• 
Number of questions and time: In its fourquestion sample BCG mentions that the online 
• 
test includes 23 questions and needs to be completed in 45 minutes. However, past candidates have also reported slightly varying numbers of questions and time limits. Maths vs. logic questions: Given the limited number of questions made available by BCG, the balance of maths and logic questions in the actual test is not known at this stage. 
Pricing strategy 

Case Overview 
Market Research 

Due to the increasing number of lowcost airlines entering the market, the world’s major carriers are forced to revisit their 
5,000 people were asked how much they would pay for a flight from London to Paris. 

pricing strategies in order to preserve their market share. 
Number of respondents and price points: 

Olympian Airways is one of the largest airlines in Europe and is revamping its 
1,100
1,500
€200
€150
€100
€50
500


pricing strategy for international short Question x / 23 

haul flights. 

In order to do so, it decided to carry out market research to find out how much 

passengers would be willing to pay for different routes. 
Scenario 
A 
B 
Flight cost and tickets’ revenue 

Avg cost per flight 
€15,000 
€15,000 
# flights / day 
30 
20 
Ticket price 
€100 
€150 
# passengers / flight 
200 
150 
Distribution of passengers 

C1 
50% 
30% 
C2 
30% 
30% 
C3 
20% 
40% 
Avg duty free spending per passenger 

C1 
€5 

C2 
€10 

C3 
€15 
After conducting market research in ticket prices the company puts together two different scenarios. Scenario A is a low price high volume strategy and Scenario B is a high price low volume strategy.
In addition to ticket revenues, Olympian Airways also sells products (perfumes,
alcoholic beverages, electronics, etc.) to passengers during flights.
The company classifies customers into three income bands: C1, C2 and C3. C1 passengers have got the lowest income and C3 the highest.
C1 customers are price elastic across ticket prices and likely to spend less on goods purchased on board.
Olympian Airways’ aircrafts all have the same number of seats.
Scenario analysis
Customer segments
Which of the factors listed below would not affect the gross profit difference between scenarios A and B?
1. Ticket prices 2. Aircrafts’ seat capacity 3. Fuel costs 4. None of the above
Scenario 
A 
B 
Flight cost and tickets’ revenue 

Avg cost per flight 
€15,000 
€15,000 
# flights / day 
30 
20 
Ticket price 
€100 
€150 
# passengers / flight 
200 
150 
Distribution of passengers 

C1 
50% 
30% 
C2 
30% 
30% 
C3 
20% 
40% 
Avg duty free spending per passenger 

C1 
€5 

C2 
€10 

C3 
€15 
Customer segments
After conducting market research in ticket prices the company puts together two different scenarios. Scenario A is a low price high volume strategy and Scenario B is a high price low volume strategy.
In addition to ticket revenues, Olympian Airways also sells products (perfumes,
alcoholic beverages, electronics, etc.) to passengers during flights.
The company classifies customers into three income bands: C1, C2 and C3. C1 passengers have got the lowest income and C3 the highest.
C1 customers are price elastic across ticket prices and likely to spend less on goods purchased on board.
Olympian Airways’ aircrafts all have the same number of seats.
Scenario analysis
New customer loyalty programme 

Miles & Bonus 
Data 

In addition to reviewing its pricing strategy, Olympian Airways has also decided to launch a new loyalty programme called Miles & Bonus. 
There are 60 different types of tickets (10 destinations, 3 travel classes and 2 seasons) with an average of 2,000 points awarded per ticket. 

In this programme customers are awarded points based on the distance 
None of these tickets earns less than 500 points and exactly 15 of them earn less 

they travel with either the airline or one of Question x / 23its partners. 
than 1,200 points. 

The points earned vary depending on the travel class (i.e. first, business or economy), the destination and the season. 

For instance, peak season business tickets in nonpopular destinations are awarded the most points. 
Upgraded fleet of aircrafts 

New aircrafts 
Data 

Olympian Airways is considering upgrading its fleet. The new aircrafts will use technologies such as touch screens and WiFi on board. 
The ratio of first class, business and economy seats in the new aircrafts will be 1 to 3 to 8 and the total number of seats will be 240. 

