Chizingc Soap Case Study
The main competitive products in the premium sector were soaps such as Roger and Gallet, Penhaligon range, Yardley, Morley and three internationally available premium soaps. The prices for the 150gm bar for the 5 main ranges were: £1.60, 1.75, £1.85, £1.95, £1.45. There was some evidence that the price elasticity of the premium product sector was fairly low. Consumers bought the product primarily on perfume and image rather than any other product attribute. Very high prices were charged for soaps that were part of ranges such as Rive Gauche; around £3.00 for the 150 gram equivalent. As the companies sold very little soap in these ranges they were not particularly worried about the effects of other products cannibalising brand sales. They were prepared to see Chic Soaps take on the sales of perfumed soap to a wider market.
3. The size of the total toilet soap market was around £190 million at retail. The top quality premium soap market was estimated to be 7 per cent of the total; it was growing slowly as the deodorant market came under pressure because of the environmental problems associated with aerosol sprays; other growth factors included the expansion in showers, and the expansion in the number of single …show more content…
The costs of packaging would be high. High quality packaging with the appropriate perfume design on the label would cost £0.14 per unit; with a minimum print run of 40,000 units. It was anticipated that gift packs of the five perfumed soaps for the Christmas season would be an additional £0.45 to produce with a minimum production run of 25,000 units.
10. The company had access to five of the leading perfumes in the country. These accounted for approximately 20 per cent of total fragrance sales - the market has been and will remain highly fragmented. The costs of incorporating the perfume in the soap was £0.40 per unit based on a minimum annual quantity of 300,000 units; £0.65 per unit based on an annual quantity of 200,000 units, and £0.80 on an annual quantity of 100,000 units.
11. The soap base was widely available from a number of alternative suppliers. Costs varied considerably from year to year depending on the commodity market; in the year of the plan the base costs for a 150 gram bar were £0.08 for the highest quality.
12. Filling, molding and packing machinery could be bought from a variety of sources. A small but complete production line would cost around £25,000; it would be able to produce 1200 units per hour, and would occupy 2000 square feet of factory space. Changing the perfume and the packaging for each new production run would take around 2