and office-building lobbies.

sloppy journalism
Sloppy journalism

May 12, 2003Verizon Plans to \'Wi-Fi\' Pay PhonesBy Ryan NaraineJust weeks after slashing its monthly DSL fee, Verizon plans to build Wi-Fi (define) "hotspot" (define) extensions of its broadband service in New York, using existing pay phones as the distribution vehicle.

A spokesperson for Verizon (Quote, Chart) said the company would upgrade more than 200,000 pay phones in Manhattan to create 802.11b-compliant network nodes for its high-speed subscribers. The move is yet another carrot to lure customers in the burgeoning marketplace for offering wireless Internet access via Wi-Fi.

how many pay phones
How many pay phones?

Gotham Gazette: 4,000 payphones in Manhattan

Wall Street Journal: Verizon has 20,000 payphones in NYC.

Something reasonable: There are 1.8M payphones in the USA (down from 2.6M in 1998); Manhattan is like 1/300 of the population of the US, but perhaps 1/100 of the employment; that would suggest a few thousand payphones.

However payphones are more common in urban areas.

the web turned up a flame
The Web turned up a flame…

RESOLVED, that Community Board Six, Manhattan, opposes the application for installation of all 476 proposed public pay telephones, unless they are installed in kiosks or other structures of minimal width and depth, because they will obstruct pedestrian traffic solely for the purpose of generating advertising revenue and without any benefit to the community; and BE IT FURTHER RESOLVED, that Community Board Six, Manhattan, opposes the application because the widespread placement of these oversized structures upon public sidewalks will severely detract from the beauty of the community.

how many pay phones12
How many pay phones?

But that screed told me who regulates payphones in NYC: the city Department of Information Technology and Telecommunications. And on their website:

the answer 10 500 payphones
The answer: 10,500 payphones
  • It’s a little harder to understand the trends, because they’re tied up in Federal regulation.
  • Many more people use cellphones, so the need for payphones on the streets is dropping.
  • Payphones are a nuisance to maintain, and they get vandalized, and for a time in the 1990s as more and more people used phonecards the operators got less and less revenue.
  • But lobbying resulted in a rule that every time you use a payphone to call an 800-number the phone operator is paid 25 cents.
  • So payphones are now profitable, and more are appearing.
slide14

Q: How many hotel-sized bottles of shampoo and conditioner are produced each year around the world?

A: You might begin by assuming that hotel-sized bottles are produced for two purposes only: 1. To supply hotels and upscale motels 2. To provide samples for gift packs, salons, and so on You would then want to start by estimating the number of hotels and motels around the world that offer the products to their guests. One way of estimating the number of hotels is to assume that hotels are found predominantly in major cities and resorts. Figure that there are 2,000 major cities and resorts around the world, an average of ten for each of the world’s approximately 200 countries. Assume that each city averages 20 hotels that offer bottled hair products to their guests. Multiplying 20 by 2,000 gives you 40,000 hotels around the world that require shampoo and/or conditioner for their guests. To understand how many bottles of shampoo and conditioner the 40,000 hotels require, you now need to estimate the total number of uses each hotel on average represents. You can arrive at that number through the following calculation: assume that there are 100 rooms in each hotel, and that those rooms are occupied 50 percent of the time. Multiplying 40,000 by 100 by 0.5 by 365 (don’t forget the number of days in the year!) gives you approximately 750 million. However, it is probably reasonable to assume that a guest staying for longer than a day will not use a whole shampoo bottle every day. If you assume that an average of one shampoo bottle is used for every two occupied days in a given room, you can now divide your 750 million estimate in half to 375 million.

hotel rooms 2000
Hotel rooms (2000)

The top 300 chains had 5,900,000 rooms.

shampoo bottles
Shampoo bottles

Marietta: $150M/yr (half to hotels)

Guest Supply: $60M/yr (local, by the way, North Brunswick)

Another site shows ½ oz. shampoo bottles are sold for $30/1000.

So Marietta, if all its dollar volume was hotel shampoo, would be selling 2+ billion bottles of shampoo a year. It’s not all their business, but they’re not the only supplier. (In fact they claim they make 1.2 billion “units” each year).

more tidbits on shampoo
More tidbits on shampoo

Pantene claims it is used in 4,500 hotels with 110M room-night-usages per year.

So if that’s about 10% of the hotels in the world, there would be about 1B uses of shampoo per year.

(Pantene, by the way, is one of the Marietta brands)

as for the rest of the bcg ideas
As for the rest of the BCG ideas

How many bottles of hotel shampoo are needed? They say 375 million: 40,000 hotels times 100 rooms times half occupancy times 365 days/yr times half of the guests use the stuff. This turned out to be a bit low.

(US has 3.9M hotel rooms; average occupancy 63%).

And the electric switches/light trick is an old game (hot bulb).

number of competitors
Number of competitors

Somebody innovates

Lots of imitators

Market sorts itself out

Consolidation & mergers

know the stage of your product
Know the stage of your product

Are you trying to make something new?

Are you competing for an improvement on something older?

Are you fighting to salvage a declining market?

There are aphorisms for anything:

“pioneers are the folks with arrows in their back”

“dead cat bounce”

Basically, it’s very hard to win by growing market share in a declining business.

summary
Summary

Marketing requires a lot of optimism. To some extent, the job of the competitive intelligence specialist is to introduce some reality.

Try to learn which are the growing markets, and which are the shrinking ones.

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