Bain - PowerPoint PPT Presentation

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Bain

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... new customers with trials and promotions Adjust product line to focus on niche market Strategic alternatives Merger Divestiture Bain & Company: ... – PowerPoint PPT presentation

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Title: Bain


1
Bain CompanyCase Interview
2
Introduction
  • Take notes
  • Ask questions
  • Structure your analysis
  • Drive towards a recommendation

3
Case Question Entertain Me
  • Music retailer cassettes, CDs, and videos
  • Business Activities
  • Mail orderrecords and tapes
  • Went public
  • Expanded retail stores to 400 mall-based stores
  • Recent focus on Internet
  • Mail order channel was allowed to die
  • Issue Declining revenue and margins

4
Structure your approach
  • Wrong Always use the same framework regardless
    of the business issue
  • Better
  • Clarify the primary business issues
  • Evaluate options
  • Explore broader issues to determine if channel
    segmentation is appropriate during analysis
  • Same product competing in overall market
  • Channels may have cost advantages

5
Framework
  • Cost of Goods Sold (COGS)
  • Multi-channel approach in order to increase
    volume and decrease unit costs
  • Sales, General Administrative (SGA)
  • Retail sales people
  • Mail Order call centers
  • Internet promotions, ads, program development
  • These channels may share general overhead, but it
    is important to explore points of
    differentiation
  • Activities
  • Customers
  • Competitors

6
Competitors Customers
  • Online competition is highly fragmented
  • Mail Order historically have focused on this
    channel now moving online
  • Retail stores off-line consolidation moving
    online
  • Internet Many Internet-only retailers
  • Customer demographics for various channels differ

7
Channels
Explore each channels revenue and margins
individually
  • Retail Adequate, consistent with industry
    standards
  • Mail Order May have been a cash cow even if
    market growth was declining
  • Internet Drive profitable growth

8
Strategic Issues
  • Level of differentiation
  • Reputation
  • Mall stores easy returns, advice from
    entertainment associates
  • Metrics
  • Revenue
  • 10 in 1997
  • 2 in 1998
  • - 10 in 1999
  • compared to 50 market growth
  • Cost Performance
  • Structure How does this overall cost structure
    compare to the cost structure within each
    channel?
  • 60 COGS
  • 10 distribution
  • SGA up 5 over last 2 years

9
Revenue Analysis
  • Decline in prices
  • Lack of differentiation
  • Easy product returns to mall stores
  • Cross promotions to create loyalty effect
  • Recommendation engines
  • Decline in volume
  • Customer demographics for various channels
  • Key volume drivers
  • Visitors to the site
  • Purchase frequency
  • Average purchase volume
  • Repeat purchases
  • Compare to mail order channel and online
    competitors

10
Recommendation
Leverage assets across multiple channels
  • Encourage existing mail order customer base to
    move online
  • Direct mail to build awareness of the site
  • Communicate with customers to mitigate online
    security concerns
  • Cross channel promotions
  • Virtual coupons in direct mailer
  • Long-term coupon plan to build repeat purchases
  • Friends family programs
  • Integrate offline assets
  • Easy returns at over 400 stores nationwide
  • Professional advice from entertainment associates

11
Recommendation
Consider alternatives
  • Target new customers with trials and promotions
  • Adjust product line to focus on niche market
  • Strategic alternatives
  • Merger
  • Divestiture
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