Case Interviews Session 2B

Agenda
◼Pricing Cases

◼Growth Strategy Cases

◼Unconventional Cases

◼Demo Case (Unconventional)

Pricing Cases
What constitutes Pricing Cases?
● Evaluate the product offering of the client and suggest appropriate pricing
strategy - Often combined with market entry cases

● It is imperative to understand the objective of the company, product

features and current/future market scenario to narrow down to best pricing
strategy

● The Product could be anything - A service, convenience, speciality - New

launch/ Old product repositioning

● 3 common strategies -
○ Cost based pricing
○ Competition based pricing
○ Value based pricing
 What to ask? Tips & Tricks
● Industry (Pharma? CPG?) & Company’s Objective (Profits? Market
Share? Revenue?)
● Product Features (Commodity? Differentiated? Luxury?)
● Competition (Novel? Price-War? Imitable? )
● Target Segment/Geography (Income Segment? Pan India?)
● Target Market Size (Might have to calculate)
● Cost associated (If applicable ask the split - R&D, Manufacturing,
Distribution, Marketing etc.)

1. There is no correct Ans! Its just what factors you take in to price something.
Brownie points for suggesting pricing techniques (Discounts? Bundling?)
in line with company’s objective

2. Try and suggest qualitative factors that will change your price at the end of
the case which couldn't be incorporated mathematically - Govt. Policies?
Inflation? Switching Cost? Supply/Demand?
1 - Cost Based Pricing

● Calculate cost of product

○ Split cost in small components
via value chain
○ R&D costs are often sunk cost! -
Ask the interviewer what all costs
should be considered giving
rationale
○ Sometimes cost will be directly
told :)

● Calculate Price basis company’s

objective (Breakeven? 10% margin?)
2 - Competitor Based
Pricing
● Identify similar products that already
exist in the market

● If no similar product exists, try and find a substitute

○ Eg. A one of its kind glass transparent premium phone - iPhone X?

● Once you have identified that, try and differentiate/benchmark your product
against the competitor and adjust (increase/decrease price accordingly)
3 - Value Based Pricing

● This is usually applied on novel

products

● Identifying product features and

understanding target consumer
segment becomes extremely
important here
● Set the price basis customer’s Willingness to Pay (WTP), value based on
features, opportunity cost of no competition, Supply/Demand
 Quick Solved Case

“Give a price for SpaceX’s Space tour ticket”

- No competition, Patent for 4 years

- Development cost 4000 Cr, Operating Cost/Year
= 300 Cr
- 2 Per day trips, 100 passengers
- Shuttle lifetime 20 Years
 Quick Solved Case
“Give a price for SpaceX’s Space tour ticket”
● Cost Based
○ Assume 100% margin - Give rationale
○ Calculate cost per passenger = 300Cr/(720 Trips*100 passengers *
0.9 Avg Occupancy) ~ 46K per passenger
○ Price ~ 2*46K = 92K - Reasonable? NO Why?
● Value Based
○ Typical value ~4*92K ~ 4 Lakhs
○ What % of Americans can afford a 4 Lakh ticket price? Those who
make over 1 Cr a year? ~1%
○ Total Trip takers ~ 1% * 30 Cr * 20% conversion ~ 6 lakhs
○ Total revenue ~ 6 lakhs passengers * 4 lakh/ ticket ~ 240 Bn
○ Extremely profitable even if we take development cost
Growth Strategy
What is it all about?

● Client is looking for X% YOY growth (of what?)

● As an interviewee, first align on what kind of growth the
company wants, what are the specific targets and in which
segment/market
● Identify pillars that can support the target (Tree structure)
● Finally recommend how the company can go about these pillars
Preliminary questions to consider
● What is the growth objective/target of the client? Is the target at par/more/less
than industry?
● What is the time period in which the client wants to achieve the target?
● How has the client’s industry been performing?
● Where does the client stand vis-à-vis competitors (number and respective
market shares)?
● Does the client have the capacity to meet increase in demand?
● Does the client have any financial constraints for investment?
● Effect of substitutes & complements
Tips
● Very important to clarify growth target percentage and time period
● Growth cases involve a greater creativity component. Take a lot of cues
from the interviewer.
● It is quite possible that you tread into tree structure that the
interviewer does not want you to go, clearly communicate each level of
tree before delving deeper
● Clear synthesis, although important in all case types, has
disproportionately higher value in growth cases - it is ultimately what
you suggest to the client that matters and the logic you back it up with.
(Summary v/s synthesis)
Framework to consider
International expansion
A Quick Example
The client is an operator of one of the stations of Delhi Metro. Client is
targeting increase in revenue by 25% within the next year. How can he
achieve the same?
Sources of Revenue - Typical station
1. Percentage of ticket sales
2. Rental
3. Parking
4. Advertising on station

Travelers prefer going to a nearby station because it has parking facility whereas the Client’s
station does not.

Potential solution - Create parking space (feasible?)

Guesstimate profits from leasing parking space; virtuous effect on ticket sales, advertising and
rentals.
Unconventional
Introduction
● Generally have vague problem statements
● No set framework - you need to develop a customized framework for each
case
● Problem statements need to be converted to a structure using MECE
● Most common way to solve unconventional case is customer journey - put
yourself in the situation and start from scratch
● Interviewer tests your structure and ability to think on your feet
Preliminary questions
● Understand the problem statement well - clear any direct doubts
● Take a minute to deep dive into the situation
● Understand the possibilities, break down into a MECE structure
● Go with the flow :)
Sample customer journey
Mock Case
Interview