Your client is the CEO of a publishing company that publishes an educational magazine and a women's magazine.
Although both businesses are profitable, they are not growing fast enough. Thus, the CEO is thinking about starting a third monthly magazine that is targeted towards 30 to 60-year-old men in the US. He wants to know whether he can reach his first-year goal of $15 million in revenue.
Since this is a candidate-led case, the candidate should drive the case from start to finish.
This case is mostly about market sizing. The interviewee should be able to both estimate the market and work with those estimates.
While there are no right or wrong answers in market sizing cases, the interviewer usually has a range of acceptable answers.
As long as their assumptions are realistic, the interviewee’s answer should be within one order of magnitude of the acceptable answers.
Suggested case structure:
To determine whether the client should launch the new magazine, the interviewee should first outline a structure to estimate the magazine’s potential first-year revenue. At this stage, the candidate should start with an issue tree rather than estimating numbers.
Main revenue streams:
Retail sales Advertisement SubscriptionsAfter laying out a structure, the interviewee should consistently follow it. To calculate revenue, the interviewee should begin with the end-nodes (the nodes at the bottom of the tree) and estimate values to calculate the nodes’ values from the bottom to the top of the tree.
Since we need the total number of units sold to calculate the first two branches (retail and subscription sales) let’s start by branch number 3 (advertisement).
If they ask for the following information, have them estimate first. If their estimates are very different from the following numbers, you must decide whether to follow their estimates or to ask them to use the following numbers.
(1) Subscription revenue
Total annual revenue
The revenue in the first year is then estimated to be ≈$17 million.
Based on the estimated first-year revenue alone, the CEO of the publishing company should launch the new magazine.
The estimated potential first-year revenue is 16% higher than the CEO’s targeted first-year revenue ($15 million).
However, before giving a firm recommendation, the following factors should be investigated.
Risks
Counteractions
Provide discounts when launching the magazine
Additional questions
If the interviewee solves the case very quickly, you can come up with additional challenging questions to ask them
Hi Anonym, as I understand the description, the company has different magazines for different interest groups. In this particular case, the scope is simply on the one magazine that focuses men i... (more)
In order to get into consulting, the case study is the most important element of the interview. Here, you can learn the specific skills and concepts to solve them.
1 Q&AGet an overview over a company’s customers, competition, cost and capabilities by conducting a 4 C analysis in your case interviews
Market Sizing Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.
1 Q&AMarket Entry Strategy Frameworks may be a great solution to apply in your Case Interview if your client is searching for growth alternatives.
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.
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The total revenue is the sum of the revenues from
37.5% (=30/80) of the population is between 30 and 60 years old. (Assumption: Uniform age distribution and a lifespan of 80 years)
