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澳洲report阿根廷国家队官方赞助商范文：Queen of Shaves Case Analysis
2017-04-25 来源: 51due教员组 类别: Report范文
Queen of Shaves, a manufacturer for women’s persona care products including facial creams, hand and body lotions, and toiletries, sells their products through drug and food-and-drug stores. Aimed at the high end customers, the product witnessed an increase in sales from its initiation at 1986 to 1997, after which the sales started to decline. The management team is deciding on whether to change the product container from its original tube container to the new aerosol container that prevails the women’s shaving industry nowadays. This case analysis calculated the expected monetary value and EVPI regarding the decision of whether or not to change the container, to which size should they change the container, and whether or not to conduct a market research before changing the container. Calculations showed that they should change the container into a 10 ounce aerosol can but does not conduct the market test.
The product for Queen of Shaves pertains to the women’s shaving industry. The demand for women’s shaving is high and varies with different seasons. Popular methods includes shaving with razors or with electric shavers. Due to the demand for more moisturizing products, the product produced by Queen of Shaves has changed its ingredients to cater to the demand. In 1999, the market size for women’s shavers was $300 million with a 3% to 5% growth rate from 1994 and onwards. The number of competitors was low (2 major competitors) in 1994 and increased to 7 competitors by 1999. Silky Smooth Shaving Gel, although comes in the smallest size, was priced the highest amongst all the competitors. Major products were all packed in aerosol containers while Silky Smooth Shaving Gel continued to be sold in tubes.
Queen of Shaves, a manufacturer for women’s persona care products including facial creams, hand and body lotions, and toiletries, sells their products through drug and food-and-drug stores. In 1999, their sales was $225 million and the profit margin was 20%. Their product Silky Smooth Shaving Gel is targeted at the high end customers and required few changes in packaging and manufacturing. The product differentiated itself from men’s shaving products and realized a profit margin of 40%. The product has been sold in a tube since 1986 and manufacturing policy plans to continue with the current production capacity. Now the company is deciding whether the product should be changed to aerosol containers due to the declining sales in recent years, limited manufacturing capacity, and the trend in the industry packaging change.
Pros of changing the package
If Queen of Shaves chooses to change the package, there will be many positive aspects. According to the case, first, it will be environmental friendly because they will be able to eliminate the chemical chlorofluorocarbons in the product that is harmful to the earth’s ozone layer. Second, the new container will be rust-proof. Third, the new container lowered per unit cost because the supplier can produce and ship the product directly from its manufacturing factory. The firm plans to maintain the premium product image even with a lower cost.
Cons of changing the package
Despite of the various advantages for the new container, there are still some drawbacks. According to the supplier, the major drawback is that the container can only come in sizes of 5.5 and 10 ounce while the demand for the gel is typically about 7 ounce or 10 ounce.?
EMV and EVPI Calculations?
To calculate the EMV, I first calculated the contribution per ounce for the three types of products. From Table 1 attached below, we can see that the original product with 5.5 ounce tube had the largest contribution/ounce of $0.299, with the 5.5 ounce can following at $0.262 and the 10 ounce can contributing the least at $0.175.?
Next, the unit contribution is multiplied by the unit volume as provided by Exhibit 5 from the case to arrive at the incremental product line contribution under four different scenarios.?
Table 2 showed that under the low estimates, we will be losing money because the incremental sales will be negative. Under the high estimate, we add $43,103 value for the 5.5 ounce can and $120,201 for the 10 ounce can.
Finally, EMV is calculated by multiplying the chance with which the low estimate and high estimate happens by the value added under each scenario. The result was that the expected monetary value added for the 5.5 ounce can is $29,639 while that for the 10 ounce can is $61,084. Under the certainty condition, the best EMV could be $83,608. So the EMPI is $22,524, which means that if the cost for a test market is less than this number, then we should go ahead and continue with the test because it can increase our value by choosing the best strategy under a certain outcome.?
Having analyzed the pros as well as the cons of the proposed solutions, it is clear that introducing the 10 ounce can will increase the value for the firm highest. However, according to the case, the cost for a test market is $30,000, which is higher than the EMVPI of $22,524. This figure suggests that we should not conduct the test market because the benefit will not be able to exceed the cost. Even if we conduct the test and arrived at the EMV under certainty condition, we would not profit enough to offset the cost for the test market. So I recommend that Queen of Shaves adopt the 10 ounce can and does not conduct a test market.