How to structure case interview information?

Video 2. How to structure case interview information? Qualitative decision tree as the basis of structure.

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Hello everyone! Today we are going to talk about qualitative structures. Qualitative structures are structures which don’t have numerical characteristics. They can have characteristics of any good, set of disks, for example, or decision tree. In the future, most of these characteristics could be digitized, but initially they have a qualitative nature, which is why it makes sense to structure them and separate according to semantic groups. 

Generally, cases don’t start with the application of qualitative structures. For example, if it’s a revenue case, then initially we will use a formula structure, because we need to reveal the key component of the case. So, we separate revenue by quantity and price, then we split quantity in to market share and our share etc. In this case a qualitative structure is used to understand why a particular component has changed. For example, when we realize, that our share in the market has changed then we apply qualitative structures in order to group factors that could affect the change in the share.

Here is an example. Last time we talked about the change in revenue at a café such as Starbucks. When we realized the reason might have been in the change of market share, the formula structure was no longer applicable. So, what should we do next?

If we realize that in our case the market share has changed and we have to understand what the possible reasons were, we will use the qualitative structure in order to group all the factors. However, there is a detail that should be considered. When we create the formula structure, we create it from the top to bottom. This means that we take a key indicator of the upper level and decompose it into lower level indicators. While in the qualitative structure we decompose the other way around. This means that first we have a quick brainstorm and give all possible factors that come to mind. And only after we determine what the common characteristics of these factors are and try to divide them into groups and define the necessary numbers of levels at which these groups will be located.

Let’s start with a quick brainstorming session. What factors can affect the market share decline of the café? You can think for yourself and write down some factors, while pausing the video, then turn it back on and check yourself and compare with me. What I would say. First, I would put the price. For example, if Coffeex opened close to Starbucks, that means there is a competitor that has a lower price. So, the price of our client, Starbucks, will be the determining factor when making a decision.

Second factor I would say is brand. People are going to Starbucks just because it is Starbucks.

Third factor is the product that we sell. It can be the taste of coffee, choice, the opportunity to make different drinks and customization, the ability to make coffee not with cow milk but with soya or almond milk. 

What else can influence market share? Maybe marketing. In our case, marketing will be something that attracts people to a particular coffee shop. I would even place outdoor signs in this category. That is if the coffee shop is located in a place that is difficult to find and we do not have a signpost, many people can just pass by. We can add distribution of promotional leaflets in the subway and other similar factors to marketing. Marketing slash…

This is what comes first to mind. We may think some more. Usually, each brainstorm has several stages. The first stage is when you just provide what is already in your head, the second stage is when you need to think a little more and put as many options as you have already written. It helps to develop creativity, so I would advise doing this exercise.

Let’s think what else can influence the coffee shop market share.

We can consider location as well, how convenient it is to get to the coffee shop. For example, if the same Coffeex opened across the road and it takes too long to cross it, many traffic lights, for example, we will most likely just come to Starbucks, in order to save time.

There is one more factor that is connected to price. I would call it the “loyalty card” factor. Are there any loyalty programs or discount programs in this café? Partner discount programs, for example, through bank cards, that allow the client to save in addition to the price. Loyalty programs or affiliate programs. I would also include everything that is related to special promotion and discounts, for example. Discounts during business lunch or combo, special offers and so on.  In general, we can say that we named most of the factors that may affect the market share of the coffeehouse. 

Let’s think what needs to be done with these factors further in order to turn them from a brainstorm into a grouped structural unit.

I would single out those factors that have a similar characteristic. For example, the factor of price, loyalty program, affiliate programs and promotions, discounts – all of these somehow affect the financial component of the product. Thus, we could put them in to a group called the “financial component”.

There are also factors associated with promotion of the product: marketing, promo, partly the location can be attributed to this category, but I would put it in another group. If you take it to the well-known framework 4P – Price, Product, Promotion and Placement, the location will be located in the Placement. If we talk about some product that can be bought in a store, for example, Nescafe coffee, in this case Placement for it would be in which stores it is sold and on which shelves it is placed. While for our product, the coffeehouse, placement will be the location of the coffeeshop.

We have two groups of factors left. The first one is what influences the perception of this coffee house by people who pass by. This is brand. Many other factors can be attributed to brand, but brand will be the base factor. Everything else, such as public relations, the use of the brand in some partner promotions and events and so on, will be extra factors affecting the brand itself.