The company has decided that the new 
Average ticket prices for popular destinations are expected to be €700 for 

aircrafts will have three different types of seats: first, business and economy. Question x / 23 

First class seats will have leather heated chair beds, business seats will have leather seats with extra leg space and economy seats will have standard seats. 
first class, €300 for business and €150 for economy. The average duration of these flights is 3 hours. First and business customers get free Wi Fi on board but economy customers need to pay €2 / hour for using it. 
The company rents debit and credit card
machines to its clients. It earns a rental fee for the card machines as well as a
small fee for each card transaction processed by their client.
The company works with banks to acquire new clients. It purchases lists of businesses from them and calls them to sell card machines and services.
PayCo is a payments company that processes debit card and credit card transactions in the United States.
Cost per 
Share of 

lead ($) 
total mix of leads (%) 

Alma Bank 
$5 
30% 
Bingo Bank 
$3 
60% 
Com Bank 
$6 
10% 
PayCo’s clients are shops such as restaurants, bars, apparel shops, supermarkets, petrol stations, etc.
Current situation
Case overview
PayCo purchases lists of leads at different prices from Alma Bank, Bingo Bank and Com Bank.
It then calls the leads to try and sell them card machines and services. The average conversion rate from lead to actual customer is about 10%.
Alma Bank is a large commercial bank from the East Coast of the US. Its clients are mainly restaurants and shops.
Com Bank has got a similar list of clients to Alma Bank but is established on the West Coast of the US.
Bingo Bank is established in the Midwest
and primarily serves Mom and Pop businesses.
The team at PayCo has always assumed a similar conversion rate of 10% across all three banks.
After carrying out some research, your team finds out that the conversion rate between the three banks is actually different.
Conversion 
# of leads 

rate 
available per year 

Alma Bank 
12% 
100,000 
Bingo Bank 
8% 
600,000 
Com Bank 
15% 
80,000 
PayCo needs to achieve its sales target by using 300,000 leads per year.
Conversion rate results
Bank by bank analysis
$35.0 / sale $37.5 / sale $40.0 / sale None of the above / we lack sufficient information at this stage
What is the minimum cost per sale PayCo can achieve by using Alma Bank, Bingo Bank and Com Bank as sources of leads?
1.
2.
3.
4.
Com Bank has got a similar list of clients to Alma Bank but is established on the West Coast of the US.
Bingo Bank is established in the Midwest
and primarily serves Mom and Pop businesses.
The team at PayCo has always assumed a similar conversion rate of 10% across all three banks.
PayCo needs to achieve its sales target by using 300,000 leads per year.
Conversion 
# of leads 

rate 
available per year 

Alma Bank 
12% 
100,000 
Bingo Bank 
8% 
600,000 
Com Bank 
15% 
80,000 
Alma Bank is a large commercial bank from the East Coast of the US. Its clients are mainly restaurants and shops.
Conversion rate results
Bank by bank analysis
After carrying out some research, your team finds out that the conversion rate between the three banks is actually different.
4.
3.
2.
Work with Bingo Bank to increase the quality of the leads purchased from them by PayCo Group sellers handling different banks in a single team and randomise the distribution of leads between them Keep sellers in different teams but rotate lead sources between them Increase bonuses to $200 per sale for all sellers
1.
Which of the following statements would NOT increase the motivation of sellers handling leads from Bingo Bank?
Sellers incentives 

Day to day 
Sellers’ compensation 

PayCo’s sellers work from 9am to 5pm from Monday to Friday 47 weeks a year. 
The sellers’ base salary starts at $40k and increases by about 5% per year for In addition, sellers can receive $100 for 

Sellers are divided into three teams. Each team deals with one of the following lead sources: Alma Bank, Bingo Bank and Com Bank. 
each additional year they stay with the company. each sale they make. 

