Firm：A.T. KearneyCase Number:Case setup (facts offered by interviewer):q Your client is a U.S. based manufacturer of branded cookies (cookies that carry the name of the manufacturer)q Recently private label cookies (those carrying the name of the retailer) have emerged and threatened branded cookies Private label cookies emerged five years ago Two and one-half years ago they made up 10% of the overall cookie market (brand being the other 90%) Today they make up approximately 20% of the overall cookie market (i.e.，there has been a steady，linear increase of private label portion of the overall cookie market during the past five years) The overall cookie market has been relatively flat over the past five yearsq Private label cookies are made by the same manufacturers who make branded cookies，they are just sold under the name of the retailerq There are essentially three major competitors to consider: Your client，who makes only branded cookies A second major player，that makes both branded cookies and supplies cookies for private labelers A collection of small outfits，that make both branded cookies and supply private labelersq Distribution occurs primarily through one of two types of outlets: Grocery outlets：all grocers sell branded cookies，most also carry their own private label cookies. This represents approximately 90% of total cookie sales Mass merchandisers (ex. Walmart，Sams，etc.)：sell only branded cookiesQuestion:q How large would you estimate the overall U.S. cookie market to be in terms of $?q How large of a threat do you believe the trend in private label cookie sales to be to your client?q Based on your assessment，what is an appropriate strategy for your client to follow?Suggested solutions:The first question，estimating the size of the U.S. cookie market，has no right or wrong answer. It is a test of a candidates ability to make reasonable assumptions and work quickly with numbers on an “order of magnitude” level. One acceptable response would be to estimate the number of U.S. households，estimate household consumption over some period of time，estimate the average cost of a bag of cookies，and project out for one year. In this case，after an estimate has been made，the candidate would be told to assume the market size is $1Billion to simplify any future calculations. As stated in the upfront information，the market is assumed to have been flat for the past five years.The second question is more involved. It involves determining to what extent your client is threatened by the increasing percent of the overall cookie market represented by private label sales. To better answer this question information should be gathered pertaining to what is driving the demand for private label cookies，to what extent this has already affected your clients sales，and what the likelihood is for the trend to continue. The following are questions and answers that would be provided in an interview scenario.q What are the sales trends for the client over the past five years?Your clients sales have been flat at $600M for the time frame of five to two and one-half years ago. Over the past two and one-half years，sales have decreased steadily down to a present level of $560MM.q How has market share of the private label segment been split over the past five years between your clients main competitor and the other smaller players?The smaller players combined had 100% of the private label subsegment five years ago. Two and one-half years ago your clients main competitor began supplying private labelers. Today，this main competitor owns 40% of the private label subsegment，the smaller players own the remaining 60%q How has market share of the branded segment been split over the past five years?Your client held 60% of this segment five years ago，67% two and one-half years ago and 70% today. Its main competitor held 30% five years ago，25% two and one-half years ago and 23% today. The combined smaller players owned 10% five years ago，8% two and one-half years ago and 7% today.Analsis of the above information tells a very important story. The private label segment was launched five years ago by the smaller players. As private label first cut into the branded segment，it came at the expense of your clients main competitor and the smaller players，not your client. In response to this，your clients main competitor entered into the private label segment two and one-half years ago. This further hurt their own sales and those of the smaller players，but also began to hurt your clients sales. Additional information is required to understand what is driving the demand for private label cookiesq How does the quality of a private label cookie compare to that of a branded cookie?Consumer studies have shown that there is a noticeable difference in taste，texture and quality in favor of the branded cookiesq At the manufacturing level，what is the difference in