Weekly Case Challenge

Market Entry Case

Mike Apparel
Solution

Source: Consulting Club ROSS

Case prompt
Our client, Mike Apparel, is a large apparel and sporting goods company. The client is interested in entering
the women’s golf apparel market and is looking for guidance on whether this is a good idea.

Interviewer Guidance
• Mike makes both produces and retails the goods in its own stores
• The objective is to invest extra cash (amount undefined) in a profitable project
• Scope of the launch is the United States

Source: Consulting Club ROSS

Framework
1. Market Size
• Population of the United States
• Ratio of women
• Percentage of golf players
• Achievable market share
• Customer $ purchases/year
A strong framework will hinge on two factors: Market Size or
Revenue Potential, and the costs of the launch and ongoing
operations.
Basic cost numbers available are as follows:
• R&D (one-time): $255M
• Fixed Costs (yearly): $5M

2. Cost
• R&D
• Fixed Costs
• Variable Costs
• Marketing & Advertising

3. Risks
• Cannibalization of existing products/shelf space

Source: Consulting Club ROSS

 Questions

01 What does the market size and

revenue potential look like?

02 When can breakeven be achieved?

Source: Consulting Club ROSS

Data Available

Source: Consulting Club ROSS

Interviewer Guidance and Solution: Question 1
Market Sizing (nudge the interviewee towards the following numbers)
• Population of US 300M
• Women (50%) – 150M
• ~80% people in age ranges that play golf: 80% * 150M = 120M
• Golf is an affluent sport, only rich can play. Rich = 10%. 10% * 120M = 12M
• Percentage of people who actually play Golf 25% (a fourth of affluent people is a reasonable assumption) =
3M
• Market Penetration (20%) = 600K

Source: Consulting Club ROSS

Interviewer Guidance and Solution: Question 2
Profit potential depends on two factors – numbers of items bought and profit on each item. We already know
we have 600,000 potential customers.

Therefore, profit per customer per year:

• Shirt: 2 * ($60 - $15) = $90
• Hat:$80-$20=$60
• Total: $150

Total Revenue Potential = $150 * 600K = $90M

(-) Fixed Cost = $90M - $5M = $85M
Breakeven = $255M / $85M = 3 years

Source: Consulting Club ROSS

Interviewer Guidance: Recommendation
Recommendation: Enter Market – 3 year breakeven
• $85 Mannual profit, quick breakeven
• Tap new customer base – women, may have been untapped by industry before
• Women-focused product promotes diversity in sporting, also good for branding/PR
Risks
• Bad launch may affect other products
• Some cannibalizing of standard products (e.g. non-golf specific shirts and hats)

Next Steps
• Set up manufacturing
• Sign brand ambassador: a professional woman golfer
• Research which products to replace on shelves

Source: Consulting Club ROSS

 Proposed to you by The Trainee Club.
Thank you!

Apprentice today, Leader tomorrow! https://bit.ly/AP2022_TTC

Source: Consulting Club ROSS