Case

China book publisher

1,8 Tsd. mal gelöst
3.8 5 270

Problemdefinition

Our client is a Chinese publisher called AnimeCo who is looking to publish a new book based on the popular Anime series Little Panda. This series has been highly popular in China with millions of viewers every day and the publisher is looking to capitalize on this potentially.

They have asked us to provide advice on whether this will be a good investment and if they should move forward with it. They want to know the total market size, potential revenue & potential profit.


Kommentare

This is a profitability case as much as it is a market sizing case. The candidate should lead the case from the start breaking down the problem and providing a structure to work with.

Additional information & data can be shared with the candidate if he asks for it. Chinese currency CNY is used during the case.


Kurzlösung (Ausklappen)


Detaillierte Lösung

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case.

I. Market size

Interviewee should outline his approach to calculate market size and then ask for the data. Interviewee should not start assuming the data, but specifically ask for it.

The interviewee should ask for the following information:

  • Which target market is the client after?
  • How many segments are we dealing with and what is the proper breakdown?
  • What is the expected conversion rate that will purchase the book for each target segment?

Interviewee should use the profit framework to calculate market size, revenue, cost and profit. Additionally, interviewee can use the customer branch of the Business framework to determine data needs on customer segments and conversion rates.

Share Table 1 (Target segment breakdown) if the interviewee inquires additional information.

Information that can be shared on the interviewee’s inquiry:

  • Target market are young kinds ranging from 10-15 years of age.
  • Focus lies on high-end segment of that target market due to book's pricing.
  • Total population of target market is 140 m kids.
  • We have three target segments.
  • We expect a conversion rate of 5% who will purchase the book.

Calculating total market size

The interviewee should now calculate total market size:

  • Segment A: 10%*40 m = 4 m.
  • Segment B: 8%*50 m = 4 m.
  • Segment C: 12%*50 m = 6 m.
  • Total market size is 14 m of which 5% will be purchasing the book so our commercial market size is 5%*14 m=700.000 people.

II. Profit

Interviewee should now calculate profit by outlining that profit=revenue-cost.

Information that can be shared on the interviewee’s inquiry:

  • The book will be sold through hardcopy & digital format.
  • Hardcopy will be priced at CNY180 and digital copy at CNY150.
  • We expect a 50% equal split in sales between both options.
  • Cost per unit is CNY25 for physical copy and CNY19 for digital copy.

Calculating revenue

Interviewee should calculate revenue first:

  • Segment A: ((4 m*5%)*50%*CNY180) + ((4 m*5%)*50%*CNY150)=33 m.
  • Segment B: ((4 m*5%)*50%*CNY180) + ((4 m*5%)*50%*CNY150)=33 m.
  • Segment C: ((6 m*5%)*50%*CNY180) + ((6 m*5%)*50%*CNY150))=49.5 m.
  • Total revenue is 115.5 m.

Calculating cost

Interviewee should then calculate cost:

  • Segment A: ((4 m*5%)*50%*CNY25) + ((4 m*5%)*50%*CNY19)=4.4 m.
  • Segment B: ((4 m*5%)*50%*CNY25) + ((4 m*5%)*50%*CNY19)=4.4 m.
  • Segment C: ((6 m*5%)*50%*CNY25) + ((6 m*5%)*50%*CNY19)=6.6 m.
  • Total cost is 15.4 m.

Calculating profit:

Interviewee should now calculate profit:

Potential profit is: CNY115.5 m– CNY15.4 m = CNY100.1 m.

III. Go/No-Go on investment

Interviewee should ask for client's profit target to determine final decision.

Information that can be shared on the interviewee’s inquiry:

  • Target is CNY75 m.

Profit of CNY100.1 m > target of CNY75 m, so client should go ahead & invest.


Schwierige Fragen

What would your next step look like after finding out the economics stimulate a Go-decision?

What more information would you need to further strengthen your Go-decision?

Verwandte Consulting-Fragen

The number of hairdressers depends on three main factors: # of haircuts done per year, time spent per haircut and capacity of each hairdresser. Number of haircuts: Number of haircuts depends on US... (mehr)

Hi there, I would start by asking some general questions to have a better feeling on the case: 1) Does our client provides this new service elsewhere? If not, does our client already has the cap... (mehr)

Bisher beste Antwort von 2 Antworten:
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi, 1) You proactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty,... (mehr)

Beste Antwort bisher:
Aktuell nicht aktiver Experte
Experte

Hey Philip, There are for sure several ways of estimating that number, but a quick top down approach can be resumed in 3 steps 1. Estimate the total population of the US: ~300M (I guess it's alrea... (mehr)

Beste Antwort bisher:
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 50+ candidates secure MBB offers

Hallo Brinja, hier ein Bottom-Up Ansatz: Das jährliche Marktvolumen in Holland entspricht [ I. Menge verbrauchter Windeln pro Jahr] x [ II. durchschnittlicher Verkaufspreis pro Windel] I. Menge ve... (mehr)

Verwandte BootCamp-Artikel

Cost-Benefit Analysis

Investments or single business cases need to be evaluated based on a certain set of criteria. Since financial performance is the key criterion in most cases you need to have an idea about future financial impacts. A key tool to asses this impact is the cost-benefit analysis which is used to determine the net effect of potential revenues and costs.

4 Kommentar(e)

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

9 Kommentar(e)

Market Sizing

Market Sizing Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.

15 Kommentar(e)

Profitability Case

Learn to crack Profitability Framework Consulting Cases, which are the number 1 reason for real consulting projects and hence are an important case type.

7 Kommentar(e)
3.8 (270 Bewertungen)
3.8 5 270
Case-Exhibits