In: Operations Management
Answer the following questions:
1. - 3 separate answers. For the three options presented by the brothers, what are the pros and cons of each?
2. Which would you choose from #1 above and why?
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Bringing an Innovative Razor to the Masses By MICKEY MEECEAPRIL 28, 2010 L.P.I.
Consumer Productsmakes and distributes patented ShaveMateall-in-one razors that feature shaving cream dispensed from the handle. The company, which has been in business since 1987, has been developing its line of razors since 1997. Titan 6, for men, and Diva 6, for women, which have six in-line blades, are the newest products. The company employs four people and had revenue of about $2 million in 2009. THE CHALLENGETo crack the $2.6 billion United States razor and blade market, which is dominated by Gillette and Schick. THE BACKGROUNDLouis D. Tomassetti and Peter C. Tomassetti, known as “the inventor brothers” in Pompano Beach, Fla., created and sold a line of marine signaling devices under the Safety-Sport brand. More recently, they homed in on razors because they believed shaving was getting “complicated.” They concluded, Louis said, that “the common sense thing to do is to combine the shaving cream with the razor.” After years of research and development, engineering and patent work, the brothers took their razors to the military in 2002 because they had heard that soldiers in Iraq and Afghanistan were dry shaving. That first product was rugged and featured two blades, with the shaving cream in the handle. The military became a repeat customer. Still, the Tomassettis found American retailers reluctant to take shelf space from Gillette and Schick. Store managers encouraged the brothers to improve their product — add more blades, they suggested. So the Tomassettis did. With six blades, ShaveMate offers one more in-line blade than its competitors, and it is the only all-in-one razor on the market with shaving cream in the handle. Peter Tomassetti, left and his brother Louis invented ShaveMate razors, which dispense shaving cream from the handle. Credit John Van Beekum for The New York Times When Titan 6 and Diva 6 were in prototype, the brothers took the razors to trade shows. While retailers were intrigued, they said that ShaveMate lacked brand awareness. It became clear that the brothers needed to stimulate demand by building name recognition and educating consumers on the benefits of their razors. THE OPTIONSThe brothers thought they had three options: They could go head-to-head with Gillette and Schick with a national print, television and radio advertising campaign, supplemented by store promotions and coupons. Because the cost could easily exceed $150 million, the brothers dismissed this idea out of hand. They could market ShaveMate on their own through shavemate.comand specialty retailers like hotels, airport stores and cruise ships, using their tagline, “The future of shaving is here.” This was the most affordable option, costing an estimated $100,000 to produce razors for the initial stock, displays and promotions, but it would take a while to build the brand and increase sales. Finally, they could initiate a two-pronged marketing attack for about $1 million, looking for a big splash with a low-cost specific public relations effort to put ShaveMate in front of print editors and TV producers. Then they could begin a national, as-seen-on-TV campaign on cable channels to educate consumers via two-minute commercials on how their product could simplify shaving. The goal would be to have a well-known spokesman promote the razors.
1. Option 1- They could go head-to-head with Gillette and Schick with a national print, television and radio advertising campaign, supplemented by store promotions and coupons. Because the cost could easily exceed $150 million, the brothers dismissed this idea out of hand.
Pros- In the process of competing with other competitors, Gillette and Schick might increase the brand awareness for the product.
Cons- It requires huge investment such as $150 million which is a risk to the business itself because the revenue for the company itself is $2 million in 2009.
Option 2- They could market ShaveMate on their own through shavemate.com and specialty retailers like hotels, airport stores and cruise ships, using their tagline, “The future of shaving is here.” This was the most affordable option, costing an estimated $100,000 to produce razors for the initial stock, displays and promotions, but it would take a while to build the brand and increase sales.
Pros- It targets the niche market where competition would be less. Also, it is highly cost-effective when compared to the first option.
Cons- Brand building cannot happen over a night. It takes time and efforts to build strong brand images.
Option 3- They could initiate a two-pronged marketing attack for about $1 million, looking for a big splash with a low-cost specific public relations effort to put ShaveMate in front of print editors and TV producers. Then they could begin a national, as-seen-on-TV campaign on cable channels to educate consumers via two-minute commercials on how their product could simplify shaving. The goal would be to have a well-known spokesman promote the razors.
Pros- Since the promotional cost is just $1 million which is an affordable cost for the company (revenue is $2 million), it is a feasible option.
Cons- Choosing a well-known spokesman to promote the razors is a highly complex task. It is difficult for managers to decide to which spokesman the potential customers would listen to.
2. Personally speaking, I would choose option 3 because the promotional and advertising cost is within the company’s affordability. Since the revenue is $2 million, the company can do a onetime investment of $1 million for advertising and promoting its product. It is the best low-cost public relations effort for the company to increase the brand awareness when compared to option 1. Television is the best mode of advertising as it is viewed by almost all the people. A cable TV advertisement would have a wider reach within the community. A well-known spokesperson to describe the product is a good idea as people would be instigated to listen to what the spokesperson is about to say.