【正文】 Grocers financial stake in private label products extends beyond the product margins. There is lost profit from branded products that could occupy the same shelf space, advertising costs of the private label products, etc.Key takeaways:This case has no right or wrong answer. It forces the candidate to take a stand in a “grey” situation and defend it. It also provides a large amount of data upfront which the candidate must quickly sort through and determine what is important and what is not. The key is to understand the story behind the data. How did the private label segment emerge? What is driving it? How has it affected manufacturers, retailers and consumers? Firm: . KearneyCase Number:Case setup (facts offered by interviewer):q Your client is a . based oil refineryq The refinery has a single location and is a small to mediumsized refineryq Your client, although profitable, believes it is lagging behind the petition and could improve q You are brought in as part of a joint consultantclient team that will review overall operations and make remendations on ways to improve the bottom lineq You have been assigned to work with the maintenance divisionq The maintenance department’s primary objective is to prevent equipment failure and to repair equipment when it does failq Understanding of its organization is important. It consists of three primary areas: nine assets areas, one central maintenance area and one group of contractors. The first two areas are employees of the client, the third an external source of labor.216。 Understand low cost positions on product ingredients and mix216。 The overall cookie market has been relatively flat over the past five yearsq Private label cookies are made by the same manufacturers who make branded cookies, they are just sold under the name of the retailerq There are essentially three major petitors to consider:216。 What organizational changes will be required?216。 What technological improvements are to be made?216。 What are the expected growth rates of each segment?216。 Mainstream bikes: Durable, but not overly plicated bikes for everyday riders216。 What additional advertising and promotions costs might be incurred?216。 Are the mainstream and children’s segments potentially “overengineered”?216。 Private label cookies emerged five years ago216。 Mass merchandisers (ex. Walmart, Sam’s, etc.): sell only branded cookiesQuestion:q How large would you estimate the overall . cookie market to be in terms of $?q How large of a threat do you believe the trend in private label cookie sales to be to your client?q Based on your assessment, what is an appropriate strategy for your client to follow?Suggested solutions:The first question, estimating the size of the . cookie market, has no right or wrong answer. It is a test of a candidate’s ability to make reasonable assumptions and work quickly with numbers on an “order of magnitude” level. One acceptable response would be to estimate the number of . households, estimate household consumption over some period of time, estimate the average cost of a bag of cookies, and project out for one year. In this case, after an estimate has been made, the candidate would be told to assume the market size is $1Billion to simplify any future calculations. As stated in the upfront information, the market is assumed to have been flat for the past five years.The second question is more involved. It involves determining to what extent your client is threatened by the increasing percent of the overall cookie market represented by private label sales. To better answer this question information should be gathered pertaining to what is driving the demand for private label cookies, to what extent this has already affected your client’s sales, and what the likelihood is for the trend to continue. The following are questions and answers that would be provided in an interview scenario.q What are the sales trends for the client over the past five years?Your client’s sales have been flat at $600M for the time frame of five to two and onehalf years ago. Over the past two and onehalf years, sales have decreased steadily down to a present level of $560MM.q How has market share of the private label segment been split over the past five years between your client’s main petitor and the other smaller players?The smaller players bined had 100% of the private label subsegment five years ago. Two and onehalf years ago your client’s main petitor began supplying private labelers. Today, this main petitor owns 40% of the private label subsegment, the smaller players own the remaining 60%q How has market share of the branded segment been split over the past five years?Your client held 60% of this segment five years ago, 67% two and onehalf years ago and 70% today. Its main petitor held 30% five years ago, 25% two and onehalf years ago and 23% today. The bined smaller players owned 10% five years ago, 8% two and onehalf years ago and 7% today.Analsis of the above information tells a very important story. The private label segment was launched five years ago by the smaller players. As private label first cut into the branded segment, it came at the expense of your client’s main petitor and the smaller players, not your client. In response to this, your client’s main petitor entered into the private label segment two and onehalf years ago. This further hurt their own sales and those of the smaller players, but also began to hurt your client’s sales. Additional information is required to understand what is driving the demand for private label cookiesq How does the quality of a private label cookie pare to that of a branded cookie?Consumer studies have shown that there is a noticeable difference in taste, texture and quality in favor of the branded cookiesq At the manufacturing level, what is the difference in cost of production and price between branded and private label