Case Type: market entry/new market; math problem.
Consulting Firm: Advisory Board Company 1st round job interview.
Industry Coverage: Retail; Clothing & Textiles.
Case Interview Question #00084: Your client Hugo Boss Ltd. (FWB: BOS3) is a German clothing manufacturer and retailer based in Metzingen. The company currently has at least 6,100 points of sale in 110 countries. It owns around 330 retail stores with over 1,000 stores and shops owned by franchisees. Recently Hugo Boss is considering entry into the United States tie market.
In Europe, Hugo Boss has been very successful in the tie business by targeting young males in urban areas with stylish ties that are moderately priced. It is partially owned by a large German department store chain and currently sells 55% of its ties through these stores. You are asked by the CEO of Hugo Boss to prepare a brief overview of the U.S. tie market. You do some research and find interesting data at the United States Tie Manufacturing Association website (See the two tables below).
Table 1. Customer Segmentation of the US Tie Market
| Segment | Segment Characteristics | Percent of US Tie Market |
| Elite Executives | Brand Recognition, Quality Conscious, Price insensitive | 11% |
| White Collar Businessmen | Conservative fashions, Moderate to expensive price range | 45% |
| Trendies | Impulse buyers, Value style over brand name, Moderate prices | 27% |
| School Ties | Younger buyers (age 15 – 24), Less expensive prices, Influenced by family and peers | 7% |
| Eccentrics | Retro fashions, Outlandish designs, Price insensitive | 10% |
Table 2. Distribution Channels for Customer Segments
| Customer Segment | Department Store | Manufacturer Chain | Independent Shop | Catalogues |
| Elite Executives | 36% | 21% | 38% | 5% |
| White Collar Businessmen | 44% | 17% | 31% | 8% |
| Trendies | 31% | 45% | 16% | 8% |
| School Ties | 25% | 46% | 29% | 0% |
| Eccentrics | 17% | 18% | 55% | 10% |
Now the questions are:
1. Should Hugo Boss target the trendy customer segment or not?
2. Would a strong presence in the trendy customer segment allow Hugo Boss to gain more than 5% of the overall United States tie market?
Possible Answers:
Initial Hypothesis: Yes Hugo Boss should enter target the customer trendy segment.
Assumptions:
Hugo Boss in Germany has successfully targeted the Trendy customer segment at moderate prices. It has its strong Own channel in Germany that can be replicated in US.
US Population is 300 million , with 1/2 Men Population and Men are equally distributed in all customer segments. 80% of Men population is 18 & above i.e. 120 million and 24 million men in each customer segment.
Approach:
The top 3 segments constitute 83% of the market.
We will take 3 cases Worst, Base, & Best
Case 1: Worst : Where competition to stiff with top 2 players having almost 80% of the market in all customer segments
If Hugo Boss manages to target even 6-7% of market share in only top 3 customer segments, it will easily be able to gain a market share of more than 5% in US Tie Market.
Case 2: Base Case
Any new entrant is able to easily fetch at least 7-8% market share, Hugo Boss has a strong Brand affiliation.
Strong Distribution channel, to penetrate in the segments
Case 3 : Best Case
New entrant is able to get 8-9% of market share
I am not able to put the table that I worked on to get to the more than 5% market share calculation.
the question raised was only for Market Share, & Not Revenue or Profitability. so Issues related to Cost & Price has not been considered