Marketing Management: Skin-Tique Corporation

Pages: 8 (1831 words) Published: October 24, 2011
Marketing Management

Skin-Tique Case

SKIN-TIQUE CORPORATION Synopsis In January 2003, Phoebe Masters, the newly appointed product manager for hand and body lotions at Skin-Tique Corporation, is faced with the decision whether to add a 5-1/2 ounce or 10-ounce aerosol package alongside the existing tube container of the firm’s Soft and Silky brand of women’s shaving gel. The apparent decision involves the determination of whether to conduct a market test on the two aerosol packages to determine which package will be most profitable when sold with the tube container. However, as the case unfolds, the whole matter of an aerosol container being a viable line extension at all emerges to cloud the decision.

Marketing Management

Skin-Tique Case

A. Based on Soft and Silky’s sales performance through 2002, results from the focus group studies, and the performance of analogous products, should the aerosol container concept be pursued further? 1. YES 1. S&S’s unit sales volume plateaued growth suggests that the brand might be in the mature stage of its cycle. Perhaps a packaging change is necessary to stimulate growth since aerosols have become so popular and the women’s shaving market is growing at a rate of 3 to 5 percent annually since 1994. But, from where will the source of volume growth come? Former users of soap and water; S&S; or users of competitor creams and gels? Focus group studies indicate that shaving cream users like the aerosol can — 1/4 said they would switch over to S&S’s aerosol can, irrespective of can size. It is unlikely that current S&S users will purchase more (at least there is no data to support a counter-argument). A marketing research firm studied case studies in which marketers of men’s shaving cream had introduced a new package. As shown in case Exhibit 5, the research firm projected a unit (ounces) increase in sales volume for the S&S brand (S&S was projected to sell 1,953,668 5-1/2 ounce tubes in 2003 or 10,745,174 ounces. All projections were greater than this figure.) Customers and non-customers were unanimously in favor of the aerosol can. The 10-oz. size can was most preferred.

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2. NO 1. Twenty percent of the present S&S users say they would switch to the 10-oz. Can. Since the 10-oz. can is almost twice the size of the present 5½-oz. tube, this could reduce the

Marketing Management

Skin-Tique Case

turnover of S&S in stores. 2. Furthermore, the retail store’s margin for the 5 ½-oz. aerosol can will be $1.40/can compared with $1.58/can for the 5 ½-oz. tube container (see calculations in Exhibit 1 in this note). Slower turnover plus lower margin are not in the best interest of supermarket health and beauty aid buyers. However, a higher retail margin for the 10-oz. aerosol can ($1.70) exists. Even so, the larger retail margin does not compensate for an almost doubling of the container size. Couple 1 & 2 above, health and beauty aid buyers in retail stores might think twice about giving the aerosol container shelf space.

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B. What are the economics of the 5 ½-oz. tube container, 5 ½-oz. aerosol container, and the 10-oz. aerosol container? 1. The case states that the retail margin is 40 percent and the jobber margin is 20 percent. Furthermore, the suggested retail prices are given and the cost per delivered aerosol unit is given. 2. Contribution per unit and contribution per ounce is calculated in my Exhibit 1 in this note. The 10-oz. aerosol can has a higher unit contribution than the tube container. However, on a per ounce basis, both the 5 ½-oz. and the 10-oz. aerosol have lower contribution figures. The 5 ½-oz. tube container has a higher contribution/ounce.

Marketing Management

Skin-Tique Case

Exhibit 1 CALCULATION OF CONTRIBUTION BY PACKAGE
5 ½ OZ. TUBE 5 ½ OZ. AEROSOL 10 OZ. AEROSOL

Retail Price Less: Retail Margin (40%) Jobber Price Less: Jobber Margin (20%) S&S Price Per Unit Variable Cost/Unit* Contribution/Unit Contribution/Ounce...
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