After formulating your framework, it's time to walk your interviewer through your structure and analysis step by step.
Once you’ve walked through your thinking, propose where you would like to start. In this case, start by deep-diving into developing a better understanding of current marketing and consumer trends.
Ask the interviewer questions to gain additional information
- Which styles do we offer?
- Do we know what consumers want these days?
Provide additional suggestions to continue the conversation
Additional suggestions to continue the conversation include:
- There may be a bigger percentage of stores online versus brick-and-mortar.
- Competitors may be integrating technology into their stores in new and interesting ways.
- There may be an increase in loyalty apps, through which customers can pay via mobile.
- Consumers may want an easier way to return clothing or more overall online shopping options.
After understanding the different market and consumer trends, brainstorm ways the company can drive revenue.
- A good answer includes different types of ways to increase revenue.
- A better answer includes the pros, cons and practicality of each idea.
A good answer
Ways to increase revenue include:
- Consider changing the style to shift more towards social wear since it appeals to shifting consumer trends
- Raise the prices to make more money per item
- Increase volume through sales and advertising to drive more traffic to the store
A better answer
- Pro: Might help with customer acquisition, if it appeals to more/younger customers.
- Con: Might not align with current brand positioning and could alienate the core customer group.
- Pro: As long as sales stay constant, we would increase our revenue.
- Con: This is an unlikely assumption and requires more research to understand our elasticity of demand. The assumption is that volume would fall if we increased the price, making the likelihood of success unclear.
Increase volume through sales and advertising
- Pro: Don't have to change merchandising or pricing strategy.
- Con: Need to ensure we're not spending more than we're bringing in.
The CEO will most likely need to approve a new sales and advertising strategy, so the CFO and CMO will narrow it down to two possible options:
- Option A: A rewards program
- Estimated number of customers participating in Y1: 25%
- # of customers: 10M (assume flat)
- Average pre-sale spend per person, per year: $100
- One-time customer activation fee: $50
- With the rewards program, customers always receive 20% off
- Option B: Intermittent sales
- Customers (flat): 10M
- Average pre-sale spend per person, per year: $100 (assume evenly distributed across years)
- Model: 20% discount 3 months per year
- Assumption: Discount would increase pre-sale purchase sales by 100% over those 3 months
Which one would result in more revenue this year?