Skin-Tique Corporation Case

SKIN TIQUE CORPORATION

(Barath K K - @03413524 – Cohort B9)

Skin-Tique Corporation is a manufacturer of women’s personal care product with annual sales of $225 million in 2002.  The company manufactures products like, facial creams, hand and body lotions and full line of women’s toiletries. These products are sold by drug and food -and- drug store in women personal care section. Soft and silky shaving gel was introduced in 1986 in a 5.5 ounce tube which was marketed by Skin-Tique Corporation, this soft and silky was introduced to market as high quality product which generated a $3274000 sales in 2002 with a 1960000 unit volume and $1363900 brand contribution.

The company was planning to introduce new package design for its soft and silky shaving gel. So they were facing a problem of weather to introduce 5.5 ounce or 10 ounce aerosol package and they were worried about additional funds should be approved for market test. As they knew that dominant packaging for women’s shaving cream and gel had become the aerosol pack. They should also focus on two major competitor Gillette and SC Johnson, these companies are significant in size and operate on global basis.

The total cost of producing 5.5 ounce aerosol can of shaving gel was $0.24 and estimated retail price would be of $3.50 but they should be a minimum order of 100000 units. They might face the risk of cannibalization of current product is different to that predicted, there might be loss of control of manufacturing process. There might be a positive response from the customer for value added features there won’t be any impact on current supply chain.

The total cost of producing 10 ounce aerosol can of shaving gel was $0.29 and estimated retail price would be of $4.25 here also they should be minimum order of 100000 units. There will be a risk like consumer might not adopt the larger size aerosol package as forecasted. So it will be cross promotion of shaver and lubricant product by competitors and there will be competitive response to new package. So it’s better to introduce 10 ounce aerosol pack of soft and silky shaving gel. As we have seen loyal customer in recent years there might be some percentage of risk that could convert to other competitor’s product if soft and silky does not offer an aerosol.

...