Toothbrush disruption

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 -- your interviewers have done the cases tens or hundreds of times, and when the next interviewee comes and shouts out a standard framework, they tend to get super annoyed (me included). Think about it as a real-life consulting project situation: If a CEO pays $XM on a project, and the consultant comes and presents the 4Ps, it's bad. Two ways to solve it:

• Reword it in your head and adapt terminology to the case. Examples: Don't use "product" as term for a services company. Split "place" into distribution channel and regional expansion. Maybe add customer segments if applicable.
• Rank according to priorities. "price" is rarely a lever for growth/expansion, but can be important for market share gains; probably better in both cases is a low-spec version of the product. Mention the most important topics first and quickly state why they seem most important, and name the last ones just to be MECE.

To give you a "real" case example -- let the case be a high-quality Chocolate Manufacturer from Italy who wants to gain market share in Europe.

1. Worst answer, "the researcher":

"I would analyze the market, the competition, and the customer segments in order to understand the positioning first, and then see how we gain market share".

--> This is called "boiling the ocean", asking tons of questions with no clear sense of where you want to go. You won't believe how often I saw when doing interviews at BCG and still see it on preplounge interviews, this is super, super dangerous and risks you failing the interview, even if you guess it "right" in the end.

2. Good, but bad answer, "the MBA"

"I would look at Price, Place, Product, Promotion. We can lower the price to gain share. We can sell at more places. We can change the product to better serve customer needs. We can invest in promotion and run more ads to gain share".

--> Why is this bad? Because it's 100% generic. Re-read it - it fits to ANY growth case, for literally ANY industry. And doesn't help the client at all, she can get the same level of insight by reading a textbook on business 101.

3. Good answer, "the interesting candidate"

"In order to grow market share for the Italian chocolate manufacturer, we have a few options. First, we can regionally expand our footprint into more markets. I would want to see in which markets the client is already strong to get an understanding of where we can continue to grow. Second, I would look at distribution channels and how the client is currently selling it's chocolate, e.g., via own shops, specialized sweets/chocolate shops, or via retail. As availability at the point of sale is highly important for consumers to buy chocolates, increasing the distribution footprint may offer potential to gain share. Third, I would look at the range of chocolates the clients offer, maybe there is an opportunity to further differentiate into other specialty or luxury chocolates, or offer a basic, more mass market chocolate. Fourth, let me look into customer brand awareness and whether a marketing push can increase market share. Fifth, looking at customer segments, there may be an opportunity to go into fully different segments like B2B for events or giveaways. Finally, I would review the pricing structure of the current product offer and see if there are opportunities to position the client more competitively to gain share. I would start by looking into 1, the regional footprint ..."

--> This is 200 words, or 2 minutes talk time, plus maybe 2 minutes thinking time for the structure. And, generally the content is the same as answer 2 (4P, with place split into regional footprint and distribution, and customer segments added, and reworded!). But it FEELS completely different and unique to the case, shows prioritization skills and a bit of business judgment already.

Think about it this way: As a project leader in real life, if I leave candidate 3 in a room alone for a day, I would have a really nice presentation with first hypotheses on how to grow market share with a few specific analyses already pointing into the correct direction. If I leave candidate 1 in a room for a day, I would find somebody who managed to download 50 industry reports on the chocolate industry.

Is answer 3 perfect? Of course not, I came up with it in 10 minutes. Maybe the customer segments/B2B branch is not necessary. Or the ranking is wrong, maybe price is more important. That's not the point however -- once you're at this level of discussion, you pass the interview :)

Hope this helps -- good luck with your preparation!

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 easily remember the framework, it would make more difficult to present a customized structure when the interviewer asks the initial question. Moreover, since every business situations has some peculiar key elements (eg how to enter in a market-entry case, price valuation in M&A, etc), this could lead to completely miss one core bucket.

Based on my experience, it thus make sense to make the extra effort to learn 3-4 different structures for business situations (potentially with some elements in common), and be able to present from the beginning something ad hoc when needed.

Moving to the framework per se, using as an example market entry, this is how I would structure it:

1) Goal clarification. It is always good to start with the end in mind – thus what is the specific reason why you want to enter the market? Is it revenues, profits or specific synergies?

2) Industry. There are two macrovariables here.

