Guesstimate — Estimate the market share of pencils
Welcome to Day 8/30 of Mastering Guesstimates
Q. Estimate the market share of pencils.
Clarifying Questions:
- By pencil you mean only wooden ones or also digital ones like apple pencil or mechanical pencils?
- Calculation for a box of pencils or pencils as a single unit?
- Calculation in terms of revenue or quantity?
- Current market share or projected future? if future then any information about growth rate?
- Calculation for India or any specific geography?
A. Consider only wooden pencils as a single unit, in terms of revenue, calculate for current and take India as geography
Assumptions:
- India population is ~140 Crores.
- Life cycle of one pencil (as per my use and observation): Heavy Usage — 15 Days, Casual Usage — , Low Usage —
Approach:
Population of India = 140 Crores
Pencil will only be used by literate population = 80%(140 Crore) = ~110 Crore
Age Wise Distribution:
Calculating Casual Users = (0.14 * 110) + 15 = 30 Crores
Calculating Heavy Users = 18 Crores
Lifecycle of each pencil for heavy users = 1 month = 12 pencils in a year
Let Heavy Users buys 2 Pencils at a time (then 12/2 = 6 pencils in a year) = 18 * 6 = ~ 110 Crore Pencils
Lifecycle of each pencil for Casual users = 6 months = 2 pencils in a year
Let Casual Users buys 1Pencils at a time = 30 * 2 = 60 Crore Pencils
Market Share of Pencil (in quantity) = 170 Crores
Market Share of Pencil (in revenue) = 170 Crores * 5 (cost of each pencil) = Rs 850 Crores
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Stay tuned for Day 8/30 of Mastering Guesstimates, Until then, let curiosity be your guide and let the adventure begin!
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