What Not to Do in Guesstimates

The Coke Edition

For the second guesstimate, let’s look at what you’d call a bad solution for a competition. This was one of the first solutions I did. The context is quite old but the ‘umbrella’ points required to reach a more comprehensive answer are all taken care of. Find the list of faults and their possible corrections at the end after going through the solution and try to pick them out on your own. Did I miss a few?

While solving the question, remember the below:

• You’re explaining this to someone who’s not in your head. The solution isn’t for you.
• At the same time, remember to not turn each aspect into an entirely new guesstimate itself! It’s easy to get swayed by your own intelligence and analytical abilities. Focus on the question. Heard of analysis-paralysis?

Q. Guesstimate the inventory of Coke Zero cans required within the first two weeks of its introduction in the Indian market.

The promotional activities taken up by Coca Cola to promote Coke Zero for the first two weeks of its introduction (Promotional Period)

1. Tie up with Amazon
2. Subway + Reliance Retail + INOX theatres tie-up
3. Promotional event by Farhan Akhtar etc.

Amazon

• Ran for 2 weeks
• Sold in packs of 4
• Yardstick?—?1700 orders in 4 hours (initially)
• Assuming that the initial four hours saw huge rush, we will cut it down to about 200 per hour for week 1. For week 2, we will decrease the sale to 150 orders per hour.
• We have assumed the time to be 14 hours per day since the volume of orders made during the night will be negligible. Any orders made will automatically be accounted for in the number of orders during the day of 14 hours. Multiple orders are also accounted for in the same amount of orders.

2. Subway, Reliance Retail and INOX theatres

3. Promotional screening by Farhan Akhtar and others

Assuming 200 cans were consumed during the entire event.

Therefore, the total inventory of Coke Zero cans for the promotional period of 2 weeks is 140,800 + 420,000 + 200 = 5,61,000

The Misses

Amazon

• The number of Amazon orders is unexplained. 1700 for the initial orders, 200 for week 1 and 150 for week 2 are arbitrary number to consider or at least they seem to be so. Remember, the solution isn’t about the numbers, it’s about the approach used to reach the numbers. At the same time, the approach has to be clearly explained.
• To substantiate these figures, we could have used the historic figures available for a similar campaign. How about Burger King selling its burgers on eBay ahead of its launch? Similar brand power, so I think we can go with it. That gives us a figure of about 2000 for first two days.
• For the subsequent days, it is explained that the rush will see a decline and hence, cutting the sales by about 50% (to inculcate the trend for the entire week) makes sense. And a further increase of 60% for week 2. And we reach quite a different figure.

Subway, Reliance Retail and INOX theatres

• This one is just full of loopholes! The better approach would be to list the number of stores in India for each of these. Take an average of the number of customers in a day for easier calculations for all of these stores. How? Let’s look at Subway. Think of a popular store and a ‘sad’ store. Assume numbers for each of these according to the time. What do we note? Lunch > breakfast or dinner. 600 for popular and 100 for sad? We have the average at 350 per day.
• Assume about 60% take drinks with their order and about 50% of those are willing to try Coke Zero because of being prompted or being generally excited about Coke Zero (or maybe even by default!). This brings us to 105 per day, which is 1470 for two weeks per store. Phew!
• Similarly, do the same for the others. Chances of analysis-paralysis are high here, so stick to a limited number of parameters and assume the rest!

Launch event

• The number is quite close to the possible number here. The fault? It’s not lucid. Just break it down to the possible attendees of a launch event (a celeb or two, their entourage, company representatives, media persons, retail representatives etc) and assign two samples each.

That’s it for now! Do share it with someone who’s about to give an interview! The green heart below lets me know you liked it.

Related posts:

• How to Approach Guesstimates (A semi-guide to solving these engaging questions)
• Guesstimate?—?Cost of painting the pillars of the metro lines in Delhi
• Guesstimate?—?Total Revenue earned by the Australian Tourism Industry