Analyse the following case and answer the questions:
The market for women’s hair shampoos has become highly specialized and segmented. In recent years a large number of special purpose shampoos have appeared on the market, each promising to provide various hair care benefits to the potential user. The Syd Company is diversified manufacturer of consumer packaged goods. At this time the firm has no women’s shampoo in its product line.
The company’s marketing research personnel met recently with a small research firm, FC Associates, and discussed the possibility of study of young female adults living in Bombay.
The Syd company had established—through a series of recently completed interviews with a small group of women consumers—that “body” (apparently connoting hair thickness or fullness) in a hair shampoo was frequently mentioned as a desired characteristic. Armed with this rather sketchy information concerning the desirability of “body” in a shampoo, the firm’s laboratory personnel had set to work on developing some prototypical compounds that appeared potentially capable of delivering this characteristic to a greater extent than brands currently in the market.
During the initial conversation between Syd and FC Associates, the following managerial problems came to the light:
1. Assuming that laboratory personnel could produce a women’s shampoo with superior “body”, is the market for this product large enough to justify its commercialization? 2. What benefits in addition to “body” should be incorporated into the new shampoo? 3. What are the characteristics—product usage, hair type, demographics—of people who are particularly attracted to a shampoo with “body”? (Knowledge of these characteristics would be desirable in defining the target segment for the new product.) 4. How would the concept of “body” in shampoo be communicated; what does the consumer mean by “body’ in shampoo? ( Knowledge of the connotations of “body” would be valuable in design of promotional messages and point of purchase materials.)
Since Syd had no entry in the shampoo market, the company had little to go on in the way of secondary sources of information. While various market statistics could be obtained for the existing brands, the firm was primarily interested in characteristics appropriate for a relatively new concept in the market place—a shampoo that emphasized “body”.
Although formal statistical decision analysis was not applied in this case, it became apparent that the firm faced three primary courses of action:
1. Continue the technical development of a new shampoo that delivers the consumer benefit: “body”. 2. Terminate technical development related to this characteristic and switch efforts to some other shampoo benefit. 3. Discontinue all the efforts in women’s shampoo products.
Continuation of technical development on “body”, in turn, is based on two considerations:
1. that new product can be developed successfully from a technical standpoint 2. And that the new product can be sold in sufficient quantities to justify future development outlays, start-up expense, ongoing production and marketing costs, plus earning an appropriate return on invested funds.
Informal analysis indicated a high probability of technical success during the ensuing 12 months with relatively modest additional outlays in technical resources. The major problem appeared to be one of market potential—more specifically, whether a target segment of sufficient size was available to warrant technical development and eventual commercialization.
COST AND VALUE OF MARKETING RESEARCH
Current uncertainties about the potential demand for the new product suggested the desirability of conducting marketing research beyond the preliminary consumer group interviews that had been recently conducted by the firm. Crude estimates of the cost versus value of...