MBB 1st Round Case - Hazella Light

Information to be shared only under request:

• The company would like to understand the revenue potential. In particular, they are concerned that the sales of Hazella Light may cannibalize the sales of common Hazella.
• There are existing competitors selling low-calorie spreads in Italy.
• The only way to launch for our client is to develop and launch on their own.

Example of an excellent answer (score: 2)

GOAL CLARIFICATION

An excellent candidate would clarify the objective of the client i.e., estimate revenues for the launch.

STRUCTURE

1. Company potential with new product
   1. Direct results (revenue potential, derived from market size and market share that the client may reach)
   2. Synergies/cannibalization (mention possible cannibalization of Hazella sales)
2. Capabilities of the client to launch
   1. Financial
   2. Non-financial
3. Risks and next steps

COMMUNICATION

An excellent candidate should present clearly the different areas in a structured way.

Moreover, the candidate should clearly present the rationale for why he/she wants to explore a particular point, connecting the answer to the objective of the client.

Suggested score

An excellent candidate should: 

1. Clarify the goal of the client
2. Include the main elements as presented above in the structure
3. Communicate the structure in a clear way

Provide extra credit if the candidate is able to detail elements that would impact the market share of Hazella light, e.g. benefits of the product compared to the competition.

Recommended score calculation: starting from 2, decrease the score by 0,5 points down to 0 for any of the following:

• The candidate did not clarify the objective
• The candidate did not include two or more of the areas described above
• The candidate included multiple useless elements in the structure
• The candidate communicated the structure in a disorganized way or without a clear connection to the goal

What do you think are the product characteristics that would drive the sales of Hazella Light?

Example of an excellent answer

• Pricing factors
  • Regular price
  • Discounts
• Quality factors
  • Flavor
  • Texture
  • Spreadability
  • Color
  • Shelf life
  • Nutritional values (calorie intake, amount of fats, carbs, etc.)
  • Ingredients (presence of allergens, ingredients sourcing…)
• Marketing factors
  • Packaging style
  • Possibility to recycle

Note: factors such as distribution and capacity could also drive sales, but they are not direct product characteristics.

Suggested score

An excellent candidate should: 

1. Take some time to come up with an answer
2. Structure the drivers according to different categories
3. Consider at least 3 categories with multiple drivers within each category
4. Present the structure clearly

Recommended score calculation: starting from 2, decrease the score by 0.5 points down to 0 for any of the following:

• The candidate did not take some time to brainstorm
• The candidate did not divide the drivers into categories
• The candidate brainstorming outcome is poor
• The candidate did not present the structure clearly

Please estimate the current market of light chocolate spreads in Italy.

Information to be shared only under request:

• Estimate the market in euros.
• Do not consider restaurants/bars/etc, only households.
• Italian population = 60m
• The average jar is 500g, priced at €4

Example of an excellent answer (score: 2)

Possible structure:

• Price per jar (1), times
• Jars sold
  • Households buying light chocolate spread (2), times
  • Number of jars bought per year per household (3)

1) Price: 4€ (candidate should have asked)

2) Possible way to estimate the number of households buying light spreads:

• Italian population = 60m
• People per household = 2
• Households = 30m
• % of households buying chocolate spreads = 60%
• % of households buying chocolate spreads that prefer light version = 10%
• Market in households = 30m * 60% * 10% = 1.8m

3) Possible way to estimate the number of jars bought by a household (see image):

Jars per year = 1.8m * 5.6 = 10,080,000 jars/year

Total sales = 10,080,000 * €4 = €40,320,000 €/year

Suggested score

An excellent candidate should: 

1. Ask for additional information
2. Take a reasonable amount of time to think of a structure
3. Present the structure clearly
4. Carry out the computation without mistakes and present it clearly
5. Carry out a sanity check of the results

Recommended score calculation: starting from 2, decrease the score by 0.5 points down to 0 for any of the following:

• The candidate did not ask for additional information
• The candidate did not identify a reasonable structure
• The candidate made mistakes in the computation
• The candidate did not comment on the result / consider if it is reasonable

Our client is looking for the right price for Hazella Light. They are wondering whether they should sell it at a cheaper or higher price compared to Hazella. A cheaper price of 4€ would maximize the market share of the light market, but would yield lower revenues. A higher price of 6€ may be too high for the customers. What do you think is the right price for Hazella Light?

Example of an excellent answer (score: 2)

If needed, clarify that we can assume that customers that chose probably and definitely would all switch, while those that selected not at all and unlikely would not switch, for simplicity.

The candidate should compute for both scenarios the expected sales, divided into:

• Sales of Hazella Light from new customers (light-spread only consumers)
• Sales of Hazella Light from existing customers
• Sales of normal Hazella from existing customers

From Exhibit 1, compute the size of the two markets (Hazella and Hazella Light) in jars:

• Hazella market size in jars = €400m/€5 = 80m jars
• Light spreads total market size = €40m/€4 = 10m jars

Scenario analysis (see image): 

Note: excellent candidates should realize that launching Hazella Light at a lower price would cause excessive cannibalization and reduce overall revenues from the current €400m to €388m.

Suggested score

An excellent candidate should: 

1. Take a reasonable amount of time to understand the provided data
2. Interact with the interviewer to find the right insights
3. Structure the computations clearly
4. Comment on the result and identify the right price per jar i.e., €6

Recommended score calculation: starting from 2, decrease the score by 0.5 points down to 0 for any of the following:

• The candidate did not take some time to look at the exhibits
• The candidate did not identify the insights of the exhibits
• The candidate did not structure the computations clearly
• The candidate did not comment on the result / identify

Can you sum up the case for our client?

Example of an excellent answer (score: 2)

The candidate should:

1. Recap the objective
2. Provide an answer-first approach to the question asked
3. Mention risks and the next steps to take

RECAP OF THE OBJECTIVE

“As requested by the client, we evaluated the impacts of launching Hazella Light in Italy in terms of revenues and cannibalization of their standard spread, Hazella.”

ANSWER-FIRST APPROACH TO THE QUESTION

“Based on our analyses, we recommend launching the spread at a premium price of €6. The main reason behind this is an estimated increase in yearly revenues by 10%, reaching €438m. With this price, we expect:

• To capture 30% of the light spread market 
• About 1 of 4 existing customers to switch from Hazella to Hazella Light”

RISKS AND NEXT STEPS

“The risks behind this move include the reliability of the available data. We only compared two prices, €4 and €6, but there might be a better pricing option. Moreover, there might be some negative effects we are neglecting. For example, launching a light version of the core product might make Hazella look less healthy or appealing to existing customers, hence further research may be done on this.

As for the next steps, we will be happy to identify the right marketing strategy for the launch. We also recommend planning an expansion beyond the Italian market if the product is successful.”

Recommended score calculation: starting from 2, decrease the score by 0,5 points down to 0 for any of the following: 

• The candidate did not have an answer-first approach, supported by multiple reasons
• The candidate did not mention the importance of the pricing strategy
• The candidate presented the analysis in a disorganized way
• The candidate did not conclude the recommendation proactively, mentioning the next steps