Wharton Consulting Club How To Summarize Industry Report

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Airlines

39

Overview /
Products & • Airlines provide air transport services for passengers and/or freight
Services

• Consolidation - multiple high-profile mergers


Keyy Trends • Fare competition – airlines compete to undercut one another on competitive routes
• Low-cost carriers - recent entrance by smaller carriers trying to replicate Southwest Airlines’ low-cost model

Competitive • Established legacy carriers (e.g., Delta, American, United) compete with each other and with low-cost operators on
multiple domestic routes; price is usually the major competitive factor. Some domestic carriers also operate
Landscape
p international
e a o a routes,
ou es, placing
p ac g them
e in competition
co pe o withw overseas
ove seas airlines
a es

• Individual consumers
Customers • Corporations/small businesses
• Travel web sites/resellers

• Internet – airline websites, online ticket resellers


• Telephone – airline call center agents
Channels • Travel agents
• Over-the-counter – walkups at airports

Profit • Revenue: Ticket revenues, excess/oversize baggage fees, food and beverage sales
• Costs: VC: fuel, food and beverage, ground crew/hourly employees FC: aircraft leases, airport gate leases, IT/admin
Summary costs, salaried employees (i.e., pilots)
Consumer Packaged Goods (CPG)
40

Overview /
Products & • CPG companies provide consumers with a range of household products etc.. soaps, pet supplies, snack foods etc..
Services
• Lifestyle/consumer behavior e.g. aging population, social networks, online advertising, go green, economic downturn
• New products critical to success
• Completely new, slightly improved, product line extensions
Key Trends • In addition, companies driving ‘outside-in’ product innovation (from outside of R&D division)
• Product mix and Brand management are critical to CPG companies
• Emerging markets – India & China – seen as important source of future growth

Competitive
p • Proctor and Gamble ((P&G);
); Uniliever,, Clorox,, Kelloggs
gg , Campbell’s,
p , Frito Lay,
y, ConAgra
g Foods,, Colgate-Palmolive,
g ,
Landscape L’Oreal, Estee Lauder

• Individual Customers
• Discount Wholesalers (Sam’s Club, Costco)
Customers • Large
g box retail ((Wal-mart ,,Target,
g , Safeway)
y)
• Convenience Retail (7-11, Rite-Aid)

• Retail
Channels • Wholesale
• Direct (web and mail order)

Profit • Revenue : Volume of goods sold; Price premium on branded goods


Summary • Cost s: Branding, Sales and Marketing, COGS (commodity costs – raw & packaging material)
Financial Services: Consumer Banking
41
Overview / • Provide deposit-based services, credit cards, consumer loans, payments etc..
Products & • Broad range of financial products are sold by banks whose main function is to collect money from those who have
Services savings and loan money to those who need it.

• Credit crisis / financial meltdown threatened solvency of industry due to illiquid assets difficult to value
• Consolidated, mature industry with primary growth through acquisitions
Key Trends • Demographic shift (baby boomer aging) creating large market for retirement products
• Offshoringg of various functions to reduce expenses
p (e.g.
( g call centers,, back office functions))

• Large national players (Bank of America, Citi) compete with regional banks.
Competitive • Largest players services extend well beyond commercial banking to investment banking, securitization, proprietary
Landscape trading, etc. with services that are increasingly opaque

• Individual consumers
Customers • High net worth consumers (priority segment)
• Small/medium businesses without sufficient size for larger investment banking financing services

• Still large face-to-face presence with bank branches, tellers, etc.


Channels • Increasing use of ATM services, online banking
• Banks increasingly offer credit cards, home loans, etc. as means to increase asset base

• Revenue: Net revenue is the spread between bank’s borrowing cost and the rates charged to borrowers; fees
Profit Summary • Costs: Overhead (branches, administration, compliance); Salaries; Bad Debt Expense
Financial Services: Insurance
42
Overview / • Insurance is fundamentally about underwriting various types of risks. Customers make regular payments (premiums) to
Products & the insurer for coverage when unforeseen events, e.g. car crash; fire damage; death; credit default) occur
Services • The insurer invests premiums to generate sufficient income to match future assets with future liabilities

• Credit crisis / financial meltdown threatened solvency of industry due to illiquid assets difficult to value
• One of the global leaders (AIG) nationalized in credit crisis, emphasizing the importance of monitoring investment
Key Trends portfolio
• US national healthcare policy changes could completely change the landscape of the health insurance market
• Companies
C i ffocused d on managing
i risk
i k and
d controlling
t lli costs
t

Competitive • Several large, integrated players operating across multiple parts of the industry (AIG, Prudential, etc.)
Landscape • Some niche players focusing in a particular segment (Geico )

• Individual consumers seeking to manage risk at home / on the road


Customers • Small/medium/large businesses seeking to manage risks of property damage, liability, etc.

• Insurance agents (sales force) still manage much of the front-end sales process to businesses/individuals
Channels • Online sales becoming easier with better websites and aggressive marketing
• Direct marketing to employees via in-office demonstrations (Aflac supplemental insurance, etc.)

• Revenue: Net revenue is the spread between premiums collected and claims/payments made over time
Profit Summary • Costs: Overhead (administration, compliance); Salaries; Sales Commissions; Marketing

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