Case Study: Splash Corporation (a): Competing with the Big Brands

Case study: Splash Corporation (A): Competing with the Big Brands

1. Problem Identification

Splash has to figure out what market strategy should apply for 2006 to maintain its long-term profits and market share in cosmetics and toiletries industry. It should pick out which brands and products should be concentrated on, and how these products should be branded and marketed.

Compared with its multinational competitors, Splash has limited marketing budget, meager branding sources, and small economics of scale. Compared with its domestic competitors, Splash has complicated and broad production line, high value of products but related higher price. In this industry driven by price and advertisements, Splash now has three main issues to consider. First, Maxi-Peel and BioLink both face some threat from alternative products. Second, low-cost alternative products could also steal Splash’s market share. Last, hair care category was the largest cosmetics and toiletries industry, Splash should think about its development in this category.

1. Situation Analysis

There are several major forces counting in the company’s marketing environment. Here we classify them into out-layer and core factors. The out-layer factors include economics, technological, political, demographic, and socio-cultural elements, and core factors contain competitors, company, marketing intermediaries and consumers.

Classified as a developing country, Philippines has a mixed economics performance. Although it has reached Per capita GDP of US$5,100 in 2005, nearly half of its population lived less than US$2 per day. The lagging economics led to people’s tighter budget for cosmetics and toiletries expense. Especially for some commodity products which price is the only dictator, consumers would trend to choose cheaper products without thinking about the brands and national identities. That is the main reason why some small, backyard enterprises or low-cost overseas competitors from China and Taiwan could also take certain market shares. They have little brand recognition but could reach the budget-conscious consumers by products with low price.

  There are also technological and political factors have influence on the marketing strategy for Splash. As Hortaleza emphasized, domestic companies cannot win the mature and sophisticated MNCs in the direct competition of price, they could only seek chance to success in products innovation. But the technology in this industry is easy to imitate, even though Splash have enjoyed plenty of revenue by innovation in its hair spray products, Extract facial cleanser, Extraderm exfoliants, now Splash is challenged with imitation for BioLink from new players with lower prices. Splash is a leader in continuously addresses the changing needs of its consumers more effectively than others. In addition, there exists a tiny advantage for domestic producers that they do not need to pay imported tax for their products. In that case, the cost of similar foreign imported products would be higher than local products, which means domestic company like Splash could utilize the strength of taxation.