• Key industry numbers/facts. This includes for the market and potential subsegments the following
  • Growth
  • Size
  • Barriers to entry
• Key industry players. This includes:
  • Customers segmentation
  • Competition
  • Occasionally for some cases: suppliers and substitutes.

You should present this area connecting with the goal, and not purely listing the elements to analyse as if it was a laundry list. The best way to do so is explain how a certain variable will help you to achieve you goal. Eg, if your goal is to increase revenues, don’t simply say “I want to look at growth, size and barriers”, rather “I want to look at growth and size – this will tell me if the market has the potential to provide enough revenues for our client. I would also like to check the barriers, to understand which are the obstacles in entering such a market and thus increase revenues”.

3) Company - Target objective feasibility. Here you want to check the fit between the client and the selected industries.

• Can our specific client reach its objective in the selected market (eg profits, revenues, market share, etc)?
• Are there positive or negative synergies in such industry?

In the first point, you will probably have to go through a profitability/revenue/cost framework, to calculate the effective result.

4) Best way to enter. Once you know the industry is attractive and you can reach you goal, you should consider the entry options.

• Which are the possible ways to enter the market? Usually you should consider (i) starting from scratch; (ii) M&A; (iii) Joint Venture or licencing
• Which option meets better our capabilities to enter the market? Each specific way to enter will require some different capabilities. If you start from scratch you may need skilled people in all the phases of the value chain; if you buy another company you may need less people, but more upfront capital, etc.

5) Risks and next steps. What are the major elements that we should further analyse based on the previous points (eg regulator decision, unexpected competitor reactions, potential wrong pricing in the new market, etc)?

This would include all important market metrics, presenting barriers to entry into the industry. I would not consider the price or the product in the first or second level for a market entry, but rather as a possible third level once reached step 3, when we have to understand if/how we can meet the client's goal.

Hope this helps,

Francesco

Hi,

1) You proactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty, product mix. Distribution and customers I usually check within qty part

2) Not sure if I understand the question. Your company does not necessarily replicate industry trend, so you have to look at it separately

Hi Kay,

this is indeed one of the fundamental things that you need to learn in order to rigorously disaggregate the value drivers of a business. The driver tree allows you to identify the numerical drivers and sub-drivers of profits. The qualitative elements (such as consumer demand, market structure, company operations, etc.) then have to be mapped to the sub-branches of the tree!

Hence, your analysis has two steps. Imagine you want to run a diagnostic on why profits have fallen. First you need to identify the numerical driver of the problem (e.g., customer base is shrinking). This gives you an understanding of the WHAT. The second step is the understanding of the WHY! To do this, you have to examine the qualitative elements that link to the "number of customers"-sub-branch in your driver tree (e.g., competitive situation, market entries, new substitutes, relative price point, customer preferences, product/service properties vs. competition, etc.)

You can think of these qualitative elements as the typical business situation framework elements (see V. Cheng et al.) - but here, they are not hanging in the air, but they are embedded in a rigorous thinking frame which emerges from the disaggregation of value drivers and linking it to qualitative reasons.

Cheers, Sidi

Hi,

I would start with either market sizing or with profitability cases since they are much easier:

1) In market sizing cases I would try to understand the basic approach:

• How to structure market sizing case
• Key tools (Assumptions, Households, using personal experience, adjustments, age groups, Income split via 80/20, peak / off-peak calculations, replacement rate, using size of the area to calculate markets, calculating adjacent markets, sanity checks, etc).
• How to do math in the case interview

2) In Profitability cases, I would learn

• How to ask clarifying questions
• How to structure profitability cases
• How to work with data (Comparing with competitors, segmentation, historical data)
• How to answer the questions on creativity
• How to provide recommendations

3) Then I will switch to Market context cases (Market Entry, New product, Acquisition, etc). In addition, I would learn how:

• Structure market context questions
• How to analyze graphs and tables

4) After that I would look at other case types: Operational math problem (e.g. Should we increase the speed of an elevator or just buy a second one? How should we reduce the queues? Etc.), Cost Cutting, Valuation, Private equity due diligence, Synergies, etc.

Also, I would try to focus on the most common industries in the following priority(sorted by probability of getting a case): 1-retail and CPG; 2-airlines; 3-Telecom; 4-banking; 5-natural resources; 6-tech

Best!