Case Statement:
Your client is a primary battery manufacturer. Although the market size is growing at the rate of 3%, their market share is declining. They wish to have a revenue growth rate in double digits by next year, provide recommendations to do so.
I: Your client is a primary battery manufacturer. Although the market size is growing at the rate of 3%, their market share is declining. They wish to have a revenue growth rate in double digits by next year, provide recommendations to do so.
C: I would like to approach the revenue growth by dividing it across three broad headers, the cost incurred, revenue per customer and number of customers.
I: Let us focus on only the revenue part. Please proceed.
C: Sure. In Revenue per customer, we can look at the product mix, price and units sold per customer. Among AAA and AA are we facing slower growth in any product?
I: Let us focus on the first two headers. Our AAA batteries are not at par with those available in market. The growth rate for this is particularly lesser than our competitors.
C: Why is our price higher compared to our competitors for a standardized product? Are we providing higher value compared other products in market?
I: Not really, the prices were set higher simply because we control a larger market share.
C: Understood. Coming to the number of customers we have; I would like to discuss in terms of market size and market share
I: Sounds good. Go ahead.
C: Given the market share is organically growing at 3%, I would like to explore options to increase the same through expansion. Is there a possibility to increase the total addressable market through new product or by exporting our product internationally?
I: Interesting options but let’s focus currently only on the products mentioned and the Indian market.
C: Understood, moving to the next bucket i.e., market share; I would like to explore our marketing strategy and current distribution channel. Are we facing any challenges across these two? What is our current marketing strategy and are we present across all geographies inside India?
I: We have not put much effort into our current marketing. No, there are certain geographies inside India where our competitors have a stronger presence compared to ours where the distributors but our products in lesser quantity.
C: Is there a reason we haven’t focused on the marketing? Is there any challenge involved and how are our competitors doing the same?
I: No reason. Our competitors have higher online commercials and offline advertisements than our client.
C: Understood. Is there any other aspect you would like me to cover?
I: No, that was an exhaustive approach. Please provide your recommendations.
C: In short-term, company should focus on improving their marketing both online and offline through commercials and online advertisements. They can focus on expanding their distribution channels to geographies where their presence is low. As a long-term strategy, they should focus on improving their AAA batteries which are lacking behind in quality as compared to that of competitors through investing in R&D. They should focus on bringing the price down to those of competitors to not lose the market share to customers.
I: This looks good. We can close the case now.
Background Information:
Company – Primary Battery manufacturer based out of North India and sells PAN India through distributors
Competitor – There are 5 other major competitors and the client holds a market share of 50%
Consumer – Majorly Households and Businesses. No further data is available
Product – There are 2 SKUs that the client wants to focus on. AAA and AA batteries of normal capacity. Our products in this category are priced slightly higher than our competitors
Case Recommendations:
In the short term, companies should focus on improving their marketing both online and offline through commercials and online advertisements. They can focus on expanding their distribution channels to geographies where their presence is low. As a long-term strategy, they should focus on improving their AAA batteries which are lacking behind in quality as compared to that of competitors through investing in R&D. They should focus on bringing the price down to those of competitors to not lose the market share to customers.
Case Tips:
There are multiple areas to increase growth, it is important to be exhaustive with the approach to find all those. Proper scoping and structured MECE approach is essential to solve this case.
