Guesstimates questions are often used by Top Management college Placement Interview panels at the time of intake or to assess the decision making analysis and estimation ability of a candidate.In this scenario, candidate is expected to estimate a number based on very limited information (hence “guess”). Successfully answering these questions relies on a combination of mental math, logical thinking, problem-solving skills, and background knowledge. Check IIM Admission Process

What are Guesstimates?

As the name suggests, a guesstimate question is an estimate based on a mixture of guesswork and calculation.It gives the panellist a peek into your problem solving and thinking abilities. The focus is more on the approach than getting the answer right.The process of problem-solving is fairly simple in case of guesstimate questions. A candidate should look at the parameters that might affect the given problem and arrive at the estimated quantity.

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For Example, Estimate the number of tennis balls bought in India per month

Following are the key considerations in building the segmentation and the intermediate guesses:

  1. Rural areas have a negligible number of tennis courts.
  2. Metro cities have the highest number of sectors.
  3. For each sector in metro cities, the number of grounds for both tennis and cricket is higher. This is both because of the bigger area and the higher buying capacity in metros.
  4. Number of balls consumed in metros per ground is higher because of the higher engagement in metros.

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Guesstimate is a process of making an educated guess on some numbers. The guess has to be made using estimates after breaking down the overall number crunching problem into smaller subunits. So, for example if an interviewer asks you , “How many people live in your housing society?”, in its answer you cannot refer to the society directory or use any other factual direct modes of counting. You will guess using some estimates right! This is what guesstimate is all about.The interviewer is looking out for the below mentioned four key traits of the candidates during the Placement interview of Top Management Colleges .

  • How structured is your approach?
  • How comfortable are you with numbers?
  • Are you able to make quick checks on the efficiency of different methods?
  • Can you do back of the mind calculations and validate the magnitude of numbers?

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There are 4 steps to answer guesstimate questions:

  • Step 1: Clarify all unclear terms in the question.
  • Step 2: Break the number down into 3-5 small, easy-to-estimate pieces.
  • Step 3: Estimate each piece using math and background knowledge.
  • Step 4: Consolidate the pieces to arrive at the final result.

Types of Guesstimates based on Approach to the Solution:

  • Household Approach: The category for instance, Cars are bought as a household purchase and hence we calculate the number of cars as per the number of households.
  •  Population Approach: For Example, a category like a pen is bought for individual consumption and is based on the number of people. Hence, we proceed with the guesstimate about the number of people.
  • Structural Approach: This approach includes guesstimates such as,to find the number of airplanes landing in India in a single day, the bottleneck would be the runway as it controls the entire operation.

Check Top Management Colleges Admission Stories

IIM Ahmedabad Admission Story Siddhartha Siva B IIM Bangalore Admission Story Sanchit Sachdeva
IIM Calcutta Admission Story Bharadwaaj Manchala IIM Calcutta Admission Story Ankit Jalgaonkar
IIM Lucknow Admission Story Mayank Dohare IIM Kozhikode Admission Story Jalaj Sharma
IIM Indore Admission Story Abhinob Kemprai IIM Indore Admission Story Shyla Nehru

Tips to solve Guesstimates in Management Placement

  1. Don’t panic

When approaching a guesstimate question, the first thing to remember is not to panic. If you’re visibly shaken when presented with a guesstimate, it’ll hurt your candidacy—it’s extremely important that you don’t lose your cool. Also, don’t let yourself struggle verbally. 

  1. Think out loud

When answering a guesstimate, you want to showcase your ability to analyze a situation and form conclusions by thinking out loud. You’ll drive toward a conclusion through a series of increasingly specific analyses. Once you’ve had a minute to compose your thoughts, be sure to talk through your reasoning, allowing your interviewer to see (and hear) that you're arriving at your answer in a logical manner.

  1. Clarify the problem

Clarifying at the beginning serves four purposes:

  • It gives you the necessary information to solve an otherwise-unclear problem.
  • It brings you and the interviewer on the same page, preventing later disagreements.
  • It shows an ideal, organized approach to problem-solving similar to what consultants do.
  • It buys you some time to think about the problem.
  1. Break down the problem

Ask for timeout, then break the problem down into pieces small enough to estimate reasonably.

Each small piece has to be easier to estimate than the big piece – if you can’t estimate the small pieces, you’re not breaking down enough, or you’re doing it wrong

  1. Solve each piece

This is where you solve each piece independently.

Don’t try to do this during the “timeout” phase – most likely it will turn the otherwise-short timeout into a long awkward silence – which is bad.

