Product Brand Management

Assignments

Submitted To:
Prof. Pallavi Mittal
Submiited By:
Palak Shah
Roll no-44
Term-6
 Case-1
Household Product (India) Limited (D)

Background of the company:

Household product ltd., a public limited company, was set up in 1940.The

company was a leading marketing organization in the country and was
engaged in the manufacturing and marketing of all kind of consumer products
of household use. It is a profit centre organization.
The new product in toilet soap was SEHRA which was made from pure
vegetable oils and exotic jasmine fragrance and introduced in two cities Indore
and Hyderabad in oct 1995.

There are various forces which have resulted, which are as follows

Internal force:
High profit margin and growth of the company.

External force:
Low price sector profits on decline , due to fierce competition; jasmine
perfume soap of competitive brand, achieved 10% share of high price sector in
2 years.
The new brand of soap is an addition to existing product line.

Market Focus:
Product is a substitute for customers who need features of jasmine perfume,
an existing need. In addition, the focus is on widespread vegetarianism and
religious feeling among customers, latent need is considered. So, pure
vegetable oil was introduced in place of animal fat in soap.

Economic value for customers of this product is 50 paisa more than competing
product butte customer here, will get an added advantage of using a soap
made of vegetable oil.

Product Launch Plan:

Product test was conducted and test market plans were developed. Three
plans were introduced:
1. Internal sources like sales data were used.
 2. Audit of a sample of retail shops like information about purchases, sales
of this product and other brands of toilet soap.
3. Survey among consumers by Marketing Research department.

Market Share by Retail Shop Audit Sehra vs. Jaimala (Exhibit 2)

Month by Month Analysis of % of Household’s buying Sehra and Jaimala
(Exhibit 4)
(AS GIVEN IN THE CASE)
1. Decisions taken at critical stages of product development:

Concept development and testing:

Concept taken- toilet soap in the high price sector that contains jasmine
fragrance and made from pure vegetable oils .Testing was done with the
approach of standard test markets.

Product development:
Task was given to R & D to develop two different jasmine perfumes, with better
impact than perfume of competitive brand.

Market testing:
Test the product in markets which are responsive, like Indore as well as in
markets which are not responsive to this product, like Hyderabad. Team
decided to run the test for a period of 9-12 months.

Commercialization:
The company will go for commercialization, only after the test results .Extension
of product nationally was based on performance in test market. Sales of the
company existing brand were used as benchmark to evaluate the performance
of new product.

2. Launch of product nationally:

Product should be launched with some consideration

 Focus more on income group A and that too more on non responsive states,
as they can make the overall strategy in loss.
 Target Jaimala customers in responsive state like Indore, as Sehra is not able
to gain share from Jaimala.
Case-2
 Dominion Motors Case Analysis

1) What, precisely, is the problem here?

The problem is that DMC's largest consumer of oil well pumping motors
has ranked them the #3 supplier, and not only could this impact
purchasing from this customer (Hamilton), other smaller companies
follow this large company for their purchasing decisions, so that they get
the benefit of copying their R&D decisions.

2) What are the causes of the problem?

Power companies implemented a graduated monthly base charge per

HP at installation, to mitigate ineffieciencies caused by overmotoring in
order to improve power factor. Upon the announcement of this change,
the head of Hamilton's EE department conducted testing on motors
from different manufactures and used starting torque as the deciding
parameter, in order to define the specifications of a motor which could
be used most economically.

3) Is this just a "brush fire" or an important problem?

This is an important problem because, look at sales potential for DMC in

this particular market.

1,000 new wells will enter production over the next 5 years, so that's
5,000 wells. Since DMC has 50% of this market, that would mean 2,500
potential sales. Per exhibit 2, the total cost to manufacture a 7.5 HP unit
is $714.00, and it is sold to large users for $1,200, for a net profit of
$486.00 per motor (the profit on mfg cost is 536.49 per motor.)
Additionally, there DMC sells about 15% of the control and panel-board
applications.

4) Other than lost dollars, what are the other implications if DMC loses
Hamilton?
 Other smaller companies that do not have their own engineering staffs
follow the purchasing decisions of the larger companies, so that they can
avoid the R&D investment. Therefore, DMC could stand to lose some of
that market as well (This is somewhat analogous to Zoll Medical, where
ambulance companies were highly influenced by hospital buying trends.
However, there is no interdependence here as there was in the Zoll case,
only.

Problem Definition

John Bridges, the chief electrical engineer of Hamilton Oil Company, has
concluded through motor testing that DMC competitors Spartan Motors
and the Universal Motor Company of Canada offer the first and second
choice motors on the market, respectively.   DMC’s position as the third
choice could prove quite detrimental to its market share because
Hamilton is the largest active oil company in Canada, operating over 30%
of producing wells, and Bridges is extremely influential in Hamilton’s
purchasing policy.   The test results will probably carry significant weight
throughout the industry because no other company operating in
Canada’s oil fields has an electrical engineering department.   Thus, DMC
will likely lose sales from companies industry-wide, as many will decide
to follow Hamilton’s purchasing policy.

Unit Contribution per Alternative

Alternative 1: 
Reducing the price of the motor will be a feasible option only for a short
period. As in the industry the companies want more of starting torque. So it
will work until the report is out.

Price of 7 ½-hp motor (P): $1,200

Manufacturing cost of 10-hp motor (k): $816
Unit contribution = P – k
                    = $1,200 - $816
                      = $384

Alternative 2: 
This is not at all a profitable idea
Price of 7 ½-hp motor (P): $1,200
Manufacturing cost of reengineered
Motor (k): $790
Unit contribution = P – k
                    = $1,200 - $790
                      = $410

Alternative 3:
Until the formal report comes out in the public domain till then there is
no large benefit for going for a new product. So wait till then. Manufacturing
cost + investment will have to be made.
Price of definite-purpose motor (P): $1,045
Manufacturing cost (k): $665
Investment (Fixed Cost): $75,000
Unit contribution = P – k
                    = $1,045 - $665
                      = $380

Break-Even Volume = "Fixed Cost" /"Unit Contribution" 

    = "$75,000" /"$380" 
    = 198 units

Alternative 4:

The 3rd alternative will encourage the trend of definite-purpose motors; they
won’t remain competitive in the market. So there is a need to contact and ask
them to test it again as tests had not produced data sufficient to define oil
pumping requirements. But it is tough to meet Hamilton.

Price of 7 ½-hp motor (P): $1,200

Manufacturing cost (k): $663.51
Unit contribution = P – k
                    = $1,200 - $663.51
                      = $536.49

Recommendation:

Alternative 4, trying to convince Bridges and Hamilton executives that their

test conclusions overly emphasize the importance of having the maximum
starting.