Case Statement:
Your client is a leading manufacturer of premium calculators and has been facing a decline in its market share from 75% to 50%. Analyze and give recommendations as to what could be done.
C : Before diving into the analysis, I’d like to ask a few clarifying questions to better understand the situation. First, can you tell me more about the geography in which this manufacturer operates? Is it a global company, or are they focused on a specific region?
I : It’s an Indian company, primarily operating in India.
C : Understood. Have profits also been declining along with market share? If so, for how long has this trend been happening?
I : Yes, profits have been declining over the past two years.
C : Thanks, that’s useful. To further understand the competitive landscape, you mentioned the market share has dropped—are competitors gaining this lost market share? How many competitors are there?
I : There are two major competitors, and both have seen an increase in their market share during this period.
C : That’s insightful. One more thing—has there been any notable shift in customer behavior during this time, such as a preference for cheaper alternatives, or is there still demand for premium calculators?
I : There’s still demand for premium calculators, but the competitors seem to be more successful in capturing it.
C : Got it. I’ll now proceed by analyzing revenue first. Does that sound good? Yes, go ahead.
I : Let’s break down revenue into two key components: price and quantity. Since this company offers premium calculators, I assume they charge higher prices than competitors. Have they made any changes to their pricing strategy recently?
C : No, their pricing has remained the same, but competitors are offering more competitively priced calculators.
I : That makes sense. It sounds like competitors might be drawing away some price-sensitive customers. Now let’s explore quantity - has the company experienced a significant decline in the number of units sold?
C : Yes, sales volume has dropped substantially.
I : I see. Do you think this is primarily a demand-side issue, where customers aren’t buying the calculators as much, or a supply-side issue, where the company is struggling to meet customer demand?
C : It’s a demand-side issue. Customers are just not buying as many of our calculators as before.
I : A demand-side issue suggests the company might not be reaching its customers effectively. Could you tell me more about the company’s distribution channels? Are they relying solely on traditional retail stores, or do they also sell online?
C : The company primarily sells through traditional retail stores. Competitors, however, have shifted to online platforms.
I : That’s crucial. With more consumers gravitating towards online shopping for convenience and price comparisons, the company’s reliance on traditional retail could be limiting its market reach. This could explain the significant drop in sales volume and, in turn, market share.
C : Interesting. What would you say is the root cause?
I : The root cause seems to be the company’s lack of adaptation to the shift towards e-commerce. Competitors have been quicker to leverage online platforms, making their calculators more accessible to a wider customer base at competitive prices. This shift in buying behavior has led to the company's sales volume drop, resulting in a decline in both market share and profitability.
C : I see. What would you recommend?
I : I’d recommend that the company quickly establish a presence on major e-commerce platforms like Amazon and Flipkart to regain lost market share. They could also launch their own direct-to-consumer website to maintain their premium brand positioning while offering convenience to their customers. Additionally, they should explore online marketing strategies, such as influencer campaigns, to boost visibility. Lastly, considering bundling or offering limited-time deals online could help attract new customers without compromising their premium image.
C : That sounds like a solid plan. Thanks for the analysis.
Background Information:
Geography – Operations in India
Competitor – There are two major competitors, and both have seen an increase in their market share during this period.
Product – Premium calculators
Timeline – 2 years
Case Recommendations:
Quickly establish a presence on major e-commerce platforms like Amazon and Flipkart
Launch their own direct-to-consumer website to maintain their premium brand positioning while offering convenience to their customers.
Explore online marketing strategies, such as influencer campaigns, to boost visibility.
Consider bundling or offering limited-time deals online could help attract new customers without compromising their premium image.
Case Tips:
Start with the approach/framework to analyze the situation. Collect all the facts about the relevant variables.
Perform external analysis to take into account all the factors.
