Chipco Case Study

Topics: Sales, Marketing, Cosmetics Pages: 7 (2300 words) Published: July 27, 2010
Bill Gates, founder of Microsoft, said, “It's fine to celebrate success, but it's more important to heed the lessons of failure. How a company deals with mistakes suggests how well it will bring out the best ideas and talents of its people, and how effectively it will respond to change.” This quote definitely applies to Colleen Klein’s company Chipco. “Chips,” as Ms. Klein is common known, invented a 3-way mirror for the application of eye make-up: The Eye Maker. It was Chips’ personal belief that this product was a useful essential for all women that wear eye makeup. Although she was aware of the fact that 95% of new products end in failure (Chipco, p. 1), Chips took a risk and launched her creation. This risk, however, was uncalculated and lacked vital research and development that could have lead to potential sales and success. These and other factors lead to the initial failure of this product. A well-known marketing concept, “The 4 P’s of the Marketing Mix,” could have dramatically affected the outcome of the product. This essay will explore some issues concerning Chipco, their impact, and how they could have been avoided all together. 1. Product

The first “P” is product. Ibrahim and Ellis detail four stages of product development (Ibrahim & Ellis, 2002, p. 132). The first is the idea generation stage. The idea for Chips product came from her experience as cosmetologist and applying makeup in cramped spaces during her dancing career. She perceived a need for a solution to the difficulty of applying ones’ own eye makeup. A 3-way mirror that allowed one to see their top and bottom lids was Chips’ potentially innovative product. This stage was complete.

The second and third stages are the development and the incubation stage, respectively. During these stages, an innovator researches all aspects of their idea and, based on this, develops a feasible prototype. Although Chips conducted some research, it was insufficient to ensure success for her product. Chips began by drawing what The Eye Maker would look like and making an initial prototype out of household items. She then visited many metal and plastic fabricators to learn about the manufacturing process necessary (Chipco, p. 5). The main issue with the way that she proceeded to develop her product was that she knew nothing about its feasibility and potential. With the state of the cosmetic market and 1 billion in annual sales in Canada at the time, Chips perceived that her product could accompany the use and application of makeup. She felt that makeup mirrors and accessories were underrated by cosmetic counters and generally unavailable. Chips thought that The Eye Maker could fill this supposed niche. But, perhaps there was a reason for this lack of accessories and innovative mirrors. With only 2 million cosmetic mirrors sold in 1981, was there really a market for Chips’ mirror? According to Ibrahim and Ellis, “Feedback is essential in order to refine the product and identify unique features of the product innovation.” (Ibrahim & Ellis, 2002, p. 133) Way before pitching her embarrassing homemade prototype to a cosmetic manufacturer, Chips should have ordered a couple of professionally-made prototypes and planned focus groups. Focus groups of women, including those who wore eye make-up, would have generated feedback from possible purchasers and users of the product. A while variety of questions, both directly and indirectly related to the product, could have been asked to generate quantitative and qualitative data. Such as: •Do you wear makeup? If so, how often? What kind?

What kind of makeup accessories do you own?
Where do you purchase your makeup? Accessories?
What do you think of the usefulness of The Eye Maker?
What do you think of the design of The Eye Maker?
Would you purchase The Eye Maker? How much would you pay? With her background as an educated cosmetologist, her perception of her product would be different from the...

Bibliography: Chipco. Entrepreneurship Case.
Ibrahim, A., & Ellis, W. (2002). Entrepreneurship and Small Business Management (Fourth Edition). Bubuque: Kendall Hunt Publishing.
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