## Problem Definition

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.**

## Comments

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.

## Short Solution (Expand)

## Detailed Solution

**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?

**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. **

## Difficult Questions

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?