Problem Definition
We are a premium brand apparel retailer facing a consistent decrease in market share. We would like you to figure out why this is happening and provide recommendations to reverse this trend.
Case
Premium Brand Apparel Retailer
Comments
The case is designed to be presented to the candidate by an interviewer, who plays the role of a representative of a premium brand apparel retailer.
Short Solution
Key Question 1: Why is the market share decreasing?
Answer: The firm's market share is decreasing as the company's primary distribution channel has launched its own set of apparels which are in competiton with the firm's apparels.
Key Question 2: What should the firm do?
Answer: The firm should open up more self owned stores and consider creation of an online store in order to reverse this trend.
Detailed Solution
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. Background
Share Diagram 1 with candidate if deemed necessary.
Wait for the interviewee to ask questions regarding the background of the case. A few sample questions/topics are shown below. You could use them to help the interviewee with information, if he's stuck.
1. Industry and Market Share:
- Firm's market share has fallen from 25% to 16%
- Market has been growing
- The industry has not seen any major merger or acquisition
2. Competition
Our competitors are premium retailers in the same segment. Recently we have started facing competition from mid range brands as well.
3. Cost
There has been no change in cost structure or margins.
4. Distribution
- We distribute our products through large retail outlets that stock multiple products (80%) and self-owned outlets (20%). We do not have any online sales channel
- A lot of our distributors have recently started their own premium apparel brands
5. Marketing and Sales
- Prices have not changed
- Our marketing mix has remained unchanged.
- Competitor's prices, marketing mix, etc. have also not changed
6. Customers
- They are not price sensitive
- Their recognition of our brand is low
II. Solution
It can be seen that the company does not have many distribution channels. 80% of the distribution is through large retail outlets that stock multiple products. Now since these outlets have launched their own brands, they must be pushing the sales of their own products over firms' as they earn a higher margin on their own products rather than the firms' products. Our market share is declining as they have control over the shelf space.
To reverse this trend, the firm should consider diversifying its distribution channels.
- The firm could open up more self-owned stores
- The firm could also consider creation of an online store
Since the customer's recognition of the brand is low, the company should also work on a branding program to strengthen the customer pull.
III. Concluding Observations
The firm's market share is decreasing as the company's primary distribution channel has launched its own set of apparels which are in competiton with the firm's apparels.
The firm should open up more self owned stores and consider creation of an online store in order to reverse this trend.
Difficult Questions
Explore the possible impacts of these new channels on the company’s brand.
Related consulting question(s)
MECE ways to grow market share
Best answer so far out of 3 answers:
Two frameworks here: 4 Ps (= price, place, product, promotion), or the Ansoff Matrix (grow with existing or new products in existing or new markets). Both are quite MECE. Word of caution however --... (more)
What's the best way to structure a revenue growth case?
Best answer so far out of 4 answers:
Hey Liam, There's several different ways of approaching the same case (and they can all be right!), that said, below you can find the one I often prefer: 1. Analyze the external factors/market (... (more)
Potential market share in new entry
Best answer so far:
It's a badly framed question but that is no reason you should have a badly thought-out response. Sometimes interviewers will ask these just to tell whether you jump into a "5%? 10%?" guess-work or use... (more)
Business situation framework
Best answer so far:
Hi Elisey, I would personally not recommend to use a single framework for all the so-called business situations (M&A, Entry, New product, Operations etc). Although this would help to more easil... (more)
What should be framework for following: Client is a regional retail chain. They want to reduce their supply chain cost.
Best answer so far:
Hi Aditya, I see that this problem consists of 2 questions: Where can we reduce supply chain costs? How to reduce them? First we need to start with figuring out where exactly the probl... (more)
Related BootCamp article(s)
Growth Strategy
Growth questions are among the most common questions in consulting case interviews: gather the necessary Information about volume and price to find the best growth lever
5 Comment(s)CAGR - Compounded Annual Growth Rate - CAGR
The Compounded Annual Growth Rate (CAGR) Is a theoretical steady growth rate over a specific amount of time, not the average of the Y-o-Y growth rates. It can mask sub-trends within the period
5 Comment(s)Competitive Response
In a competitive response case study, your job is either to analyze what your client should do in response to a move performed by a major competitor or to anticipate what competitors will do in response to a move performed by the client
0 Comment(s)Case exhibits