We are left with the last group, the group of factors that are directly related to the product we sell. This is the coffee itself and other drinks. Here we first of all highlight taste, choice, the possibility of customization. In addition, if you think about it a bit more, you can write something else here, for example, the quality of products. I wouldn’t consider it as taste but would single it out separately. In the end, we have four group that affect the product.

So, let’s see what we have. Let us now try to group all these factors and isolate them into a qualitative structure.

First group – financial factors. We can attribute to financial factors price, loyalty program, partner programs and discounts. 

The second group that we have talked about is how we promote our product, i.e. marketing or promo block. We see that we have no additional factors here that could be factors of a lower level. In principle, you can come up with them. We understand that marketing and promo is something that is at the top level. Accordingly, we can think about what will be the factors detailing this group. For example, as I already said, it could be a signboard, a promotion – promotional leaflets, for example, near the metro and some partner events, for example, distribution of flyers at a nearby restaurant to people, who can stop by after lunch and get coffee at a discount.

The third group, that we spoke about, is location. In fact, we can also decompose the location. The first factor will be the convenience of getting there, for example, that we do not have to cross a wide road, or that we don’t have to go down any stairs. The coffeeshop should be located in a place where there is a large gathering of people or traffic. And the absence of barriers, for example, if we are in a business center, someone may not enter simply because they will think that they need a pass.

The fourth group is brand. Our brand also has no details yet, but we can think of them. What influences the brand? Globally, if you think about the brand, you can distinguish two factors. The first is brand awareness and the second is brand perception, positive or negative. If we are talking about fame, then there are so many tools that can affect it. In fact, at the very first stage you cannot talk about these tools. However, if in the process of the case you conclude that the problem of your client is in the brand and in brand awareness, then you can think about which measures will help to change this. For example, product placement, PR companies, participation in various events and conferences, as well as increase in marketing activity, which is aimed specifically at brand awareness. And the second factor is perception and attitude. Is there positive or negative attitude to our brand?

The last group, which is the most … but not the least important, is the product itself. Well, in our case, the product, in fact, is not only coffee, but also the whole process of customer service. Therefore, I would probably divide the product into two large parts: what we buy, and how we buy it, perhaps we can say that this is a service. Why did we have the service in the product group? Because if we are talking about services, some cafes, restaurants, perhaps shops, hotels, etc., the service is part of the product, because the product is not only what we get, for example, a cup of coffee or a hotel room, but it characterizes the entire client’s journey from the moment when we enter the cafe to the moment when we leave with a cup of coffee. And maybe you would like to stay there. And this means that the atmosphere inside the coffeeshop will influence your decision.

Accordingly, the product is the taste, quality, choice and customization. These four points. They will relate to the product itself.

Service is the courtesy of the staff, perhaps the willingness to help, for example, if the staff fulfills some of our requests that are not common for this place. And if we are talking about a cafe, in fact, we can add a third point to the product group, the place itself, how comfortable it is to stay there. This point will be relevant only if we are talking about a situation when a client came to a cafe to spend time, and not just for takeaway. Well, here we are going to talk about comfort. What is comfort? This place should be, let’s say, relatively quiet, or, with pleasant music, comfortable places to sit. Those can be divided into places where to sit, either tables or bar counter. Music is music and in the ratio of music and noise, maybe there is a music, but it is not lively, or vice versa, that music is relatively quiet. And cleanliness and comfort can be distinguished separately.

If we analyze what we finally got, we can call it a three-level structure. The first groups had two levels and the last group – three levels. The ideal quality structure has many levels. But there is no need to produce them, no need to strive to maximize their number. However, if you think about how logical it will be to add a level, in most cases you will conclude that adding a level will help to structure and systematize your qualitative factors. 

That is what we got in the end. Financial factors, marketing and promo, brand and product placement. Many of you are probably thinking about where we put the competitor factor or change in customers. In fact, these factors, which we have just mentioned, we will consider them not in one section, but in all three. We will look at what has changed with our competitors in these three factors, what has changed in these three factors and what may have changed in the preferences of clients again in these three factors. We will take into account changes from competitors, changes in customer preferences, and changes in our product.

Next time we are going to talk about how to use qualitive structures while making customer’s journey, as well as types of process structures there are and how they are used in cases. Stay with us and leave comments if you have questions or suggestions. Bye!

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Want to apply the skills taught in our theory videos and practice case interview structuring? Check out our Business Case Structuring course.

NB. English speaking groups are available upon request.