Our client is an international CPG (consumer packaged goods) firm called Bryan, with multiple business units
(toothpaste, batteries, skin & body care, among others).
They are the global market leader in every market they play in except for the hair removal market. They came to us asking how they can also become number one in this market.
How can you help them out?
The core of this case deals with an essential aspect of industry analysis: the segmentation of the market.
The overall behavior of a market can completely deceive you if you do not look at its segments.
For example, imagine the bottled water market grows at 1% per year. What you should consider though, is that actually sparkling water grows at 10% per year and plain water shrinks at 9% per year.
If you don’t segment you miss the whole point.
Short Solution (Expand) (Collapse)
The following structure/framework could be used by the interviewee:
I. Market / Costumer
The interviewee should try to understand the customers and the market of hair removal better.
- Willingness to pay
- The market is segmented, for each application, into male and female market (as these follow very different trends and habits). This is a very insightful way of segmenting the market.
- 95% of men use hair removal products regularly.
- 80% of women use hair removal products regularly. (old women are mainly the ones who don’t use them regularly)
- Almost all men use hair removal products while 20% of women (mainly elder women) do not.
- Women use mainly waxing as hair removal method.
- Men use mainly wet- and dry-shaving.
The candidate should ask about the company’s expertise/capabilities.
- Sold products
- Price of products
- Company image by customers
Main conclusionBryan is apparently not very present in the women market. While it has 9 products exclusive for men, it only has 2 for women
(not present at all in the feminine dry-shaving market).
- Bryan has only 1 product in the waxing segment and it serves both men and women segments. This could be a problem for the marketing campaigns which cannot target a specific audience.
This is one of the most important parts of the case. The candidate should ask about the competition in each of the segments.
- Bryan’s market share
- Market saturation of segments
- Market fragmentation
- Main players
Main conclusionWe confirm that Bryan is not strong in the female market as it has only 10% of the female wet-shaving market compared to 33% in the men wet-shaving market. Bryan has also no market-share in the female dry-shaving market against 20% in the men dry-shaving market. The waxing segment is (as expected because Bryan has only one product in the market) almost not explored by Bryan. The men market is very concentrated whereas the women market is fragmented with many small players. This is an indication that it would be easier to gain market share in the women market (less probability of price wars, less cost of stealing customers from strong brands etc.).
A possible closing to this case could be as follows:
After analyzing the three key areas we can propose the following strategies for Bryan:
Explore the waxing market (for both men and women) which is at the moment neglected (only one product available).Bryan should create at least a couple of waxing products exclusively for women, as it could then target specifically the female public. Since waxing is not commonly used by men (among hair removers, only 10% of men use this method against 66% of women), it could be interesting to completely leave this market segment (no economies of scale for such a small segment).
Increasing the prices of wet-shaving products for women.This would have the advantage of making the image of the brand in the women segment consistent with its image in the men segment, which is of an expensive, high-end brand. This increase could be done allied with a well prepared marketing campaign to change the cheap and non-feminine image of wet-shaving among women.
Acquiring of new customer groupsAcquiring completely new female customers to the hair removal market (instead of only trying to steal market share from other competitors). This could be done with a marketing campaign aimed at old women, who most frequently do not use hair removal methods.
Partner-up with competitorsAlthough the men market is already saturated with strong players, a possibility for stealing market share from the number one (and thus become number one) would be to partner up with the third biggest company in this market or with the smaller players.
Acquiring competitorsAcquiring some of them would also increase market share of Bryan instantly.
Assuming there are as many men as women, how many more men (in %) use wet-shaving than do women use waxing?
Wet-shaving men = Hair removal users * Wet shaving users
= 95% * 95% ≈ 90%
(= 0.95 * 0.95 ≈ 0.9)
Women waxing = Hair removal users * Waxing users
= 80% * 66% ≈ 53%
(= 0.8 * 0.66 ≈ 0.53)
That means that there are approximately 70% more men who use wet-shaving as women that use waxing
- 95% of men use hair removal products regularly.
- 80% of women use hair removal products regularly.
The CEO decided to gain market share in the wet-shaving market for men by acquiring 3 competing companies. How would you proceed to choose the companies to acquire?
In order to decide which companies should be bought, it would be essential to analyze the trade-off between their market price and the market share they would transfer to Bryan.
Other aspects to be considered would be:
- Possible synergies between Bryan and the target companies, which could result in cost reduction in the production, customer service, marketing etc.
- How similar products from the target companies are to Bryan’s. The more similar the products, the bigger the risk of internal competition or cannibalization after merging.
- Soft assets like customer loyalty, brand awareness etc.
More questions to be added by you, interviewer!
At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).