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Source: Fishbowl - Consulting Memes

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 population that gets a haircut and how often people get a haircut. I will first tackle the population. Obviously, people aged between 0-10 do not get haircuts. Even if they do, it is exceedingly rare. I assume health expectancy is 80 years and population is evenly distributed among each groups. That means, only 87.5% of the US population gets haircuts. I assume there are 160m males and 160m females in the US. That means, 140m males and 140m females gets haircut each year. I also assume males get a haircut once every month and females get once every three months, which means 12 haircuts per year for males and 4 haircuts per year for females.

This means, total number of haircuts per year is 140m * 12 = 1.68 billion for males and 140m * 4 = 560 million for females.

Time per haircut: I will assume a haircut per male will take 30 minutes while it will take 1 hr for females.

Capacity per hairdresser: I will assume there will be on average four hairdressers per shop and each will work for 40 hours per week. Assuming they will work for 50 weeks per year, capacity of each shop is 8000 worker hour.

Obviously, the number of hairdressers is total hours worked / capacity per hairdresser.

Total hours worked: 1.68 billion * 30 minutes (for males) + 560 million * 1 hr (for females) = 0.84 billion worker hours (for males) + 0.56 billion worker hours (for females) = 1.4 billion worker hours

Capacity per hairdresser: I calculated it above to be 8000 worker hours per year.

Number of hairdressers: 1.4 billion worker hours per year / 8000 worker hours per year = 175,000.

There are approximately 175,000 hairdresser shops, or 700,000 individual hairdressers working in the US.

Hi consultant-to-be,

I would like to share a BCG market entry case, Pharma industry – not like a super difficult one but interestingly tricky, which makes it my fav case. Hope you guys enjoy crack the case as much as I do J

Our client is a pharmaceutical company who has recently developed a drug for apoplexy. The drug has been clinically proven to be safe and effective, and is the only product that is at this stage in our client’s business. Should our client proceed with commercializing the drug?

Some useful info are

From that we figured out the number of patients with automatic trigger that reach hospital in the 3-hour window: 260,000*20%*100% = 52,000 patient

Now, the tricky part is the timing

It takes 8 minutes for an ambulance to dispatch and 10 minutes to load a patient. It takes 12 minutes one-way for an ambulance to go from the city to a hospital and an extra 8 minutes one-way to go from the suburbs to a hospital. Given that, total time it takes for a patient to go from the city to a hospital:

8 + 10 + 12*2 = 42 minutes (it’s very easy not to double the 12 as 2-way)

All patients from the city should be able to receive treatment in the first hour. Time it takes for a patient to go from the suburbs to a hospital:

8 + 10 + (12+8)*2 = 58 minutes (again round way)

Although patients from the suburbs reach hospitals in 58 minutes, 2 minutes isn’t enough time for them to receive treatment. (Fair enough yet given the pressure in real case, we might not notice this)

Therefore, these patients will most likely go for the competitor’s drug (which is cheaper and has the same success rate after the first hour)

Number of patients who call ambulance that get treated in the first hour: 260,000*80%*60%*80% = 99,840 = ~100,000

Total number of patients who will use our client’s drug = 52,000 + 100,000 = 152,000

Revenue = 152,000 patients*$8,000/patient = $1.2 billion per year

One step further, regarding profitability

If fixed costs are $240 million/year and variable costs are $5,000 per unit, how much profit can be made from the drug per year?

Total costs = $240m + $5,000*152,000 = $1 billion; Profit = $200 million/year

Our client is thinking of lowering the price of their drug to $6,000 per use to capture more of the market. Is this a good idea?

In this case, our client will still capture all of the patients who will receive treatment in the first hour, which is 152,000 patients. In addition, our client will get 50% of the patients from the suburbs (since our client’s drug is now identical to the competitor’s after the first hour)

Number of patients from the suburbs = 260,000*20%*60%*50% = 15,600

Total number of patients who will use client’s drug = 152,000 + 15,600 = 167,600

Total revenue = 167,600*$6,000 = ~$1 billion

Total costs = $240m + $5,000*167,600 = ~$1.1 billion

At this price, our client would not make any profit and would make a slight loss instead. Therefore, they should stay with charging $8,000 per use of the drug

Conclusion:

I recommend that the client proceeds with commercializing the drug at $8,000 per use. This pricing strategy allows them to capture a reasonable portion of the market (given the higher effectiveness of their drug within the first hour), generating a profit of $200 million a year. Some major risks are competitive response and the possibility of new market entries, so moving forward, our client should develop a solid marketing plan, and push for the replacement of the competitor drug with our client’s (using the argument that it will simplify the supply management of hospitals)