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Autor: anton • July 31, 2010 • 1,837 Words (8 Pages) • 448 Views
As Soft and Silky Shaving Gel has been a premier line of women's personal-care products since 1986, they are clearly doing many things properly that is allowing for consistent growth. The first major strength that the Ms-Tique Corporation can be accredited for is their understanding of the market. As they have been in the industry for a long time, they understand their target market very well and continue to brand a high-end line of products that has been succesfully selling for years. Furthermore, they have managed to position themselves a high-quality women's shaving gel, in which they have differentiated themselves from other brands.
Another major strength is where their products are positioned in the drug and food-and-drug stores. By using rack jobbers, they have managed to place their products away from men's shaving products, where consumers would not be directly able to see their premium difference in price. Through years of experience and accurate demographic testing, Soft and Silky Shaving Gel has managed to perfect their winning formula, changing it in 1991 to better meet the needs and wants of their target market. To do so, they added three moisturizers which included vitamin E.
Another main strength for the Ms-Tique corporation is the high sense of brand loyalty present by their current customers. Through studies and metrics, it has been made clear that once a woman decides to become a user of Soft and Silky Shaving Gel, that same woman would usually end up being a loyal customer and would not switch brands. This is a huge strength because it helps promote growth and minimizes the efforts required to retain customers.
The first main weakness found within the case is that when the company decided to start selling their product, in 1986, they did not have the technology to produce aerosol containers. A study done by Ms-Tique shows that women prefer the aersole can unanimously. As a result, it is clear that this is a weakness that could be hindering the potential future profits to be had by Ms-Tique.
Another main weakness is the fact that as Soft and Silky Shaving Gel had been experiencing consistent growth over the years. Although that in itself is not a weakness, Ms-Tique has a manufacturing policy where-in they are to utilize existing production capacity at all times. However, due to growth in all the product lines offered by Ms-Tique, their production capacity has been affected along with their production scheduling.
Keeping in line with production, it was also stated that due to poor fill-rates, there had been requests made by retailers that had not been tended to in a timely fashion, which consquently lead to lost sales.
Although Soft and Silky Shaving Gel unit sales volumes are coming to a virtual standstill and at risk of declining, Ms-Tique has a great opportunity to react to market conditions and fix the problem before it affects profits too greatly. To explore this opportunity, Ms-Tique has undergone four focus-groups to see how new efforts would affect their bottom line. After completing the study, it was very clear that the aerosol can would be heavily favoured and would therefore help keep a steady growth amongst the organization.
A further opportunity with the aerosol can presents itself when discussing converting customers over to their brand. For example, the study showed that 25% of non-customers were not using Soft and Silky Shaving Gel due to the fact that it was not in aerosol cans. Therefore, by switching to an aerosol can a large opportunity has presented itself to attract new clients and therefore further revenue.
The case also states that by introducing the aerosol can in conjuction with the old packaging, there would be an incremental increase in unit sales volume soley based on the fact that there are two different types of packaging, again increasing future potential profits.
The first threat was presented by Heather Courtwright in that Ms-Tique Corporation had no plans for the expansion of their manufacturing capacity, despite an obvious and immediate need to do so. This is a big threat because without plans for a solution to their manufacturing capacity problems, scheduling will continually be in conflict which will in turn lead to lost sales. In a world where products have smaller margins in profit and heavy competition across most industries, it is not favourable or efficient to lose sales from customers that are willing to purchase their products.
Another main threat, if not the biggest one would be the fact that the aerosol can has become the predominant design for women's shaving creams and gels. This is a major threat because many consumers will not use the product solely based on the fact that it does not use an aerosol container. In fact, Masters proclaimed that if Ms-Tique continued to use the gel tubing, Soft and Silky Shaving Gel would witness a .32% decrease for 2001, which is far off from the regular 3 - 5% growth.
2. Unit Contribution Margin
5.5 ounce Tube -
In the text, it says that it costed Soft and Silky Shaving Gel $784 000 to produce 1 960 000 units sold in 2000. With that said, 784 000 / 1 960 000 = $0.4, or 40 cents per unit. This sells for 3.95 in stores. It also states that retailers would earn a 40 % margin on the suggested retail price. That would mean that they are receiving $1.58 per tube. 3.95 - 1.58 = 2.37. This also means that Ms-Tique is selling the tubes to the customers at $2.37. $2.37 (price they are selling the unit to the retailer) - 0.4 (their variable cost of good sold per unit) = 1.97. Therefore, there is a profit of $1.97 being made after calculating variable costs of goods sold.
5.5 ounce aerosol -
The text states that it would cost $0.24 to produce the 5.5 ounce aerosol can, which would in turn sell for $3.50 in stores. Keeping in line with the 40% rule for retailer profit margin, retailers would get $1.40 per can and Ms-tique would therefore be getting $2.10.
10 ounce aerosol -
The text states that each 10 ounce can would cost $0.29 to produce. These same cans would sell for $4.25 in retail stores. Again, keeping in line with the rule of 40%, the retailer