Every day, sellers receive a list of 85 Question x / 23 
The Head of Sales has noticed that 

leads from their respective bank and work through the list during the day. 
sellers for Bingo Bank are much less motivated than their peers on average. 

The list of leads they get are newly setup businesses which are likely to require debit and credit card payment processing services. 
After investigating, his initial conclusion is that they have been consistently making less sales and getting lower bonuses than their peers. 

Sellers simply coldcall the leads and try to convince them to sign up for PayCo services. 
4.
3.
2.
Train sellers to negotiate better prices with leads Fine sellers when they give unprofitable prices Incentivise sellers to sell at higher prices with a different bonus system Set up an audit team that would check prices and validate contracts before they count towards sellers’ total sales
1.
Which of the following measures would best help the company to fully prevent sellers from agreeing unprofitable prices with future customers?
Incentive structure 

Current issue 
Pricing 

Sellers are currently only incentivised based on the number of customers they manage to sell to. 
When selling PayCo’s services, sellers negotiate a share of their customers’ future revenue. 

The head of finance of the group has noticed that the prices at which sellers agreed to provide PayCo’s services have decreased in the past few months. Question x / 23 
For debit cards, they usually agree a price of about 15 cents per future transaction processed for the client. For instance, if PayCo processes a debit card transaction for a sandwich at $5, they will receive 15 For credit cards, the price agreed is a 

The head of sales suspects that this might be due to sellers selling at increasingly lower prices to increase their bonus. 
cents from the sandwich shop in exchange for their service. percentage of the transaction instead of a fixed fee. This percentage is usually around 1.5%. 

Lately, sellers have been found to sell PayCo’s services at increasingly less profitable prices. 
Question 1 
Correct answer: 2 
The ticket price can be calculated as follows: 
1. Calculate the number of respondents for the €150 price segment: 5,000  1,100  500  1,500 = 1,900 2. Calculate the weighted average by multiplying the prices by the number of people per price segment and then dividing by 5,000: (500 x 50 + 1,500 x 100 + 1,900 x 150 + 1,100 x 200) / 5,000 = €136 
Answer 2 is therefore the correct answer. 
Question 2 
Correct answer: 1 
You are asked to determine which of the two scenarios maximises gross profit. The gross profit for each scenario can be calculated as follows: 
Scenario A: 
 Revenues from tickets: €100 x 200 = €20,000  Revenues from duty free: (50% x €5 + 30% x €10 + 20% x €15) x 200 = €1,700  Gross profit per day: (Total Revenues – Cost per Flight) x Number of Flights per Day = (€20,000 + €1,700 – €15,000) x 30 = €201,000 
Scenario B: 
 Revenues from tickets: €150 x 150 = €22,500  Revenues from duty free: (30% x €5 + 30% x €10 + 40% x €15) x 150 = €1,575  Gross profit per day: (Total Revenues – Cost per Flight) x Number of Flights per Day = €22,500 + €1,575 – €15,000) x 20 = €181,500 
Scenario A maximises gross profit per day. Therefore, answer 1 (€100) is the correct answer. 
Question 3 
Correct answer: 4 
Ticket prices will affect revenues for each scenario and will therefore affect the gross profit difference between them. 
Fuel costs will affect the cost of the flight, and since the number of flights is different for each scenario, this will affect the gross profit difference as well. 
The total number of seats per aircraft could affect the gross profit difference. For example, if it was 300 then the number of passengers per flight and the number of flights per day for scenario A might increase. 
Therefore, all of the factors listed could affect the difference in gross profit. Notice that you are asked to identify which factors would NOT affect the difference in gross profit, hence answer 4 is correct. 
Question 4 
Correct answer: 1 
There are 60 different types of tickets with an average of 2,000 points each. The total number of points from all types of tickets is therefore 60 x 2,000 = 120,000. 
In order to find the maximum number of points that could be earned with a single type of ticket, the points of all the other types of tickets need to be minimised. 
None of the tickets have less than 500 points and exactly 15 have less than 1,200 points. At a minimum, we can have 15 tickets with 500 points. This leaves 44 tickets (60151) with more than 1,200 points. In order to maximise the points of one ticket the remaining 44 should carry 1,200 points each. 
Therefore, out of the 120,000 points, there are 120,000 – (15 x 500) – (44 x 1,200) = 59,700 points for the remaining ticket. 
The correct answer is therefore answer 1. 
Question 5 
Correct answer: 1 
The expected revenues can be calculated as follows: 
1. Calculate the number of passengers per category 1y + 3y + 8y = 240 => 12y = 240 => y = 20: 
First class passengers: 20 Business class passengers: 60 Economy class passengers: 160 


