Market penetration

Question

Why is 90% market penetration used in the revenue calculation? Doesn't that mean 90% of customers already own a camera and are unlikely to buy a new one? Shouldn't the focus be on the remaining 10% who haven’t purchased yet?

Answer 1

Hi there,

I would be happy to share my thoughts on your question:

First of all, you are right that the expression is ambiguous. Market penetration shows who is already a customer, even if they may be customers again in the future.
Moreover, I would advise you to clarify any unclear assumptions during the case interview, although this is unfortunately impossible with such case studies.

You can find more on this topic here: How to succeed in the final interview round.

If you would like a more detailed discussion on how to best prepare your application files, for your upcoming pre-interview assessments and/or interviews, please don't hesitate to contact me directly.

Best,

Hagen

Answer 2

Hi there,

It does seem a little ambiguous considering that this is not a recurrent purchase and we’re talking about the percentage of the addressable market that will buy during that year in order to calculate revenues.
Good question. Always make sure to bring up your POV when your logic is different from the interviewers one, sometimes cases can be interpreted in more than one way.

Best,

Mari

Answer 3

Hi there,

Market penetration refers to customers buying a camera that year. Penetration growing slower year or year means revenues grow slower as well.

Best,

Alberto

Answer 4

Hi there,

I see you already received clarifying answers on your question, so I'm only adding here a resource that you might find useful for casing:

Cheatsheet: The Must-Know Consulting Terms for Interviews

Best,
Cristian

Answer 5

Hi there, Market share loss is calculated by looking at the difference in a company's market share over a specific pe... (read entire answer)

Hi there, Market share loss is calculated by looking at the difference in a company's market share over a specific period. The basic formula is: Market Share Loss = Previous Mar... (read entire answer)