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Part Three: College Market for Coupons Case Solution

Max is an aspiring consultant who is looking to secure an analyst role with one of the top firms for the upcoming recruitment cycle in September 2011. His interest in management consulting was sparked by a failed McKinsey interview last year. In this series of blogs, he will be sharing his background, case preparation process, useful resources, and any breakthroughs or setbacks that he experiences.

***

This is an example case which I did by myself, and I wanted to post this to show people how they can practice solo with my case solution. Of course, this is not as useful as practicing with a partner, but it’s better than nothing!

Case Question:

Our client is a provider of coupons, and currently makes “welcome packages” for people who just moved to a new location. The client has had no luck reaching the college market and would like our help. In particular, they want to:

1) Segment the college market

2) Drive college traffic to their website

3) Retain their information online for future use

[I actually think that this is a pretty good question for solo practice because you can layout your entire structure, and then go through to see if it indeed captures everything. There are some cases where this is harder to do because the question doesn’t include clear objectives – but that’s not the situation here. Furthermore, I tend to layout my structure and then say it aloud afterward as if I’m talking to an interviewer. It seems a bit weird, but I find it useful.]

For this case I wanted to look at three key areas:

1) Customer

2) Products

3) Company

For customers, I want to understand the following items:

1) How many there are (market sizing)

2) Different needs among college students

Since there is no interviewer to interact with, I just started thinking out loud about the two items. Even if there was an interviewer, you would probably still need to figure out these two items since part of the case is to segment the college market – which means you can’t really ask for the segmentation pattern. To size the market (assuming it’s the U.S), I did the following back-of-the-envelope calculation.

Market Size = (Population x fraction of people between 18-23 x fraction that attend college) + (population x fraction of people between 24-29 x fraction that attend college)

Assumptions:

-Population of the U.S. = 300 Million

-Average lifespan of 80 years assuming people attend college for 5 years then 5/80 = 1/16

-30% of the eligible kids attend college to get an undergrad degree (18-23 group)

-2% of the eligible kids attend grad school for an additional 5 years (24-29 group)

Market Size = 300Million x 1/16 x 0.3 + 300Million x 1/16 x .3 x 0.02 = 19Million x 0.3 + 19Million x .3 x 0.02 = 5.7 million = ~6 million

[Based on the assumptions/rounding made above, the market size is roughly 6 Million. I did some research on the internet after the case, and in 2004 2.5 million kids entered college in the states. So that would mean 12.5 million undergrads exist at any one time if the failure/dropout rate is zero – but unfortunately it is not. I think overall the 6 million estimate is not all that bad, but I would’ve been happier with 8-10 million. Again, not sure how accurate the interviewers want this stuff to be.]

Now we know the overall size of the market, it’s time to think of some logical segments. Here are some that I thought of:

1) First years (probably moving to the area for the first time)

2) Students that are on co-op/internship (likely to move to a new area every 4-8 months)

3) 2nd year – 5th year students (already familiar with the area)

4) Graduate students (more mature than your typical undergrad)

5) Location of college

There are thousands of ways one can segment a market, and what I find difficult about cases that don’t give you a segmentation pattern is that you’re never really sure if your method is the most insightful. My feeling is that the interviewer (if he or she asks you for the segmentation) probably just wants to see how you think and whether you can come up with something within reason. I feel that this segmentation makes some sense because our client offers coupons. These coupons will probably have both local as well as national offerings so the following factors have some impact:

1) How often they move (maybe moving coupons would help co-op students)

2) If it’s the student’s first time in that particular city

3) What types of offerings they prefer (21 year old undergrads may prefer free jagerbombs more than a 29 year old graduate student)

4) What city they will be in strongly affects the local coupons offered

From products, I want to understand the following items:

1) What is our current lineup of products, and does this fit the college segments we’ve identified?

2) Are there any new products we can put in our lineup?

3) How can we distribute this product to the various segments

I know that the client currently makes coupons packages for people who’ve recently moved. To me, this means that our products probably includes coupons for things like common household items, local restaurants, phone/internet connection, furniture, landscaping, newspaper – basically things you would need when you move to a new location. Comparing this with the needs of college students, I feel that the client will most likely need to extend their coupon offerings to include things like fast food, moving/storage, drinks at local bars, stationary, clothing stores etc. This will mean that the client must build more relationships with businesses.

In order to get our product to the various segments of the college market, the client will likely have to form partnerships with colleges, various societies on campus (for example the engineering society), and also the entities responsible for organizing orientation week for first years. By forming partnerships with colleges, we can perhaps have the campus life coordinator use their e-mail list to let the students know about the great coupons we have. This will also help achieve the second goal of the case which is to drive college traffic to the website. By aligning ourselves with various societies, we can have our coupons distributed at some of their events. Finally, by getting access to the first years, we can include some coupons in their welcome packages. Of course, these partnerships will most likely cost the client money, and the outstanding question will be if the amount paid to these various bodies will be offset by the additional business.

The last thing I would like to understand is the company itself, and how it currently operates. As I understand it, the company basically distributes physical coupons to people who’ve recently moved. We can infer that the company does have an online presence since they want traffic to their website, but we are unsure of what the website actually does. Is it just information, or can you print coupons off it? In order to drive even more traffic to the website, I would think that they should put their website on all of their coupons so the users who like them know where to find more. In addition, the company should make users “sign up” on their website in order to access the online coupons (and make coupons available online if they aren’t already). This way, the company can get their information, and also preemptively e-mail coupons to the customers who frequent their site. Depending on how badly we want to customer’s information, we can also offer a special deal/coupon the first time they sign up.

I would now like to summarize the case.

[I like to say the summaries out loud just for practice, and you should too when you do your cases!]

After preliminary analysis, we have found a reasonable segmentation of the college market to be:

1) First years

2) Students that are on co-op/internship

3) 2nd year – 5th year students

4) Graduate students

5) Location of college

In order to drive traffic to the website, we should take the following actions:

1) Put our website on all physical coupons we distribute

2) Build relationships with colleges, campus societies, and orientation week committees in order to increase awareness of our company

Finally, in order to retain customer information online we should offer coupons on our website, and restrict access to them until the customer completes a quick sign up procedure. Furthermore, we can also offer a special one-time deal the first time a customer signs up. This will allow us to get their information for further segmentation analysis, as well as e-mail them coupons.

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