Therefore total revenues are €56,048. 
A faster way to obtain the correct answer is to calculate the revenues from WiFi first (€48). You should then notice that ticket revenues can only contribute towards the tens of the hundreds in the result. 
The right answer will therefore finish by 8. By doing this, all answers can be eliminated except number 1. 
Question 6 
Correct answer: 1 
This calculation can be broken down into two steps: 
1. Calculate cost per lead 2. Calculate cost per sale 
The cost per lead needs to be calculated across all three banks, taking into account their total share of mix: $5 x 30% + $3 x 60% + $6 x 10% = $3.9 / lead 
The cost per sale can be calculated by dividing the cost per lead by the conversion rate: $3.9 / 10% = 
$39.0. 
The correct answer is therefore answer 1. 
Question 7 
Question 8 

Correct answer: 2 
Correct answer: 2 

In order to maximise its conversion rate, PayCo needs to rank lead sources from the highest to the 
Sufficient information is provided to calculate the cost of sale for each lead source: 

lowest conversion rates. It should then use as many leads from the first source before considering the second one: 
1. Alma bank: $5 per lead with a 12% conversion 2. Bingo bank: $3 per lead with a 8% conversion 3. Com bank: $6 per lead with a 15% conversion 

1. Com bank 15%; 80,000 leads available 2. Alma bank 12%; 100,000 leads available 3. Bingo bank 8%; 600,000 leads available 
For each bank, the cost per sale can be calculated by dividing the cost per lead by the conversion rate: 

1. 
Alma bank: $5 / 12% = $41.7 

PayCo needs 300,000 leads per year to meet its 
2. 
Bingo bank: $3 / 8% = $37.5 

target sales. To maximise the conversion rate, the lead mix should then be: 
3. 
Com bank: $6 / 15% = $40.0 

1. Com bank: 80,000 2. Alma bank: 100,000 3. Bingo bank: 120,000 
Bingo bank has got the lowest cost per sale. In addition, it can provide 600,000 leads per year which is sufficient to cover PayCo’s needs of 300,000. 

The maximum conversion rate achievable is then: 
The correct answer is therefore answer 2. 

(15% x 80,000 + 12% x 100,000 + 8% x 120,000) / 300,000 = 11.2% 

The correct answer is therefore answer 2. 
Question 9 
Correct answer: 4 
The head of sales’ initial conclusion is that sellers handling Bingo Bank leads “have been consistently making less sales and getting lower bonuses than their peers”. 
Indeed, the conversion rate for leads from Bingo Bank is lower than that of other banks. The comment implies that, to increase sellers’ satisfaction, their bonus would need to be similar relative to their peers. 
However, if bonuses increase to $200 per sale for all sellers, the relative bonus obtained by sellers focused on Bingo Bank will not increase. 
Answer 4 would therefore not help solve the problem and is the correct answer. 
Question 10 
Correct answer: 4 
Answers 1 to 3 would all help decrease sellers’ tendency to sell at unprofitable prices. However, none of them would completely stop the trend: 
1. Training sellers to give better prices could still result in sellers giving unprofitable prices in practice. 2. Giving a fine to sellers, while a good incentive, is not guaranteed to fully stop the trend. 3. Similarly, setting up a better incentives scheme is also not guaranteed to halt the trend. 
Answer 4 is the correct answer because it fully prevents sellers from selling at unprofitable prices via an external audit team. 
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