Question

You’ve had a good run as manager for a leading brand of leave-in conditioner. The product performs better than competition in taming frizzy hair, and has long commanded a premium price based on an attribute-based positioning.

But now you’re nervous. There’s been a gradual but steady decline in sales over the past three quarters. Denise, a new member on the marketing research team, has presented you with information that suggests two possible causes.

- First, beauty magazines and salon publications wrote repeatedly last year about a shift to free-flowing, natural styles. These styles work best with products that don’t leave residue on hair. You know that secondary data isn’t always ideal, but these stories were consistent and voluminous.

- Second, recent focus groups run by Denise complained that your price is too high. Like all focus groups, these included only a small number of people, but the participants were loyal customers.

Neither source is perfect, and the information you have is far from conclusive. But there’s nothing else to go on for now. Top management is under pressure from investors and anxious to take action, but wants to make sure the company is set up for long-term success. You can’t effectively address both issues at once, so you must decide which one is more likely to be causing the sales decrease.

a) Styling change

b) Price

Answer 1

The main factor that could be decreasing the sales is the new market entrants who are undercutting the products price. The leave-in-conditioners that are sold in a lower price than that of your organization will definitely have higher sales rate. This is why the organizations sales are decreasing. Undercutting your competitors price wins more sales. However, less profits may arise from the practice too.

A questionnaire is the best method to gather the necessary information required in answering specific marketing questions. Consumers are the one who hold the best knowledgeable information for improving marketing activities hence asking them questions will give you required the feed backs.

Explanation:

When a new product that is similarly used drop into a market with a lower price, people opt to buy the cheaper product due to low costs. This also applies because of the demand rule that shows the lower the price the higher the demand. That is why the leave-in-sales are affected negatively by the market entrants.

The consumers are in the open-midst of the market activities. They know much about the competitors products and how effective the products are. They can provide information to help improving the leave-in-conditioners sales level.