ISSUE 2

PLACEMENT PREP
MANUAL!

Marketing Club, ISB Hyderabad

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Part 1 – Lingo
Product Marketing
What do our customers want/need, how do we get our product team to build that and how do we
best tell them what products we have?

Acquisition Marketing
Where can I find our customers, and how do I get them to try our product (and engage with it
more)?

Marketing Communications
What information and materials do prospect and customers need to purchase our product and
remain informed about our products

Customer Marketing
How do I help our customers get the most value out of our product?

Brand Marketing
What do we want our customers to think and feel about our company?

Corporate Communications
What do we want the market to know and think about our company?
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Part 2 Case Approach: New Market Entry Framework

A company will tell you that they are planning to launch a product line / single product in a new
market. This market can be geographically different from the current one, or can be a new
segment that was not previously targeted by the company.

Step 1 – Understand why the client wants to enter the new market and identify the
key issue
1. Knowing this piece of information will be important making the final recommendation.
Other important information:
○ What are the client’s current revenue streams?
○ What are the client's key strengths and weaknesses? (SWOT)
○ What is the product mix? How many and what types of product lines, brands,
variations of products does the company have? What's the lifecycle of each
product? Also, how closely related are the current products?
○ Who are current customers and how are they segmented?
○ Which segments would the client’s product/s target? Does a new product need to
be developed or can one the existing products/ brands be launched? With/
without any modifications?
○ What are the current distribution channels?
○ What is the client's current financial situation?

Step 2 – Understand the Market of Interest

Understand the market the client wants to enter and evaluate its attractiveness. Start by
estimating the market size if that information is available (it is implied that you would first need
to estimate market size in such cases).
● What is its growth rate?

● At what stage of the lifecycle is it? Emerging, Mature, Declining?

● What are the customer segments and what are their respective needs?

● Is there a key technology involved? If so, how quickly is it likely to change?

● What are current trends in the industry?

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● Who are the key players in the market? What is their market share? What are their

differentiating factors?

● What is their response to the determined key trends?

● Are there substitute products?

Step 3 – Evaluate the financial aspects

Key questions:

● Costs: What are barriers to entry (i.e. investment costs)?

● Costs: What are expected fixed and variable costs?

● Revenues: What is the expected price of the product for and how many units are

expected to be sold?

● After how many years will the client break-even and what is the rate of return

(understand that money has a different value over time)?

Step 4 – Evaluate the economic implications of entering the market

Remember you do not need to investigate all these questions but you do need to evaluate and

understand what questions are important by considering the reasons the client wants to enter

the market.

If you decide that entering a new market is a good idea, it would make sense to recommend to

the client how to do it.

Entering a new market can be generally done in three key ways:

● Start from scratch

● Through a Joint Venture

● Through M&A
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Based on the data, if you decide that the venture is not a good idea, recommend an alternative

plan (product differentiation, cost cutting, international presence etc.). Since you now know the

company structure, the “old” and the "new" market, make sure to structure your

recommendation.

● Competitive advantage: Can you apply the same business strategy as in your current

market or do you have to adapt the product, marketing or even sales channels to reach

customers?

● Timing: Can you lever a first mover advantage or would you rather let the competitors

try their luck first?

● Speed of entry: Define whether you want to test a single store or region or whether you

want to cover the entire market at once

● Entry mode: How much commitment are you looking at? Would it be a simple export

strategy, where you can exit easily but have less control OR a wholly owned subsidy,

where investment costs are high but you also have more control

● Organizational structure of the new branch: Do you want to decide centrally or leave lots

of freedom to the individual manager of the country

Once you have all your answers, synthesize them to give a recommendation based on the facts

you collected. Don't forget to take another minute to structure your answer but make sure to

provide your answer first and then reasons!

Market Entry Practise Question - Our client is Vidi-Games, a manufacturer and retailer of video
games. They are planning to enter the Brazilian market. One of the factors that has prevented
them from entering that market is that there is a tariff for importing products that can be
produced in the country of 50% of production costs. However, the government is planning to
lower it down to 15% in the next years, decreasing it 5% every year (from 50% to 45%, and so
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on). What variables should they consider? What is the market size? Should they enter the
market? And if so, should they export the product from China to Brazil or produce it in Brazil?
Practice Question: The interviewee should try to estimate these numbers, but no real prior
knowledge is required.
Brazil population = 200M Younger population – under 35 = 50% - It can be assumed that these
are the only ones interested in video-games Poor population = 60% (hence, affluent people who
can afford this 40%)
Average number of people per household = 4 Penetration of video games within the affluent and
young segment in Brazil = 75% Games per year per average household = 3

Total number of video-games that can be expected to be sold per year = (total number of
households that will purchase video games) x (number of video games per year per average
household)
Total number of video-games that can be expected to be sold per year = ((200M x 50% x 40%)
÷4) x 3 = 22.5M of video games

Some Information Interviewee Needs

Usual retail price = $50 Volume calculated in market size = 22.5M video-games per year.

