labelers
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Distribution occurs primarily through one of two types of outlets:
? Grocery outlets: all grocers sell branded cookies, most also carry their own
private label cookies. This represents approximately 90% of total cookie sales ? Mass merchandisers (ex. Walmart, Sam’s, etc.): sell only branded cookies
Question:
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How large would you estimate the overall U.S. cookie market to be in terms of $?
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How large of a threat do you believe the trend in private label cookie sales to be to your client?
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Based on your assessment, what is an appropriate strategy for your client to follow?
Suggested solutions:
The first question, estimating the size of the U.S. cookie market, has no right or wrong answer. It is a test of a candidate’s ability to make reasonable assumptions and work quickly with numbers on an “order of magnitude” level. One acceptable response would be to estimate the number of U.S. households, estimate household consumption over some period of time, estimate the average cost of a bag of cookies, and project out for one year. In this case, after an estimate has been made, the candidate would be told to assume the market size is $1Billion to
simplify any future calculations. As stated in the upfront information, the market is assumed to have been flat for the past five years.
The second question is more involved. It involves determining to what extent your client is threatened by the increasing percent of the overall cookie market represented by private label sales. To better answer this question information should be gathered pertaining to what is driving the demand for private label cookies, to what extent this has already affected your client’s sales, and what the likelihood is for the trend to continue. The following are questions and answers that would be provided in an interview scenario.
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What are the sales trends for the client over the past five years?
Your client’s sales have been flat at $600M for the time frame of five to two and one-half years ago. Over the past two and one-half years, sales have decreased steadily down to a present level of $560MM.
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How has market share of the private label segment been split over the past five years between your client’s main competitor and the other smaller players?
The smaller players combined had 100% of the private label subsegment five years ago. Two and one-half years ago your client’s main competitor began supplying private labelers. Today, this main competitor owns 40% of the private label subsegment, the smaller players own the remaining 60%
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How has market share of the branded segment been split over the past five years?
Your client held 60% of this segment five years ago, 67% two and one-half years ago and 70% today. Its main competitor held 30% five years ago, 25% two and one-half years ago and 23% today. The combined smaller players owned 10% five years ago, 8% two and one-half years ago and 7% today. Analsis of the above information tells a very important story. The private label segment was launched five years ago by the smaller players. As private label first cut into the branded segment, it came at the expense of your client’s main competitor and the smaller players, not your client. In response to this, your client’s main competitor entered into the private label segment two and one-half years ago. This further hurt their own sales and those of the smaller players, but also began to hurt your client’s sales. Additional information is required to understand what is driving the demand for private label cookies
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How does the quality of a private label cookie compare to that of a branded cookie?
Consumer studies have shown that there is a noticeable difference in taste, texture and quality in favor of the branded cookies ?
At the manufacturing level, what is the difference in cost of production and price between branded and private label products?
It costs approximately $1.50 to manufacture a bag of private label cookies which will sell for $2.00 to retailers. It costs approximately $2.00 to manufacture a bag of branded cookies which will sell for $2.75. ?
How do the same numbers translate at the retail level?
A retailer, paying $2.00 for private label cookies can sell that product for $2.50. The $2.75 bag of branded cookies can be sold for $3.50. The key finding is that from a cost-price-margin perspective it is advantageous for both the manufacturers and the retailers, with all else equal, to sell a bag of branded cookies. Other factors must be contributing to the demand for private label cookies. Think about the incentives at each level in the chain (manufacturer, retailer, consumer). The following questions can help fill in details
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Have any of the manufacturers been able to gain additional shelf space for branded products by supplying grocers with private label products?
No ?
Has their been excess capacity at your client, its main competitor or the smaller competitors that has been used up through the manufacturing of private label products?
There was some excess capacity at the smaller competitors and your client’s main competitor (your client is unsure as to how much).. There is little excess capacity anywhere in the industry today. . ?
Has your client’s relationship with its retailers suffered as a result of it not supplying private label products?
Not noticeably ?
Are grocery stores using private labels in other food categories? Yes, there has been a major push by grocery stores to populate shelves with private labels ?
Is competition increasing or decreasing among grocers?
Generally increasing. Grocer chains are expanding and the number of grocers to be found serving a given area has generally increased over the past five years
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What general macroeconomic trends have occurred over the past five years?
The economy has been slowing over the past five years. There is concern about recession
2020年(招聘面试)怎样应付案例分析面试(英文版)
