Firm: A.T. Kearney
Case Number:
Case setup (facts offered by interviewer):
Your client is a U.S. based manufacturer of branded cookies (cookies that carry the name of the manufacturer)
Recently private label cookies (those carrying the name of the retailer) have emerged and threatened branded cookies
Private label cookies emerged five years ago
Two and one-half years ago they made up 10% of the overall cookie market (brand being the other 90%)
Today they make up approximately 20% of the overall cookie market (i.e., there has been a steady, linear increase of private label portion of the overall cookie market during the past five years)
The overall cookie market has been relatively flat over the past five years
Private label cookies are made by the same manufacturers who make branded cookies, they are just sold under the name of the retailer
There are essentially three major competitors to consider:
Your client, who makes only branded cookies
A second major player, that makes both branded cookies and supplies cookies for private labelers
A collection of small outfits, that make both branded cookies and supply private labelers
Distribution occurs primarily through one of two types of outlets:
Grocery outlets: all grocers sell branded cookies, most also carry their own private label cookies. This represents approximately 90% of total cookie sales
Mass merchandisers (ex. Walmart, Sam’s, etc.): sell only branded cookies
Question:
How large would you estimate the overall U.S. cookie market to be in terms of $?
How large of a threat do you believe the trend in private label cookie sales to be to your client?
Based on your assessment, what is an appropriate strategy for your c