CleanSpritz Group8

Product Management
Case - CleanSpritz
Submitted To:
PROF. DEVIPRASAD GHOSH

Assistant Professor,
Institute of Management Technology Hyderabad
Group - 8
Anindya Basu 18A1HP081
Ujjwal Raina 19A1HP076
Shreshth Saxena 19A3HP602
Madhav Kothari 19A3HP664
Utkrisht Mallick 19A3HP674
This study source was downloaded by 100000851814403 from CourseHero.com on 09-05-2022 11:46:05 GMT -05:00
https://www.coursehero.com/file/67324012/CleanSpritz-Group8docx/
Q1: Explore the delicate balance of responsibilities a company faces in
serving a broad range of stakeholders when responding to business
environmental concerns.
The list of responsibilities increases when a company faces a change in consumer demands. In
this case it was consumer trend shifting towards more environmentally friendly products than the
current ones that made the company view a new perspective. This turnaround brought the
following changes in the product and the company’s finances-
 14% cost savings in packaging and delivery.
 Packaging material volume reduced by 85%
 100% recyclable.
 Firm and rigid design hence enables easy standalone display on shelves.
 Easy adoption by consumers.
 Can be shipped in existing shipping containers used for 3:1 concentrate.
 Less product storage required
 33% additional start-up cost for first 1 million SUs.
 Dependency on 3rd party for packaging.
Consumers- This improves the company’s image in the minds of the people. They view them
as more socially responsible than the ones who ignore the change in consumer demands. Hence
the responsibility to keep the consumer demand in focus has to always be prominent.
Stockholders- However, the initial setup cost and the time it takes for the adoption of the new
product by the consumer base separate from the loyal consumers often hits the finances hard.
This purview is not altogether liked by the company’s shareholders who wish to be in profit and
make money. Thus, tackling the shareholders’ point of view and the company’s responsibility to
them boils down to the performance of the product in the market and patience on the firm’s part.
Society- The responsibility to the society is the third most important factor in these situations.
If the people find you against the generic view of pollution free and environmentally friendly
products, your company is seen as socially inept. It paints a picture of selfish business and thus
reduces its consumer base immensely. Hence balancing this responsibility with the other two is
very crucial to keep your company and its products floating in the market.
Q2: Explore the decision-making process for product extensions. Explore
the creative attempt to revive the mature brand.
Product extension is a strategic decision in which an established product brand name is placed on
a new product item. This item must belong to the same product category and should differ from
the existing products on the basis of flavours, added ingredients, colours, forms and package
sizes. The product extension process is carried out in order to get a likely boost in sales, demand
and market share. At the same time, producer need to ensure that the product being launched
leads to minimum cannibalization i.e. decreasing the sales revenue, sales volume or the market
share of the existing products. In the given case, there were three options that were consideration
in order to revive the mature brand i.e. CleanSpritz.
 Option-1: Concentrate Re-launch

This option suggests re-launching the existing 3:1 concentrate with heavy promotion
focusing on the environmental benefits. It would lead to reduction in packaging i.e. about
45% less packaging volume than compared to the diluted spray. It would cause less
pollution from freight and would lead to reusing of old spray bottles. It was estimated that
this option would increase the current 16 oz. concentrate sales by more than 5M standard
units. The rate of cannibalization at the expense of lost diluted spray sales was projected
to be about 43% by Beaton & close to 55% by MJ Brenner’s finance team.
 Option-2A: Refill Pouch

This option suggests an extension to the existing product line with a stronger 4:1
concentrate in a 6.4 oz. lightweight 100% recyclable pouch for 32 oz. bottle refill. It
would lead to reduction in packaging materials volume by 85% & would lead to 14%
cost savings in packaging and delivery than compared to the diluted spray. The 4:1 refill
concentrate cost of the pouch would rise by 33% due to initial start-up investment for the
first million SU’s produced.
 Option-2B: Refill Dissolvable packet

This option also suggests towards the extension of the existing product line with a
stronger 4:1 concentrate which will be filed inside an innovative 6.4 oz. 100% water
soluble packet for 32 oz. bottle refill. It would lead to reduction in packaging materials
volume by 90% & would lead to 6% cost savings in packaging and delivery. The 4:1
refill concentrate cost of the packet would rise by 41% due to initial start-up investment
for the first million SU’s produced.
The rate of cannibalization at the expense of lost diluted spray sales for both option-2A &
2B was projected to be about 60% by the CleanSpritz brand team & close to 80% by MJ
Brenner’s finance team.
 Option-4: Base Case / Status Quo
This option suggested toward making no changes in the short run. And further consider
re-launching the existing 3:1 concentrate with 99% biodegradable spray in 2 years or a
cartridge system after a 12-month period.
Q3: Analyse the cost and benefit of first mover.
The first-mover advantage pertains to the benefit gained by a firm that first launches a product or
service in the marketplace. The first-mover advantage allows a company to create strong brand
awareness and product / service loyalty before other market entrants.
Following can be the benefits that CleanSpritz will enjoy as a first mover:
 Technology Leadership: As a first mover, CleanSpritz will be the first one to

