Introduction
Every aspiring product manager looking to land a role in a FAANG company must be prepared for a rigorous interview process, which not only tests their problem-solving abilities but also their competency in using structured frameworks to craft well-thought-out answers. Today, we’ll be addressing a common type of question that assesses a candidate’s ability to estimate market sizes, often represented in the format of: “How many shampoo bottles are sold in the US annually?” Understanding the importance of a structured framework helps you deliver a clear, concise, and compelling response during your interview.
Detailed Guide on Framework Application
To approach this question, we’ll use the popular framework known as Fermi Estimation, which is outlined in ‘Decode and Conquer: Answers to Product Management Interviews.’ This framework is especially suitable for market size estimation questions where precise data may not be readily available.
Step 1: Break down the problem into smaller parts
Fermi Estimation encourages dissecting complex questions into more manageable components. For the shampoo sales in the US question, we might consider the US population, average shampoo purchasing frequency, and the number of shampoo bottles an average person might purchase per year.
Step 2: Make educated assumptions
Since exact numbers aren’t always available, making reasonable assumptions is key. For instance, if the US population is approximately 330 million and we assume that each person uses one bottle of shampoo every month, we could estimate the annual sales.
Step 3: Calculate based on assumptions
Using our assumptions, we’d multiply the number of people by the average number of bottles purchased annually (330 million people * 12 bottles/year).
Step 4: Adjust for variables and segmentation
Consider different segments such as children, adults, people with baldness, etc., and adjust your numbers accordingly.
Step 5: Verify assumptions and calculations
Double-check to see if the assumptions are reasonable by comparing them with known benchmarks or available statistics.
Example: Upon doing some fact-checking, let’s say we find an industry report indicating that on average, a person in the US purchases shampoo less frequently due to the trend of using shampoo alternatives or washing hair less often. We might adjust our monthly purchase frequency to once every two months, changing our initial estimate accordingly (330 million people * 6 bottles/year).
Communication Tips:
– Walk the interviewer through your thought process clearly and methodically.
– Validate your assumptions out loud and explain your reasoning behind any adjustments.
– Show how you can use rough estimates to get to a close enough answer, highlighting your analytical thinking.
Conclusion
The key takeaways for aspiring PMs preparing for FAANG interviews is to understand the market estimation questions and to tackle them with structured problem-solving frameworks like Fermi Estimation. It’s important to make logical assumptions, segment the market appropriately, and adjust your calculations based on reasonable verifications. Remember to practice these techniques in various scenarios to build confidence and agility in your estimation abilities for your product management interviews.