Summary of costs of manufacturing & distribution

Production in China $14

Production in Brazil $21

Distribution $6

Labour $8

Overheads $6

Other Costs $10.4

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Profit = Revenue - Costs Total revenue = Volume x Price = 22.5M video games x $ $ 50 per video
game = $1.125B

For costs, two scenarios have to be considered: producing in Brazil or in China. Total costs of
producing in Brazil = $21 + $6 + $8 + $6 + $10.4 = 51.4 Because of 50% tariff, the production cost
of producing in Brazil or in China is the same. Total cost of producing in China = ($14 x (1.5)) + $6
+ $8 + $6 + $10.4 = 51.4

Per unit profit = $50 - $51.4 = $ -1.4

Because of 50% tariff, the production cost of producing in Brazil or in China is the same.

Conclusion - Under the current situation it is not a profitable business, and therefore the
company should not go.

If the investment of going into Brazil is $100M, when will they recoup their investment?
First year (3 years from now) = $15.75M Second year = $31.5M Third year = $47.25M Total of
first three years = $94.5M Very soon, beginning the fourth year, the investment would be
recovered (3+ years is a good answer). Exact number (assuming you sell the same number of
video games every day of the year, 360 days) =3 years and 31.43 days.
Calculations to get the exact number: $100M-$94.5M = $5.5M
If we sell the same amount of video games every day, then we sell 22.5M÷360 = 62,500 video-
games per day. And because this is the fourth year of our investment, the tariff is 20%,
therefore, the profit per unit is $2.8. Hence, we make 62,500 video-games per day x $2.8 per
video-game = $175,000 per day. $5.5M still to break-even ÷ $175,000 per day = 31.43 days.
What could Vidi-Games do if they needed to enter now?

Revenue side:

Analyze how viable is an increase in price. •(Because the profit per unit is negative, increasing
volume does not solve the problem)

Cost side:

1. Negotiating cheaper labor.

2. Moving manufacturing sites to lower cost areas.
3. Optimizing distribution network.
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To produce in Brazil:

See possibility of reducing production costs.

Other ideas:

1. Entering in partnership with a Brazilian partner Entering in partnership with a Brazilian

partner.
2. Acquiring a competitor in Brazil.
3. Selling video-games to retailers there (hence saving in distribution, labor, overhead, etc..,
but selling at a reduced wholesale price).
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Part 3 – Guesstimation Questions

They are among the most popular question types you will get in a case interview. These
questions ask you to estimate a quantitative variable relevant to the case you are solving. A
“guesstimate” question which you have to estimate the size of a market is called a “market-
sizing” question. In terms of approach, there are no differences between guesstimate and
market-sizing questions.
Example of a guesstimate question: How many people wear red in New York on a typical
Monday? You need to keep in mind that it’s the way you approach and solve the problem that
matters, not the final answer that you give out.

Approach -
● Step 1: Clarify the question, make sure you and the interviewer are on the same
page on every assumption.
● Step 2: Break the problem into smaller pieces in a MECE way
● Step 3: Use Estimation and Judgment to solve each piece.
● Step 4: Consolidate all of those pieces into a final conclusion.

Illustration -
Question: How many people wear red in New York on a typical Monday?

Step 1 – Clarification:
How do you define “wear red”? – If any cloth on a person is red, he or she is considered as
“wearing red”.
If a person wearing red goes out more than once, do we count them again? – No!
Does “New York” here refer to New York City or the state of New York? – New York City.

Step 2 – Breaking down the problem:

OK, so here is how I would want to solve this problem. The number of people wearing red in NYC
on a typical Monday will be determined by these following factors:
How many people are there in NY?

What are the chances that people would wear red?

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This depends on two smaller factors: How many pieces of clothing people wear and their color
preference.

Step 3 – Solving each piece:

Work with the interviewer to estimate each of those elements and come up with the answer.
Population: approximately 20 million
Probability: 5% staying at home, 70% going out once, 25% going out twice.
Those staying at home have 2 pieces of clothing, those going out once have 5 pieces, and those
going out twice will, therefore, have 10 pieces.
There is no specific preference on color.