introduce the technology and it will make it difficult for other companies to replicate. In
addition, they should apply for patents and protect their advantage. Equipping the product
with new technology will give them a scope to earn more. From Exhibit 6, we can see
that they are having a retail margin of 9% across 16 oz concentrated, 6.4 oz concentrated
pouch and 6.4 oz dissolvable packet.
 Brand Recognition: Being a first mover in developing the sprayer and concentrations
across the cleansing products of MJ Brenner, they can create a strong brand image and
build their customer base before any competitors enter. Also, coming up with an
environment friendly product will add up to the reputation and will enhance the
recognition of the brand.
 Control of Resources: MJ Brenner can enter into partnership with the suppliers and
vendor and restrict the use of resources by their competitors. This will make it difficult
for the new entrants to get the similar resources to develop a competitive product.
 Switching Cost: Generally, first movers enjoy the benefits of switching cost. When the
competitors will come up with a new product, customers may resist changing the brand
as they might have to incur high switching cost.
Following can be the costs that CleanSpritz must bear:
 Imitation cost vs Innovation cost: We all know that cost of imitation is less than
the cost of innovation. From exhibit 5, we observe the cost of introducing a new
technology of cleaning spirits. Competitors can imitate the technology and reduce the
revenue for MJ Brenner.
 Cost of Failure: In the mode of developing a new technology, CleanSpritz will undergo
a lot of failure during the process. At the same time, the second movers will not bear this
cost and reduce their expenses.
 Product Adaptation: MJ Brenner will have to persuade customers to try their new
eco-friendly cleaning product (CleanSpritz). Although, the consumers have suggested
that they want an eco-friendly product but it is seen that CleanSpritz concentrate got huge
consumer interest but the actual sales lacked far behind. So, it will be adding additional
cost to educate consumers about the product.
Q4. Demonstrate the importance of product packaging in FMCG for

product success and in the marketing mix.
With evolving markets, packaging is an important tool for communication and branding of the
said product. It delivers brand identification as well as label information. They play a key role in
reinforcing brand values over time. Packaging enhances the positioning of products and shapes
the consumers' perception, thereby becoming an important factor in point of purchase decision.
Packaging drives the way a consumer experiences a product.
They have the power to attract the customer’s attention as well as communicate the benefits and
offering of the product.
Packaging can create a powerful shelf presence, differentiating itself with the help of visual
contrast. Packaging enhances the functional as well as marketing role.
Smart packaging decisions can help reduce costs and possibly lead to higher profits.
From the case we find the importance of packaging as follows:

1. "Environmental friendly product" was the key message communicated on the packaging.
2. Consumers were concerned with the wasteful packaging harming the environment with large
carbon footprints (2008).Consumers preferred environmentally safe packaging. 70% consumers
were open to trying concentrates to cut down on packaging for environmental reasons. (Exhibit
3)
From Exhibit 4 we see the consumer preferences in packaging options.
Q5. Issues that deem necessary for product/brand manager?

There were several issues that needs have attention of product/brand manager:
 People were getting more aware about the environmental concern. They don’t want to use
a cleaner which contains non bio-degradable substances. Since, the company was formed
at time of 20 years ago when there was much less concern about environment, company
needs to convey to customers that they are using the “green” product and hence they need
to reposition their product as “environmental friendly” ingredients in the mind of
consumers. Also from exhibit 3 it is clear that, when asked about impact of chemical in
household, the jump was 55% to 70% in a period of three years. Hence people were
looking for eco-friendly products, and brand/product manager should make their product
with keeping this view mind.
 It is also mention that packaging, size, shape of product has been slightly changed since
the inception of the product. So people are not able to associate it to contemporary
environmental friendly image. Hence with change in packaging, shape & size that would
communicate “right message” to customers is necessary and at the same time these
packaging should be bio-degradable & would reduce carbon footprint. Also since the
redesigned packages would take less space at shelf in retail store, that would be
convincing to retail stores to display it easily. Continuously updating is the key for any
business to success in long run.
 CleanSpritz was being market leader (from table 4), was losing its sale from small
independent brand i.e. from private level products because of low pricing and products
being homogeneous. This is the another aspect where product manager should pay
attention. So, they need to take care up this aspect to protect & grow its market share. As
the people in All- purpose surface cleaner market were very price sensitive, offering them
at low price as compared to private-label competitors may see them winning their
customers.
 Their sales were continuously degrading from past 5 years. Also in 2009 when they
launched 3:1 concentrated version. It went pass without much notice by the customers.
So they might need to reconsider their advertising strategy.
Q6: Present detailed quantitative analysis of the strategic alternatives in

the case with your recommendations.
Based on the quantitative analysis (Excel sheet attached), we make the decision based on the
highest Net Profit from among all the available options. The following data points have been
considered during the calculation:
Projected SUs
Projected Revenues
Projected Costs
Projected Contribution
Net Profit
The following considerations have been made during the quantitative analysis:
From the Case (pg10) we find the cannibalization rate given for both brand team and finance
team for the CSUs (4:1) as 60% and 40% respectively. Hence we have calculated the final CSUs
subtracting the cannibalization estimates.
Since data for base year 2010 has not been provided and growth % for 2011 has been provided,
we have considered 2011 as our base year for calculations.
Based on the analysis, we recommend going with the re-launch of 3:1 conc. approach as it is
feasible & the most profitable. Re-launching of the product is done in a way that consumers
perceive it as an environmental friendly product with biodegradable packaging.
Powered by TCPDF (www.tcpdf.org)

CleanSpritz Group8

Uploaded by

Copyright:

Available Formats

You might also like

CleanSpritz Group8

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CleanSpritz Group8

Uploaded by

Copyright:

Available Formats

Product Management

PROF. DEVIPRASAD GHOSH

 Option-1: Concentrate Re-launch

 Option-2A: Refill Pouch

 Option-2B: Refill Dissolvable packet

Q3: Analyse the cost and benefit of first mover.

 Technology Leadership: As a first mover, CleanSpritz will be the first one to

Q4. Demonstrate the importance of product packaging in FMCG for

From the case we find the importance of packaging as follows:

Q5. Issues that deem necessary for product/brand manager?

Q6: Present detailed quantitative analysis of the strategic alternatives in

You might also like