Product - case study
Martha's Soaps began when her young daughter developed a skin complaint and it was traced to her having used a certain well-known brand of soap. Martha decided that soaps made only from natural ingredients would be a market winner. She developed a range, which were relatively expensive, but nonetheless sold well. Eventually, she was selling over half her output to just one large 'high street' retailer. Such a large exposure worried Martha, especially when the main buyer reported that it was undergoing a complete value assessment of its product range. This resulted in the buyer agreeing to order at the previous year's quantities only if prices were lowered, but quality maintained. The ingredients could not be lowered in price, although after careful research and negotiation packaging costs were reduced and Martha met her main client's requirements. However, she knew that she had less than a year to develop a lower cost production process and ingredients list to meet future demands for lower prices.
Question 1
What, in your opinion is the main value aspect of Martha's soaps?
Question 2
By adopting a more detailed value analysis, how might Martha be able to meet next year's requirements?
Question 3
Evaluate Martha's strategy of cutting costs to retain orders from its major buyer.