Step 4 – Consolidating:
Let’s analyze the number of people wearing red from each group.

● Staying at home: 1,000,000 * 2 * 1/10 = 200,000. 1,000,000 people have 2

pieces of clothing. Chance of having red in each piece: 1/10 (7 colors + gray +
black + white)
● Going out once: 14,000,000 * 5 * 1/20 = 3,500,000. 14,000,000 people have 5
pieces of clothing. Chance of having red in each piece: 1/20 (on Monday, most of
these people go to work, thus black and white will be the main colors they wear)
● Going out twice: 5,000,000 * 10 * 7.5% = 3,750,000. 5,000,000 people have 10
pieces of clothing. Chance of having red in each piece: 7.5% (the first trip is
probably to work: 1/20; the second trip is the casual trip: 1/10)
So in total: there are about 7.5 million people in NYC wearing red on a typical Monday.

Practice Problem - What’s the global market size for smartphones?

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Solution -

There are three most popular methods: (1) by demand, (2) by supply, and (3) by segment

Step 1 - Method 1 by demand : Market size in sales of new phone:

● Number of new phones sold
○ Phones sold to first-time users
○ Phones sold to people to replace old ones
● Average price per phone

Step 2 – Method (2) by supply: Market size in sales of new phones:

● How many new phones Apple sells
● How many new phones Samsung sells
● How many new phones HTC …
● Sony …
● Asus …
● Other small producers

Step 2 – Method (3) by segment:

There are many ways to segment. But one of the most popular ones in the smartphone industry
is high-end, mid-end, and low-end.
Market size in sales of new phones:

● How many new high-end smartphones are sold

● How many new mid-end smartphones are sold
● How many new low-end smartphones are sold
When all of these are written down, they seem long. But those can actually happen really fast in
our head. We get the general idea about it, then quickly realize which method is the best. In this
question, structuring by demand makes the most sense. Let’s demonstrate the details in the
following Step 3 & 4.
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Step 3 & 4: Go out and hunt down the answer

Branch (1): How many phones are sold each year

● Branch 1.1: Phones sold to first-time users

○ There are 7 billion people in the world.
○ Suppose people are evenly distributed through all ages.
○ Suppose the average life expectancy is 70 years.
○ So each year, there are 7 billion / 70 = 100 million people getting
into the appropriate age to own a phone
○ Suppose 40% of people in the world have a smartphone.
○ All of those come down to 40 million new smartphones sold to
first-time users.
● Branch 1.2: Phone sold to people to replace their old ones:
○ Using the assumptions above, we know 40% of 7 billion people
are currently using smartphones. That is 2.8 billion
○ Suppose on average, each person uses a smartphone for 5 years.
○ With all of those, we have 2.8 billion / 5 years = 560 million new
smartphones sold to people to replace their old phones.
Consolidating branch 1.1 and 1.2, we have 600 million new smartphones sold each year.

Branch (2): Average price per phone

Suppose the average price per new smartphone is $400
Consolidate both branches, we can estimate the global market size for smartphones is 600 mil x
$400 = $240 billion.

Part 4 –Type of news to keep abreast of

1. Statistics - Internet penetration in India, smartphone penetration in India,
Government’s Digital India initiative
Google Loon and Tez
The rise of Bitcoin valuation
The Blockchain ecosystem
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The Cloud Transformation of Small Businesses

Artificial Intelligence in daily life
India’s Aadhaar Integration Spree
Microsoft Hololens vs Google Glass vs Oculus Rift

2. Company-specific – Microsoft, Google, Media.net, Directi

Company Products - For E.g. - Number of Google’s Products with more than 1 billion users - 7
Android, Chrome, Maps, Search, Youtube, Gmail and the Google Play Store
Google’s revenue / sales for the Pixel, Search, Play Store
Google’s daily revenue from Gmail ads.
Digital Ad Industry, Trends in Online Content Generation and distribution,
Digital Marketing - Basic functioning of Paid Search, YouTube, Twitter, FaceBook, Display and
mobile advertising

Digital / Tech-specific news sources -

1) TechCrunch (www.techcrunch.com)
2) Wired (www.wired.com)
3) The Verge (www.theverge.com)
4) Mashable Tech (www.mashable.com/tech)
5) http://zsoltbabocsai.org/hooked-book-summary/#sthash.bOkfY7hM.dpbs
6) http://searchengineland.com/
7) https://www.socialbeat.in/
8) https://moz.com/blog
9) https://blog.kissmetrics.com/
10) http://dmtopics.com/