Posted at 10.06.2018
This research analyzes the MEM Company, Inc. circumstance. The studies of the analysis are shown in discussions defining the central issues, determining strengthsweaknesses opportunitiesthreats (SWOT), producing alternative strategies, assessing substitute strategies, and selecting the most likely strategy.
Reviewing their slow sales over their most recent operational 12 months in 1980, MEM Company, Inc. was considering ways to encourage sales for the company's line of men's toiletries. Two main options surfaced; either 1) to extend distribution into food stores or 2) to expose a new brand called Cambridge.
MEM has a strong value delivery system with good assistance with vendors, offering retailers an extended payment period for Christmas shipments.
MEM experienced the largest sales team of 50 on the market. MEM's commission-based remuneration induces proactive promoting of sales. Thus it can maintain low turnover and top quality and experience above the industry average. With an experienced sales force to adopt of customer needs, MEM can maintain a long-term profitable relationship with its customers and convert them into "true friends". As it has an improved sales force than its rivals, it is within a good position to reach out to food store chains, many of that are acquiring drug stores.
MEM has effective marketing communication channels such as advertising marketing promotions, sponsorship campaigns and promotional programs. This brings about high and effective brand understanding. It has equivalent brand awareness with Old Spice even though Old Spice acquired spent 1. 5 times more than MEM has on all six lines.
MEM has achieved an increased syndication penetration than almost all of its competitors particularly in independent drugstores. The distribution stations of MEM are better fitted to medium to high end fragrances, which include MEM's marketplace of mid-range fragrances.
MEM has taken care of its competitiveness in the mid-range market through their six products. Led by British Leather (regarded as a "cash cow"), and its high syndication penetration in stores, MEM's market share had expanded and positioned second in terms of market talk about in 1979.
The insufficient production efficiency, repeated need for short production works, and seasonal sales, greatly restricts MEM product line. For starters, some of MEM products such as gift idea sets need a great deal of labour because they are not automated.
Another weakness would be the fact that almost all of MEM's market talk about revolves around British Leather. Putting almost all their eggs in a single basket is a high-risk move, as the inability of the brand can extremely detrimental to MEM.
One of the management's weakness is their over emphasize on pricing to draw in customers. Though it holds true that price is a significant factor for sale decisions in the fragrance industry, they should concentrate more on the other "wants" such as hedonic appeal. Some might dispute that MEM has six lines in the same mid range market. However, these six lines make significantly less revenue than British Leather. This may claim that MEM has made a mistake in segmentation, targeting or positioning. Failing to end the weaker brands also deprive MEM of growth in other areas.
MEM didn't raise their prices as quickly as the others in the industry despite growing cost. While this might make their product less expensive for a while, it could have reduced the elegance of the brand in the long run. Furthermore, the failure of increasing prices along with the industry lowered MEM's profit percentage.
The slogan "All my men wear English Leather" is outdated.
MEM also doesn't have brand collateral in the blissful luxury fragrance market as it depended on other brands right away.
MEM also has a budget deficit in the second half of the entire year. It is likely to require debts financing too.
Market Development: By growing into new market segments like major food stores, MEM can acquire yet another distribution channel to attain out to a wider consumer market.
However, MEM will likely face strong competition from existing rivals with presence in the major food chains channel. For instance, Old Spice, who's their strongest competition in the men's toiletries market has recently taken 20. 8% of the marketplace share (make reference to Exhibit 6).
Market Penetration: It is less high-risk since MEM just needs to leverage on their existing resources and functions. It also reduces the advertising cost for MEM by concentrating on the advertising efforts on the six existing lines to improve brand awareness amidst the consumers, rather than spending a huge sum to promote a fresh product.
New Product Development: MEM thought to attract new customers and keep maintaining consumer and trade affinity for the men's toiletries market by launching the new product Cambridge. There is a good response from preliminary marketing research work for Cambridge. If effective, this increase income for MEM.
Lastly, the cologne market gets increasingly rewarding where growing market of retail sales of 10% is approximated at $224 million. Hence, MEM can turn to capturing a share of this.
MEM's 6 lines of fragrances experienced powerful competition in a fragmented men's toiletries market with 60 companies and 200 brands competing for consumer acquisitions. This is due to the low obstacles of entry on the market to provide exclusive product release. This is exacerbated by the fact that competition are spending more on advertising to put their product, which can create a better brand awareness relatively. Shulton spent 1. 5 times the amount put in by MEM on advertising.
As a result, Consumers can simply find substitutes of MEM's products like Cambridge and swap to some other companies' products anticipated to improve in consumer flavor and preferences. This is especially so since men in the age group 18-34 are thought to move brands the most easily.
Furthermore, British Leather is getting rid of its charm to men average aged 25. They believe that they have grown out of the brand which is associated as a more teenage scent, and want for superior fragrances instead.
Lastly, many drugstores that are buying up the meals stores make them one entity. If MEM were to increase in to the food stores, they could face the condition of drugstores unwilling to supply them with additional shelf space for his or her products.
