Packaging Update for Soft and Silky Shaving Gel Essay Example

for Skin-Tique. One challenge was that women had grown accustomed to aerosol cans, which have been traditionally used for men's shaving cream. Ms. Courtwright now faces the decision of whether to continue producing the gel in tubes, completely abandon the brand, or reintroduce it in aerosol cans. Based on feedback from focus groups, it was determined that producing the aerosol can is the preferred option. Soft and Silky customers showed great loyalty to the brand, while non-customers did not exhibit any brand loyalty.

The focus should be on both customers and non-customers in order to capitalize on brand loyalty and generate more loyal customers for the Soft and Silky brand. Many non-customers are likely to switch brands if the product is packaged in an aerosol can, as the current tube packaging is the only barrier to purchase.

Brand Contribution and Forecast

5 ? ounce tube

The sales of the current tube package in 2002 amounted to slightly over $3.7 million. After deducting the cost of goods sold, which was $784,000, the gross profit was approximately $2.9 million. The largest costs thus far have been advertising and promotion, totaling just over $1.1 million.

After deducting overhead and administrative costs, the tube package contributes approximately $1.3 million. However, the introduction of the new aerosol can will result in a change.

5 ? ounce aerosol can

The sales prediction for the 5 ? ounce aerosol can is just over 11 million ounces. This translates to a total sales volume of slightly over 2 million cans. The sales price is $2.79, but only $1.67 per can will be made as sixty percent goes to rack jobbers and retail outlets. Even

with a conservative estimate, the 5 ? aerosol can is expected to generate around $18 million in sales.

After subtracting the test market cost of $30,000, the one-time supplier set up charge of $10,000 and maintaining the same cost of goods sold and variable costs, the 5 ? ounce aerosol can has an expected incremental contribution of $1.6 million. The high estimate forecasts sales of 11,044,000 ounces, which equates to around 2 million cans. Accounting for the variable and other costs, the brand should have a total incremental contribution of approximately $1.7 million.

10 ounce aerosol can

The low estimate for the 10 ounce aerosol can predicts production of 1.5 million cans, resulting in approximately $3.8 million in sales (calculated based on a price of $4.25 and deducting the percentage to retailers and rack jobbers). After deducting the same costs, the 10 ounce aerosol can will have an anticipated incremental contribution of about $1.4 million.

The high estimate predicts the sale of approximately 1.2 million cans, amounting to 12,245,000 ounces. This high estimate also forecasts $1.1 million in sales. It is evident that the 5 ? ounce can is more likely to contribute incrementally to a higher amount.

The Test Market

Introducing both can sizes, the test market will cost $30,000. Despite the fact that the smaller can is a half an ounce smaller than the typical size, the focus group results indicated positive reception for both can sizes.

However, the added benefits of Skin-Tique's Soft and Silky Shaving Gel include the absence of harmful CFC's and a rust-proof bottom, which are currently standard in shaving and bath products. Masters believes that only one size should be tested in the market,

but it is actually the perfect opportunity to introduce both sizes. If only one size is introduced, it will be difficult to determine if consumers chose the product based on the brand name, cost, or size. By introducing both sizes, Masters and Courtwright can gather enough information to decide if one or both sizes should be produced.

Conclusion

Skin-Tique should continue producing Soft and Silky Shaving Gel and introduce the aerosol can in a test market setting.

Although Masters is cautious about introducing both can sizes, this is the only opportunity she and Courtwright have to determine which size is more popular among customers and noncustomers. Both sizes received positive feedback from the focus groups, but there was no clear preference in terms of size. While some participants liked the 10 ounce size because it would require fewer purchases, new customers might hesitate to buy it at the $4.25 price on the shelf, especially considering that their competitors' products are mostly priced at $3.99 or lower. Soft and Silky Shaving Gel may represent only a small portion of the overall market, but it should still be pursued. Women will always have a need for shaving. As shown in Exhibit 2's graphs, the demand for shaving does not significantly decrease based on the season.

Masters and Courtwright should not only update and expand the Soft and Silky line, but also explore new opportunities. Research indicates that many women moisturize after shaving, so the company could consider offering a body lotion that can be sold alongside the shaving gel. Additionally, Soft and Silky should consider producing a travel size version of their products, as there is a limited availability of

women's shaving products in smaller sizes.