Here are some quick guesstimates for the German smartphone market:

  • Germany’s population is 80 million
  • The percentage of mobile phone owners is 80% (assuming German life expectancy is 80, the population is evenly distributed across age groups and they own mobile phones from age 15)
  • The percentage of smartphone owners is 95% (assuming only 5% own mobile phone owners choose a “keyboard phone” since Germany is a developed country)
  • The average lifespan of smartphones in Germany is 2.5 years (so the average consumer “uses” 0.4 phones every year)
  1. Consolidate the pieces

Now that you understand the basic guidelines of how to answer a guesstimate, you’re ready to put your knowledge into practice. Use calculations to consolidate the pieces into a final answer.

Quick mental math is essential for this step – if your math is too slow, you will bore the interviewer to death. Nevertheless, don’t rush it – wrong calculations are bad for case interviews.

Tips to solve Guesstimates in IIMs Placement

Some additional tips:

  • Know basic facts – Guesstimates might seem difficult if you are unaware of some critical numbers. Please ensure that you know the below-listed points, which will help you in solving the guesstimates.a. Rural-Urban Splitb. Gender Splitc. Metro cities in India and there approximate populationd. Income Split of the population in Indiae. Age Split of the populationf. Average household size
  • The devil lies in the details – While solving the guesstimates, ensure that you try to explore all aspects. The interviewers are judging your analytical and problem-solving ability so try to break down the problem into as small bits as possible
  • Avoid representative sampling – I have seen people using representative sampling techniques which are honestly ineffective. For example, I know ten people out of which five are smokers, so if I assume the ten people to be representative of the entire target customer segment, 50% of them would-be smokers. It is a flawed argument because of inherent biases and social habits. (a smoker will most probably be friends with other smokers and vice versa)
  • Always take buy-in from the interviewer for your assumptions and clearly explain the rationale for the same.
  • Use pen and paper for calculations – it might sound foolish as a tip, but believe me, in the pressure of interviews, even the smartest amongst you can commit mistakes. Please make sure that you double-check your answers.

Examples of some important Guesstimates

Ques. How many people live in your housing society?

Ans. 

  1. My society has two types of houses: Apartments and row houses.
  2. I then think about the number of apartments and row houses. I remember there are Apartment blocks numbered 1 to 30. There are 4 row house lanes and each might have 8 row houses I guess.
  3. Now I have the following first level estimates:30 apartment blocks and 32 row houses.
  4. An apartment block in my society has 9 floors each with 3 apartments. So, 27*30 = 810 flats.
  5. A row house has 2 floors, each with 2 flats – makes the total as 2*2*32 = 128 flats.
  6. So, total number of flats = 810+128 = 938. I know the average household in India has approx 5 members. I also know that some flats are still not occupied. I make a guess; let’s assume 10% flats are not occupied.
  7. I get the final number of people living in my society: 938*0.9*5 = 4221.

Ques. Estimate the number of cigarettes consumed monthly in India

Ans. A good proxy in such a problem is the population of India, i.e., 1.2 billion. Following is an effective way to segment this population:

  1. The rural population consumes far fewer cigarettes than urban because of the purchasing power difference.
  2. Male consume more cigarettes than females in both urban and rural populations.
  3. Children below 16 years consume a negligible number of cigarettes.
  4. Male to Female ratio in Urban is closer to 1 than that of Rural.
  5. Male to Female ratio in younger generations is closer to 1 than that of older generations. This is because of the increase in awareness level.
  6. Bulk of the population start smoking after getting into a job and hence the average number cigarettes are higher in older groups.
  7. Total number of cigarettes from the supply side also comes to around 10 Trillion, which gives a good sense check on the final number.

Ques. How many cups of tea were consumed in Mumbai last month?

Ans. As a first step, inform the interviewers that each day of the week is being considered equally. Tea consumption might likely decrease during the weekend as people do not go to the office—so you might consider that as well. We shall go with the first assumption.

The population of Mumbai is 18 crore; we shall round it up to 2 crores. 20% of this population is assumed to be children who do not drink tea. 

Another assumption is that of the remaining population, 20% are habitual drinkers, 30% are regular drinkers, 20% are occasional drinkers, and 10% are non-drinkers.

The habitual drinkers may be said to have three cups of tea in a day. Regular drinkers may be said to have one cup of tea in a day. The tea consumption of occasional drinkers maybe once a week, and that of non-drinkers none at all.

Calculating proportions-

Habitual – 3 x 0.2 x 7 = 4.2 

Regular – 1 x 0.3 x 7 = 2.1

Occasional – 1 x 0.2 x 1 = 0.2

None – 0
Total = 6.5
Total cups per week = 6.5 x 1.6 crore = 10.4 crore
Ques. How many iPhones are currently being used in India?

Ans.

Clarify with the interviewers whether the question is about only a single version of the iPhone or all versions put together. Here, we shall assume that all iPhones put together are being talked about.

