MBB Case: JimboTel

An excellent answer covers the major revenue drivers: volume and price. We will identify opportunities in each driver through hypotheses describing what may be causing the revenue decline:

Volume:

The total number of customers is determined by how many existing customers leave (churn rates) AND how many new users come in (customer acquisition). These two volume drivers are influenced by:

• Product offering:
  • JimboTel's selection of mobile phones is weaker versus competitors
  • JimboTel's product offering is restricted to mobile phones
  • JimboTel's data and roaming packages are not attractive versus competitors
• Network:
  • JimboTel's network coverage is poor, especially in more remote/rural areas
• Customer services:
  • Poor customer experience metrics (e.g. low call resolution rates, long call times, attendant impoliteness) may be causing high churn rates
• Channels:
  • JimboTel needs to reach the right people with the right channel (e.g. stores in urban versus small shops in rural areas)
  • JimboTel needs an omnichannel strategy to improve user experience and drive better relationships with customers, especially via digital channels (e.g. apps, websites)
• Branding:
  • JimboTel must strengthen its brand image, leveraging celebrities that appeal to specific customer segments

Price:

• Pricing versus competitors:
  • Competitors may be attracting customers through cheaper offerings
• Cross-selling opportunities:
  • JimboTel could explore premium pricing opportunities through bundles (e.g. broadband, cable TV), roaming or data packages

Show Exhibit 1.

From the graph we can infer the following:

1. The low-income population represents the bigger slice of the total. Most low-income people live in rural areas
2. Very low-income groups are the second most representative and are evenly distributed between urban and rural areas
3. High-income groups represent the minority of the population and are mainly concentrated in urban areas

Exhibit 2:

Unsurprisingly, low and very low-income levels are underserved compared to higher income, regardless of location. Importantly, within the low-income group, penetration is significantly lower in rural compared to urban areas across all four countries. As a result, we should focus on the low-income groups in rural areas for the following reasons:

1. They represent a significant share (over 1/3) of the total population (Exhibit 1)
2. Low mobile phone penetration
3. Potentially higher revenue per user versus the very low-income group

Potential ideas to increase penetration in low-income groups in rural areas:

• Product offering:
  • Selection of mobile phones that are affordable and appeal to local tastes. Could negotiate large volume orders with mobile phone manufacturers to bring costs down
• Network:
  • Better coverage in rural areas
• Channels:
  • Increase presence in rural areas through partnerships with local stores or local community leaders
• Financing:
  • Options to help people finance their mobile phone purchases (e.g. payment in installments, dilute cost monthly plan)

We can see a clear distinction between urban and rural areas in terms of channel distribution. Whereas urban areas are dominated by traditional stores, rural areas rely on a more granular distribution network with 3rd party stores and sales vans to reach remote areas

Verbally communicate the information below:

JimboTel is considering launching a new sales model targeting low-income populations in rural areas. The model is based on rural ambassadors, people who are very well regarded in the villages and are responsible for bringing supplies from larger towns.

What total sales are expected one year after the introduction of the program? Consider the following:

• There are 60 million low-income people living in rural areas
• The program will target people who do not have a mobile phone already
• Average mobile phone penetration is currently at approximately 15%
• The expected buy rate is 25%
• Each person is expected to buy one phone per year
• The estimated revenue per phone is $15

Recap the objective

An excellent candidate would start with a small recap of the objective:

"In order to meet its goal to increase revenues in the next year, JimboTel should..."

Conclusion

A great candidate would provide an answer-first approach to the question, highlighting three main actions:

JimboTel should target low-income people in rural areas through a new sales model expected to generate around $190 million in one year. The reasons are:

1. Low-income people living in rural areas represent over 1/3 of the total population but mobile penetration is still low
2. There are opportunities to improve distribution in rural areas by leveraging the power of local ambassadors
3. The rural ambassador program is expected to generate around $190 million in one year

The candidate should highlight some risks and areas for further investigation:

• Cannibalization: sales from rural ambassadors may cannibalize sales from existing channels (e.g. third party vendors)
• Incentives: need to ensure rural ambassadors are properly incentivized to deliver on sales targets
• Differences between countries: the West African four countries may differ in how they rely on rural ambassadors (e.g. they may play a more central role in some cultures but not others) and different customer preferences
• More in-depth customer research: to determine potential drivers for low adoption amongst low-income groups
• Margins: although this is a revenue problem, in the future we will need to compare the margins from the different channels. For instance, rural ambassadors may charge a higher commission per unit sold compared to third party stores

Thank you for completing my case!

Do you have any feedback or questions on the case or on your preparation? Feel free to reach out!

Wish you all the very best in your preparation,

Look forward to connecting!

Bernard