Parvaderm Case Analysis
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Parvaderm Case Analysis
Case Sypnosis
Background info
Parvaderms 2004 sales were $258,000,000
Soft & Silky Gel sales in 2004: $3,724,000
Unit volume: $1,960,000
Brand contribution: $1,363,900
Parvaderm places the Soft & Silky shave gel as a higher quality, higher priced product for a woman who “considers herself special.”
Soft & Silky was introduced 14 years prior to the time of the case in 2004
Soft & Silky Shaving cream had always been sold in a tube due to lack of technology to produce aerosol containers. All products were sold in tubes, bottles, and jars
Soft and Silky Shaving gel tube package would produce a 0.32% decrease in sales in 2005 if no new package was introduced
Currently only produces 5.5oz tube container priced at $3.95 retail
Rack Jobbers were used for product placement in personal care sections of the store and they received a margin of 20% off retail prices
Retailers also received 40% off suggested retail price
Problem Definition
How can Parvaderm introduce the most desirable package for Soft & Silky shave gel to increase unit sales and obtain more brand loyal customers given the uncertainty of market acceptance of container sizes, cannibalization rate, and incremental sales growth?
Alternative Identification
Introduce products with no market test
Introduce 5.5 oz
$10,000 set up charge for production line & graphics
100,0000 minimum order with cost of $0.24 each
Uncertainty of customer response
Introduce 10 oz
$10,000 set up charge for production line & graphics
100,000 minimum order with cost of $0.29 each
Uncertainty of customer response
Conduct market test
$10,000 set up charge for production line & graphics
$35,000 to assess consumer response to proposed container
20,000 minimum order with 10oz cost of $0.29 and 5.5oz cost of $0.24
Do nothing
Continue using tube containers
Keep current 5.5oz size
Lose 0.32% decrease in sales
Produce estimated 1,953,668 unit sales
Relative Information: Internal Factors
Objectives, etc.
New package design was based on:
The decrease in sales volume
Growth strained manufacturing capacity which caused the fill rate to drop, losing sales
No expansion plans for the next 3 years
Aerosol had become the dominant container to use
Outsourcing a contract filling company
There were rust proof cans, no chlorofluorocarbons, an adequate safety stock can be maintained, and product can be produced and shipped from the facility at a lower cost than tube containers are manufactured by Parvaderm. They can only produce 5.5 oz and 10 oz containers
Costs:
$0.29 per 10 oz container, minimum 100,000 unit order
$4.25 retail price
$0.24 per 5.5 oz container, minimum 100,000 unit order
$3.50 retail price
Parvaderm increased advertising each year since 1995, reaching 31% of sales in 2004$79,980,000
Unit