How to Analyze Data

One of the most important skills for success in a case interview is analyzing data and coming up with insights. Most people seem to struggle with this because you’re often presented the data in complicated looking charts, graphs, and tables. The interviewer is looking for you to quickly and efficiently digest the data and tell him or her what it’s really saying.

Now I’m sure you’re thinking “I’ve been reading charts, graphs, and tables since elementary school, I don’t need a lesson on it.” Perhaps, but I’ve found that when I’m under pressure I often struggle with this because I start to panic. The easy way to deal with this pressure is to take a systematic approach with every chart / graphs / table, so you know you’ll be OK when something unique gets thrown your way.

Systematic Approach for Reading Charts / Graphs / Tables

1. Always start by reading the title and the axes and make sure you understand them! Try to think about why the data has been presented to you in this way (what pattern or correlation is it trying to show?).

2. Replay  the objective of the case in your head so you know what you’re trying to accomplish while reading the graph.

3. Develop a hypothesis before jumping into the actual data (or, if you’re doing a calculation figure out the data you need before you actually look).

4. Examine the graph for any trends and try to prove / disprove your hypothesis.

5. Repeat steps 2-5 until you run out of potential hypotheses.

6. Figure out what your insights mean for the client.

7. Deliver your insights in a structured way.

Example

The following is Case 6 (The Coffee Grind) from the Wharton 2010 Casebook.

Prompt:

The CEO of a major client has requested a short-term study examining a small part of the client’s product portfolio. The company has a small division that manufactures automatic drip coffeemakers for the US and Canadian market. The division has been steadily producing coffeemakers for 20 years, and has made few changes to the business over its history. The client has always enjoyed healthy margins for the coffeemaker division, and annual volumes have been steady. Recently, however, the coffeemaker division’s profits have been declining.The CEO wants to understand what is going on.

The objective here is to figure out why profitability is declining and what to do about it. Now let’s get into the associated graph (right click and open in a new tab to see it better):

Wharton 2010 Case 6 - The Coffee Grind

Let’s go step by step:

1. Read the titles / axes:

The graph is showing the number of coffee makers sold in different distribution channels (national and non-national locations).

2. Remind yourself of the client’s objective:

My objective is to figure out why profit has dropped.

3. Develop an initial hypothesis:

My initial hypothesis is that maybe the graph is trying to show me that we’re selling less coffee makers out of one of these channels for some reason and maybe that’s why profitability has dropped.

4. Validate the hypothesis:

Looking at the trends I can see that I was half correct: the number of coffee makers sold in non national chains has dropped. However, it seems as though we’ve increased sales in the national chains. This means that total volume has actually increased. So it’s either a pricing problem or a cost problem if profit has dropped.

5. Repeat steps 2-5:

I have two more hypothesis that come to mind: maybe consumers are buying more cheaper coffee makers and maybe we’re selling more through specific chains of stores than in the past. The first hypothesis is false because we’re selling the same approximate ratio of 4/10/12 cup coffee makers.

However, I’ve also stumbled onto the fact that we seem to be selling a substantial amount of our coffee makers through Wal-Mart.

6. Figure out what it means for the client:

The client is now selling most of its coffee makers through national retailers (especially Walmart). Perhaps they have greater leverage in our relationship than the non national retailers did and are demanding lower prices as a result. We need to examine how prices have changed.

To respond we might want to expand into new distribution channels, move into new markets or if the client is a large Procter & Gamble type company the divisions should negotiate prices with Wal-Mart together to get better prices.

7. Structure your answer:

I’m getting three insights from this graph:

1. The first is that we’re seeing a shift in our customer mix from national to non national retailers.

2. The second is that our largest customer is now Wal-Mart.

3. The third is that it is possible that these national chains are squeezing us on price because of greater pricing power.

I also have three (3) next steps for the client:

1. For one, look at how prices have changed and if we’re charging the national retailers less for the product.

2. For two, look into expanding into other distribution channels like online sales.

3. For three, look into seeing if the entire company bargains with national retailers together, and if not I’d like to ascertain if that could help our division get better prices.

Conclusion

Reading charts / graphs / tables can be tough, but you’ll be OK if you:

1. Always start by reading the title and the axes and make sure you understand them! Try to think about why the data has been presented to you in this way (what pattern or correlation is it trying to show?).

2. Replay  the objective of the case in your head so you know what you’re trying to accomplish while reading the graph.

3. Develop a hypothesis before jumping into the actual data (or, if you’re doing a calculation figure out the data you need before you actually look).

4. Examine the graph for any trends and try to prove / disprove your hypothesis.

5. Repeat steps 2-5 until you run out of potential hypotheses.

6. Figure out what your insights mean for the client.

7. Deliver your insights in a structured way.

Good luck!

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