  1. The first step toward solving this query will be segmentation. There are many ways in which India’s population can be segmented. Here, we shall first assume that only people who have attained a working age and are under the age of retirement own an iPhone. Children and old citizens do not own an iPhone. This removes 20% of the population as children and 20% as senior citizens.
  2. The next assumption will be that only the upper stratum of India’s income range can afford an iPhone. This metric assumes that only 5% of the eligible citizens from the previous filter can own an iPhone.
  3. Now, it is not necessary that every member of this upper stratum will own an iPhone. Other options, such as OnePlus, Samsung, etc., are also available. However, a fair assumption would be that 50% of the eligible population from the previous filter owns an iPhone.
  4. Calculating the proportion of the population that owns an iPhone – 
  5. 0.6 x 0.05 x 0.5 = 0.015
  6. Total iPhones in India = 0.015 x 130 crore = 1.95 crore

Ques. How many cars are there in Delhi?

Ans.

Clarify whether the interviewer assumes just personal vehicles or all cars, as Delhi is also a government seat. The assumption in this solution will be that only personal vehicles are being talked about.

Firstly, the population of Delhi is 2 crores, rounding up. The average size of a family in Delhi may be said to be four people, it being an urban region mostly composed of nuclear families. Further segmentation may be as per income class or level. As is customary, 30% of people may be said to belong to the lower class, 50% to the middle class, and 20% to the upper class.

The calculation metric will be the number of cars per family. Among middle-class families, 50% may be said to own a car, and the other 50% own no car. Among the upper-class families, it may be said that all families own an average of two cars.

Calculating proportions-

Middle class families – 0.5 x 0.5 x 1 = 0.25

Upper class families – 0.2 x 2 = 0.4

Total = 0.65

Total cars in Delhi = 2 crore * 0.65/4 = 32.5 lakhs.

Ques. What is the Surf excel detergent usage in a day in India?

Ans. The best way to start with this question would be with the population.

India ~1.3 billion

Rural ~ 70% ~ 900 million

Urban ~ 30% ~ 400 million

Rural - upper BPL : ~ 40% = 360 million

Rural (BPL) : 60% 540 million

Rural (BPL)

We can assume Rural BPL mostly as collective households, averaging at 5 per family: ~110 million

  1. Mostly they use sachets. let’s average the usage 2 sachets of 3 rs each per week: 24–30 Rs. per month ~ 25*110 = 2750 million INR.
  2. Now Surf Excel is a little costly sachet , and given cheaper alternatives available, we can assume its share to be around 5–10% =200 million
  3. For per day: 200/30 ~ 7million INR

Rural (Above BPL)

  1. We can assume 4 sachets per week ~ 12 = 50–60 per month
  2. Total household: 72 million = 72*60 = 4320 million INR monthly
  3. Surf Excel share ~ 20% (others going to wheel, rin, ok, ghadi etc.) = 864 million INR
  4. Daily use therefore: 864/30 = 28.8 million INR
  5. Total Rural daily revenue: ~ 35 Million INR

Urban

  1. Urban Low class ~ 30% = 120 million = 22 million household : Usage 250gms per month: 50 INR = 1100 Million INR
  2. Surf Excel share: 5–7% = 77 million INR.
  3. Daily: 77/30 million INR = 2.10 million INR
  4. Urban Middle class: - 40% = 160 million = 40 million households (4 per family)
  5. Average use: 500 gms per month , 90 Rs per month = 3600 million INR
  6. Surf excel share: 20–25% = 900 million INR
  7. Daily : 900/30 = 30 million INR
  8. Urban High Class: 120 million ~ 30 million households (4 per family)
  9. Average use: 1kg per month, 200 INR = 6000 million INR.
  10. Surf Excel (King here) ~ 70% share ~ 4200 million INR
  11. Daily = 4200/30 = 140 million INR.
  12. Total Urban daily revenue: = 172 million INR

So total daily monetary value of the usage:

  1. Rural daily + Urban daily = 35+172 = ~ 210 million INR
  2. So Surf Excel totaling a value of Rs. 210 million is used in India daily.
  3. If you want to find out the quantity, let’s divide it by the average kg price ~ 160 INR
  4. = 210/160 Million Kgs ~ 1.3 Million Kilograms per day.

Some more Guesstimates for practice:

  1. What is the market size of toothbrushes in India?
  2. How many flights does Bangalore/Mumbai/Delhi Airport handle in a day?
  3. How many balloons can be packed in an Airbus 380?
  4. What is the market size of refrigerators/TVs/Smartphones in India?
  5. How many Chocolates are sold in a day in India?
  6. What is the market size of Noodles in India?
  7. How many idlis are consumed in India in a year?
  8. How much paint is required to paint this room?
  9. What is the market size of disposable diapers in India?
  10. How much biryani is consumed in India in a year?
  11. How much toothpaste is used in a day in India?

Guess estimates questions are one of the most common case estimation query asked in IIMs interview for summer as well as final placement.With the right tools and techniques, this case study becomes a cake walk.

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