Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Case Partners to connect and practice with!
Back to overview
Anonymous A
on Jul 03, 2023
Global
Question about

Expected Profits in Year 1 When Launching the Marketing Campaign Expected profits Y1 w/ mktg.

Expected Profits in Year 1 When Launching the Marketing Campaign

Expected profits Y1 w/ mktg. campaign ≈ ($11.22m - $6.49m) × 80% - $1m ≈ $2.78m > $1.18m

Why the marketing cost is substructed after profit calculation and multiplication by 80%?

4 Answers
800+ Views
12
Be the first to answer!
Nobody has responded to this question yet.
Top answer
on Jul 06, 2023
#1 rated MBB & McKinsey Coach

Hi there, 

Basically, you need to remove the investment in marketing regardless of the profits you have achieved by then from winning the tender, which is why you deduct the 1M at the end. 

Best,
Cristian

Hagen
Coach
edited on Jul 03, 2023
#1 recommended coach | >95% success rate | most experience in consulting, interviewing, and coaching

Hi there,

Thank you very much for this question. I would be happy to share the solution to it:

  • In the additional information of section "1.1.3. Probability of Winning Tender", it is stated "We estimate that if Sprinker is willing to run a marketing campaign for $1m, their chances of winning the closed tender will increase to 80%.”
  • As such, given that the total investment in the marketing campaign of $1m will be spent, one needs to substract it as it is.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

Ian
Coach
on Jul 03, 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Great question! Hagen has already answered, but make sure to read all sections of a case to better understand. Additionally, these are the types of “tricks” that are common in cases so the interviewer can check that you are thinking rationally about things (even if you have not “learned” that exact thing)

Anonymous B
on Oct 02, 2023

The way to calculate expected profits is (revenue - cost)*probability of success + (revenue - cost)*probability of failure. We should cont marketing costs twice i.e marketing costs* 0.8 + marketing costs *0.2, because it is included regardless of outcome => subtract marketing cost directly, since we just multiply it by 1.

2
Similar Questions
Consulting
Expected Salary for Corporate Strategy role - Senior Associate in Dubai (UAE)
on Nov 12, 2024
Global
6 Answers
1.1k Views
Top answer by
Pedro
Coach
52
6 Answers
1.1k Views
+3
Consulting
Consulting vs. Strategy & Ops -- what's the difference?
on Nov 20, 2023
Global
8 Answers
3.9k Views
Top answer by
Raj
Coach
176
8 Answers
3.9k Views
+5
Consulting
McKinsey Location Selection
on Nov 30, 2023
Global
10 Answers
2.6k Views
Top answer by
Ian
Coach
86
10 Answers
2.6k Views
+7
How likely are you to recommend us to a friend or fellow student?
0 = Not likely
10 = Very likely
You are a true consultant! Thank you for consulting us on how to make PrepLounge even better!