Question 1: How big is the market for books in China?

Helpful hints:

  • Write out and explain your assumptions verbally before diving into calculations
  • Walk your interviewer through the logic and calculations

Reveal Answer

A possible approach to the problem:

Start with the total population of the United States and estimate the subset that would buy this consultant’s book on “Business in China.”

Estimated total population in the United States: 300 million

Of the total population, assume that only people ages 20-60 are interested in academic books.

Estimated population interested in academic books: 300 million x 40% = 120 million

Of those interested in academic books, assume that 20% are interested in business-related books. (A reasonable rationale for the 20% assumption is to draw on personal experience by examining how many students on campus are pursuing business-related majors).

Estimated population interested in business books: 120 million x 20% = 24 million

Of those interested in business books, assume that 5% are interested in books on China. (A reasonable rationale is to consider that there are many different topics in business, but China is a relatively big topic right now. This assumption does not have the strongest logic and is subject to questioning from the interviewer. Depending on the interviewer’s intentions, 1-15% is a reasonable assumption, but 50% is most likely not).

Estimated population interested in business books on China: 24 million x 5% = 1.2 million

Is this the final answer? As a gut check, ask yourself: do you think the consultant can sell over a million copies of his book? Most likely not.

An additional assumption to include could be that of those interested in books on China, only 10% will actually buy his book. (A reasonable rationale is to think about how many books you are interested in and how many you actually buy).

Estimated population interested in buying his business book on China: 1.2 million x 10% = 120,000

The final answer to our first question is 120,000 people will buy the consultant’s book “Business in China.”