CleanSpritz Case Solution
The household users of CleanSpritz included housewives,house cleaners and the people living mostly at homes. However, any one could utilize the products of CleanSpritz due to its ease of use. The customers were inclined towards purchasing CleanSpritz since the company had effectively communicated the message of effective cleanliness provided by the use of CleanSpritz in the mind of the customers. Furthermore, before recession, people tend to purchase those products, which were expensive and of good quality, therefore people chose CleanSpritz over other brands.One major inclination of the customers to purchase CleanSpritz was that it was an all-purpose cleaning chemical spray,which people could use for cleaning window panes,kitchens,bathroom, and the convenience was the cause of customers’ loyalty towards CleanSpritz.
CANNABILIZATION OF CLEANSPRITZ
The re-launch of CleanSpritz with the new packaging of reusable bottles, which was done by refilling the concentrated CleanSpritz in the bottle of 32 in CleanSpritz, and it was expected that initially this step would increase the sales of the concentrated CleanSpritz as well as it would increase the sales of the original 32 in CleanSpritz, however in the long run, the use and spread of concentrated CleanSpritz will diminish the profits of the parent brand since the parent company is branded and expensive.Secondly, customers have become price sensitive therefore, they will not pay extra for CleanSpritz when they could get concentrated CleanSpritz at a cheaper rate. In addition to this,the customers have become environment conscious and are inclined towards the use of environmental friendly product, which is why the company has launched the eco-friendly product. Therefore, the customers would be more inclined to purchase the concentrate done, and these factor sal together will cannibalize the parent brand as well as it will reduce the sales along with the remaining market share.
EVALUATIO N OF THE ALTERNATIVES
Beaten proposed two alternatives to deal with the declining sales of the company,which are
The re-launch of existing 3:1 CleanSpritz concentrated with heavy promotion
- COST EFFECTIVENESS- The efforts that are made to save the cost of 0.15 in packaging is absorbed by the increase in the chemical cost.In addition this,the additional 6% spending will have a negative impact on the net income.
- THE RISK OF CANNABILAIZATION-The cannibalization risk is high in this option.According to the finance team, it would turn out to be 55%. Moreover, the company will cannibalize the diluted CleanSpritz by 55% and will affect the contribution margin.
- The environmental effect:If the company goes with his option, then the production will reduce the packaging cost and the freight cost.
Risk & Rewards.
This will benefit the customers in selecting the biodegradable version with the ecological packing as it will address the issue of the customers regarding the use of eco-friendly product, which will help the company in increasing its sales.
The risk associated with this option is that there are chances that the labeling standards imposed by the government will incur cost and affect the image of the company.
OPTION 2: ADDING A PRODUCT LINE, A STRONGER 4.1 CONCENTRATE WITH DIFFERENT PACKAGING OPTIONS:
Cost Effectiveness-This option will reduce the cost of packaging and delivery. In terms of pouch packaging,14% of the cost will be saved while in dissolvable packet, around 6% of the cost will be saved.
Retail cost Reduction: Both these developments will help to locate the items more effectively thus,saving the storage cost.It will also save transportation cost and less handling will be required.Therefore, this option will give 9% margin.
Cannibalization Risk:The cannibalization risk for this option is quite higher as compared to the 1st option.According to Claire’s report, the cannibalization effect will be 60% whereas,the finance department’s proposed effect will be of 80%.(MAJUMDER, 2014, july)……………
This is just a sample partial work. Please place the order on the website to get your own originally done case solution