A guesstimate question can be approached by breaking a question down into smaller pieces by asking the interviewer questions and making a series of narrowing assumptions.
You can break a question down either by starting big (e.g. making an assumption about the total population) or starting small (e.g. making assumptions about the average household or some other piece of the whole and then extrapolating).
After coming up with an estimate, it is a good idea to sanity check whether the estimate is in the right ball park by establishing reasonable upper and lower bounds within which the answer should fall.
There are three types of guesstimate questions that you might come across: population questions, household questions, and preposterous questions.
For population questions, the standard formula for calculating the market size is the following:
In finding the market size, segmenting the population using simple demographics will normally be the way to go. You might decide to segment the population by age group, gender, geography, income, or marital status.
[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]