BAKERY SHOP

A bakery shop is experiencing a decline in profits since past 6 months. Figure Sure. I want to analyse the customer journey. Since bakery sells all
out why. season products, seasonality won’t be an issue.
Where is bakery located? Does it has one branch or multiple branches? Does Customer Interest -> Travel to bakery -> Parking of vehicle and entry into
it sells online also? bakery -> Select items to buy -> Placing order -> Payment -> Waiting for order -
Bakery is located in Delhi. They have only one branch where they sell through > Dining-in/Takeaway
dine-in, takeaways and online. We have problems with parking. There is a construction work going on in
Are there any other bakeries or similar food shops nearby? Do they also face parking lot, hence customers can’t park their vehicles for visiting bakery shop.
the same problem? Got it. So decline in customer visits and hence revenue issue is due to parking
Yes, there are other bakeries nearby. However, they are not facing a decline in lot problems.
profits. I’ll move to cost now. Does increase in cost in both business - Online as well as
So, it’s a company specific problem. I want to divide Profits into Revenue & Dine-in/Takeaways?
Cost. Profits can decline due to 1. Decline in revenue or 2. Increase in cost or The “cost increase” problem is only in online segment.
3. A mixture of both. Okay. I want to analyse cost factors and then drill down on the issue. The major
The bakery is facing both decline in revenue and increase in cost. costs specifically for online sales will be maintenance cost of website/app,
I’ll start with Revenue. Does decline in revenue in both business - Online as transaction cost (for online payments), margin paid to food delivery services,
well as Dine-in/Takeaways? delivery cost.
The revenue decline problem is only in Dine-in/Takeaways segment. The delivery cost has increased.
Okay. Revenue can be divided into revenue per customer visit & number of Delivery cost can be broken down into (Number of deliveries) x (Cost per
customer visits. Revenue per customer can be analysed as (Average Price) x delivery); Cost per delivery is dependent on vehicle used, vehicle utilisation,
(Number of items purchase per customer visit) fuel cost, distance travelled, mileage.
To analyse decline in number of customer visit, the problem can de analysed Right. So we have started to deliver at longer distances. Although the number
from Demand and Supply side i.e. whether there is a decrease in demand or of deliveries and revenues have increased, it also lead to higher distance
supply issues. travelled and ineffective utilisation of vehicle leading to higher delivery costs.
The number of customer visits has declined and it’s a demand side issue.
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BAKERY SHOP
Summary: Client was a bakery shop facing a decline in profits. There was a reduction in revenues due to construction work going on in parking lot, hence
customers couldn’t park their vehicles for visiting the bakery shop. There was also a rise in costs of online orders, since they had started to deliver at longer
distances. It lead to higher distance travelled and ineffective utilisation of vehicle leading to higher delivery costs.

Supply
Number of items
purchased per
customer visit Customer journey -
Dine-in/Takeaways Demand
Parking
Revenue
Average price
Online
Profit Maintenance cost of
website/app
Dine-in/Takeaways
Transaction cost (for
Cost Fuel cost
online payments)
Online
Margin paid to food
Distance travelled
delivery services
Cost per delivery
Delivery cost Mileage
Number of deliveries
Vehicle utilization

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INSURANCE PROVIDER

Client is an insurance provider facing a decline in profits. Figure out why and Can I assume that major revenue comes from the insurance premium
suggest recommendations. that we collect from customers?
Just to reiterate, that the client is an insurance provider facing a decline in Yes, you can assume that.
profits. I need to find out why. What kind of insurance does the client provide The premium would be a function of the total number of customers, the
and since when have they been facing this issue? premium per customer per instalment, and the frequency of paying
Client deals with tractor insurance, and has been facing this issue for the past 1 instalments. Has there been a change recently in any of these?
year. Yes, the number of customers has gone down.
In which geography does the client operate? Okay. This means that less people are buying insurance for their tractors. This
The client operates Pan India. could be due to internal or external reasons. Internal reasons could be anything
Okay. Since they only deal with tractor insurance, can I assume that their that is related to the client, for example any changes that have been introduced
customers are only people living in rural areas and involved in farming? recently, or external reasons which could be related to any external factor,
Yes, you can assume that. which I’ll further examine in detail.
Is this an industry wide issue or is it a client specific problem? The decline is due to external factors.
It an industry wide issue. Is it a supply issue or a demand issue? Do we lack capacity to sell the policies or
Can you tell me more about the competitors of the client? has the demand reduced?
There are 5 more players in the industry and all have equal market share. There is a reduction in demand.
How does the client operate? How do they reach out to the customers? Do Okay. To see why the demand has reduced, I would go through the journey of a
they have their own offices with agents, or is there any other tie up? customer, starting from the need till the post purchase behaviour. Does that
The client does not follow an agent driven process. We have tie ups with local sound suitable to you?
banks, the customers can approach any bank to avail the insurance and other Yes, you can go ahead with this.
facilities are available are there. The process that I will consider will include need, awareness, availability,
Okay. Now I would like to break down the profits as revenue minus costs. Have accessibility, affordability, purchase behaviour, and post purchase behaviour. Do
the costs increased or revenues reduced or a combination of both? we know if there is an issue with any of these factors?
The revenues have declined. Yes, the customer need has declined.
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INSURANCE PROVIDER

Okay, this means that the customer does not need insurance as they used to The affordability of a farmer would depend on the price of the tractor,
before, even though other factors have remained the same, is that right? and also the interest that he has to pay on the money he borrows. Has there
Yes. recently been any change in the interest rates?
The number of insurance policies that we have in the market would depend on Yes. Last year a lot of farmers defaulted on their loans, due to which the local
the total number of tractors and the percentage of them buying an insurance banks have increased the interest rates.
policy. So are less people preferring an insurance policy, or has the number of Do we know why the farmers defaulted on their loans?
people purchasing tractors gone down? No information is known for that. Can you suggest recommendations?
The number of tractors has reduced. Yes. We can focus on the farmers who already own a tractor, and reduce
Is it a supply side issue or a demand side issue? premiums so that the ones who do not have an insurance policy for their tractor
It is a demand side issue. can buy one. We can also backward integrate, and offer loans at a lower interest
Since the demand for tractors is declining, I will again consider the journey of a rate than the banks (if feasible) to help farmers finance their tractors.
customer when he buys a tractor, starting from need till the post purchase That would be all, thank you.
behaviour. Do we know if there is an issue with any of the factors?
The affordability of the customers has declined.
The affordability could again depend on both internal and external factors. Has
the income declined, or the price of the tractors has increased?
Neither. Both are the same.
Okay, I will look closely into the factors that affect the affordability of the
customers. When a farmer buys a tractor, he would either use his own finances
or borrow money from someone, which can either be a local bank or local
moneylenders. In this case, I think they would be borrowing money. Do we
know the source of their funds?
They generally borrow from a local bank.

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