There are benefits and drawbacks of MEM moving into food stores, a fresh market segment, with the current products it offers.
MEM's good reputation with stores will be helpful for them to fight for the market share that they have not contested much in. This will help MEM to concern for market share where their strong rivals have only 25% talk about in.
MEM's product range mainly focuses on the middle range, but the products at the lower end of the center range like Lime or Timberline (Show 1) can be launched into the foodstores since their current sales aren't good.
By distributing to food chains, MEM would be able to save on advertising costs if they choose to market its English Leather brand under the 'Cooperative Advertising Program'. In doing so, the promotion achieved may allow MEM to lessen its budget on other more costly types of advertising such as television set commercials.
MEM's customers have opinions that the products that all of the products is limited by shelf space. By increase shelf space, MEM is able to display almost all their products that may increase sales.
MEM is able to re-allocate budget effectively by using communication budget for food string to defeat 20% constraints.
Strong and direct competitors occupied three fifth and MEM does not have first-movers advantages. MEM must plan its online marketing strategy well in order to contend with its competitors
Might create unfavourable brand relationship since foodstores have typically stocked only the lower-end men's toiletries. However, mid-range toiletries' like old spice, Mennen pores and skin Brenner (display 6) have previously ventured in to the food stores and captured a substantial show in the foodstores. It really is a project that MEM should follow suit
New Product development: To introduce a new brand called "Cambridge". Cambridge was going to be focus on at men aged 18 to 34 and was to be sold at $10.
Periodic new product introductions in the men's toiletries market allows MEM to maintain consumers, trade interest and preserve sales. The final products MEM arrived was Racquet Golf club in two years earlier, and MEM has been introducing new product line every 2 to 3 3 years in 1970s.
Launching Cambridge might gain sales with potential new customers switching from competitor brands like British Sterling, Jovan and Brut in the medium price group. That is further supported by research evidence that that targeted consumer market has a high tendency to switch brands.
The British Leather brand was known for its youth emphasis, which explain by their customer as "the brand 'all the people wore in school'" (Display 12). This enables MEM to entice a different aim for group and record more customers since Cambridge was perceived as common, understated, and dignified.
New product may miss out to competition. Cambridge's biggest risk will be Shulton's Blue Stratos because they are targeting the same market. Blue Stratos would be launched six months sooner than Cambridge and backed by a $12-million advertising budget, which is 4 times higher than Cambridge's highest organized budget (Show 14). Entering a market with the competition having the first mover benefits and a greater communications budget is normally bad in the short term for any company.
Several experts remarked that Racquet Club still has prospect of expansion. However, if Cambridge premiered, it could eat in to the sales of MEM's other product lines such as Racquet Membership, Lime and Timberline.
MEM will maintain an Advertising problem. If Cambridge is created, MEM must have a huge budget to support its strong advertising. However, among the list of three possible advertising strategies arrived, MEM could not even afford the cheapest one. Although some of people in MEM recommended that Cambridge could hold British Leather's name, consumers perceived British Leather as a brand for younger age group, but Cambridge as classic (Exhibit 12). Therefore, let Cambridge carry English Leather brand name to save lots of advertising cost wouldn't normally be a sensible move.
Cambridge is also the name of an cigarette product under Phillip Morris, which can cause negative associations with the perfume.
Firstly, we reach a consensus that MEM should carry its Product Development methodology and thus delay the release of Cambridge. The company should proceed with its Market Development plan of expanding into food stores. Even before entering this new market, MEM already rated second predicated on market share research thanks to its elaborate syndication channels. By widening into food stores, MEM may overtake its opponents through this new product channel.
Secondly, the strain on MEM's advertising budget with regards to its original 6 type of products can be tackled by selecting certain products to be marketed as "limited model" products for seasonal sales. For example, by removing Lime and Musk from the product range, Lime only added to 2. 3% of buck sales (least profitably product) as shown in Display 5, the business frees up funds to aid the 4 left over products, including the more successful English Leather range and the relatively newer Racquet Club line. By causing Lime and Musk 'limited model" products that are closely promoted through the festive seasons as gift collections, customers may be more obliged to fill up on these surprise models. MEM should therefore concentrate on their existing products that are doing poorly in the industry and not make an effort to push for a new product altogether A proven way to add value its current product would be to draw in customers by using goblet packaging for the middle range products. With advanced product packaging for products at similar prices, customers will be more willing to buy MEM's products as more value is established for the kids as it is differentiated from all of those other market
Finally, MEM could build on their key strengths as mentioned above. MEM has an "above industry average" productive sales team but responsibilities are based on geographic territory. Furthermore, due to the changing consumer requirements, each with their products may require completely different marketing strategies. Therefore, MEM could continue steadily to tap on the efficiency of these sales force but reorganized them with their product lines. That is to build more opportunity to influence product setting and campaign in MEM's different syndication channels.