Skin-Tique Corporation Case

Topics: Shaving, Marketing, Shaving cream Pages: 7 (2278 words) Published: April 19, 2010
Memorandum
Date: February 26, 2010
Re: Introduction of new package for Skin-Tique’s Soft and Silky Shaving Gel The industry for women’s shaving creams and gels is small and new. The purchasing of women’s shaving products varies by season. The peak season is summer, while sales decline in the winter. Competition is strong, but Skin-Tique has a strong presence. The women’s wet shaving products industry, as a whole, is rapidly growing and increasing in technological advancement. The wet shaving products market was $400 million in 2002, with sales growth at 3 to 5 percent per year. Shaving creams and gels account for 23 percent of those annual sales. Skin-Tique is in the creams, lotions, and gels segment of women’s shaving products. Other top firms in this segment are S.C. Johnson, Gillette, White Labs, and Inverness Corp. With $3.7 million in Soft and Silky Shaving Gel sales in 2002, Skin-Tique Corp. held 30 percent of the shaving cream and gel market. Regardless of this position in the market, management is concerned with evolving packaging in the industry. The dominant packaging has become the aerosol container. _The Soft and Silky Shaving Gel Brand:_ Skin-Tique specializes in health and beauty products and introduced shaving gel as an extension. They have positioned it as a high quality shaving gel and differentiated the product from men’s products, in order to offer a unique product for women. Soft and Silky Shaving Gel is premium priced, which is widely accepted due to its positioning as a high quality shaving product. The Packaging and Test Market Decision: The recommendation to change the packaging was based on four developments. The developments are: a plateau in unit sales volume for Soft and Silky Shaving Gel, the growth has strained manufacturing capacity, there are currently no expansions plans for manufacturing expansion, and the aerosol container has become the dominant design in the market. With the introduction of a new package, Skin-Tique would need to outsource to a contract filler. The contract filler would purchase and assemble the components. The selected filler would products with desirable features, such as a rustproof bottom, but can only produce containers in 5 oz. and 10 oz. sizes. Equally important, with the introduction of a new package, cannibalization of the current packaging will occur. Also, with the introduction of a new package, whether or not to introduce the new package design in a test market needs to be addressed. Funds would need to be allocated to test both containers in heavy-volume and low-volume stores. This test would last three months and include promotional aids to approximate a full-scale introduction. Attachments 1-3 contain a detailed Customer Environmental Analysis, Competitive Analysis and SWOT. Assumptions:

(1) The market share trends demonstrated between 1997 and 2002 will continue. (2) There will be no major changes in industry structure or competition. Analysis:
The women’s gel and cream market is extremely competitive. Recently, product quality has improved, and major competitors have entered the market. Skin-Tique has seen sales plateau and industry packing evolve. The company has also seen issues with manufacturing capacity, with no current plan to expand the manufacturing capacity. Introduction of an additional package is thought to produce higher sales, even with cannibalization of current packaging. Possible alternatives include the following:

(1) Introduce the 5.5 oz. container
(2) Introduce the 10 oz. container
(3) Include a test market before introducing new package
(4) Do nothing
Introduce the 5.5 oz. container
Pros: (1) Non-customers would consider switching to Soft and Silky with the introduction of an aerosol container. (2) Will produce higher sales in ounces. Cons: (1) Will cannibalize current packaging. (2) May extend the budget, but not the overall net sales. Introduce the 10 oz. container

Pros: (1)...
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