Skin-Tique Corporation Case

Shaving creams and gels count for 23 percent of those annual sales. Skin-Toque 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-Toque 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-Title specializes In health ND 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.

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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-Toque would need to outsource to a contract feller. 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, centralization 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 SOOT. 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. Skill-Title has seen sales plateau and Industry packing evolve. The company has also seen issues with manufacturing capacity, with no current plan to expand the higher sales, even with centralization of current packaging. 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. Oz. Container Possible alternatives 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 net sales. Do Nothing Introducing a new package will need to be prefaced by a test market. One option is to conduct the test market, then analyze the response and make a decision at that point. Discussion: Introducing a new package is a way to keep up with industry standards and increase sales, in ounces.

The aerosol container introduction would result in lower contribution per ounce for both sizes. (See Attachment 4) However, the 5. 5 oz. Container would be much closer to the current contribution per ounce. Centralization has also been a concern for management. After re-calculating low and high estimates for each size, centralization proves to be an issue only with the 10 oz. Container. (See Attachment 5) Both estimates for the 5. 5 oz. Container would increase sales. The low estimate for the 10 oz. Container would provide a negative contribution. Risking such an outcome is not in the best interest of the Skin-Toque

Corporation, especially in such a competitive market. With the probability considered, the amount of pay-off for both containers is similar. The amounts are only different by 6,000, which is a small amount when the loss is incremental. (See Attachment 6) Last, the test market would incur cost and not prove to be reliable. A test market will cost $30,000, yet even with perfect information would not be worth that amount. (See Attachment 7) Tests will include inevitable human error and will not supply perfect information. Because of this, a test market will not be necessary to the process. Introduction of the 5. Oz. Entertainer would be sure to increase sales and even show incremental contribution after centralization of the current package. The CPU is similar to the CPU of the current package. Introducing a new package would allow the company to keep up with industry trends and maintain the high quality positioning strategy. Attachment 1- Customer Environmental Analysis Who are our current and potential customers? Skin-Toque currently sells its products to women who seek a premium priced, unique shaving product. These women seek a higher quality shave than provided from soap and a razor, yet look for wet saving” products.

The users of the product are usually the purchaser of the product. Women who work outside of the home tend to shave more often. Any do our customers do with our products? What needs towed satisfy? Skin-Tissue’s shaving gel allows the user to moisturizer, reduce irritation, experience a comfortable shave, have a better quality of shave, and get vitamins while shaving. Women that shave more often need to purchase the product more often. Complimentary products used along with the gel include razors and razorblades. Where do our customers purchase our products?

Products are sold in food and drugstores through wholesalers. Products are currently placed in the women’s personal care section of the stores. Currently the company is questioning whether to place the product in another section of the stores, along with other shaving products. When do our customers purchase our products? Our products are purchased year-round, but consumption occurs more frequently during the summer months. Promotional offers and events affect the purchase positively. While promotions will not encourage consumers to shave more, the consumer is encouraged to buy a particular brand.

Why and how do our customers select our products? Our shaving lotion allows consumers to shave easier while moisturizing. It contains aloe, vitamin E and additional moisturizer. Women stated that their ideal shaving cream allows them to shave easier, reduce irritation, and moisturizer. Our product is also in a package formulated to not leave a ring of rust in the shave area. Customers buy shaving gel to shave either their entire leg, from the knee down, their underarms, the bikini line, or a combination of the areas. Our current customers are extremely brand loyal and tend to only buy our products.

Current customers are satisfied with our price while non-customers felt that the price was a little high, but they would buy the product because of the added features. Price does not play an important role in the decision making process of the potential and current customers. Who do potential customers not purchase our products? The creams, lotions, and gels category is only one category of women’s shaving products. Compared to methods such as soap and razor, electric razor, waxing, tweezing, and depilatories; creams, lotions, and gels have negative attributes. They can be more expensive and not last as long as other ethos.

There are also competing brands with varying sized and priced gels, creams, and lotions. Attachment 2- Competitive Analysis Who are our major brand, product, generic and total budget competitors? Brand competitors include Assassinate, Satin Care, Soft Shave, Avenge Therapeutic Shaving Gel, Inverness Ultra Lubricating Shaving Gel, and Soft and Silky Shaving Gel. Product competitors include 6 oz. , 7 oz. , 9 oz. , and 10 oz. Sized gels, creams, and lotions. Generic competitors include soap and razor, electric razors, wax, tweezing products, depilatories, and electrolysis.

Total Budget competitors include pharmaceuticals, groceries, and health and beauty items. What are our competitors’ key strengths and weaknesses? Competitors have a key strength in their packaging. Aerosol containers are preferred by consumers. Skin-Toque has not currently implemented a switch to aerosol containers from the tubes and plastic bottles they use. A weakness of the competitors is that their products have not been sold at every location that sells Skin-Toque products. What are our competitors’ key marketing capabilities in terms of products, distribution, promotion, and pricing?

Competitors excel at their advertising and promotion and research and ounce for their shaving products. Advertising and promotion in the industry overall has increased, which has been noted to be a factor of the growth in the industry. What response can we expect from our competitors if environmental conditions change or if we change our marketing strategy? Because of the competitive market, a change in our market strategy would entice competitors to alter their strategies. The industry has shown to change with the environmental conditions. Wide acceptance of the aerosol container has shown the ability to change.

Is this competitive set likely to change in the future? If so, how? Who are our new competitors likely to be? Since women’s wet shaving products are a newer concept, barriers to entry are fairly low. New competitors may include companies involved in men’s shaving products and companies invested in products that are complimentary to shaving gels, creams, and lotions. Attachment 3- SOOT Analysis Strengths Strong market presence in shaving segment (about 30% of the market captured) Strong differentiating strategy Premium pricing strategy Product location distribution advantages over competitors Weaknesses