Jade Shampoo Case Summary

Jade Shampoo Case Summary

        Jade’s Shampoo is a brand in the shampoo market. The current assistant product manager is Debbie Kennedy, a 18 month MBA graduate who is starting her first large impact project since graduation. Her action proposal was to replace all of Jade’s traditional twist-off caps with a flip-top dispenser cap. The flip-top dispenser cap was more convenient, and market trends from consumer studies suggested that Jade Shampoo’s segmented target market of children and over-40 adults liked shampoo brands that introduced flip-top dispenser caps to replace their old fashioned caps. The shampoo market was highly competitive. Before the change, Jade commanded 5% of the health-and-beauty-aids (HBA) market share, with that number being relatively stable in an otherwise volatile market.

        The downsides and caution before any tests were done came from the brand’s research and development technician, who was cautious about the use of less product through the cap and a reduction in spillage which was often overlooked as a source of sales.

        In terms of numbers, 1987 sales was forcased to be $91,500,000 retail and $58,560,000 factory with average factory price of $1.28 per unit, volume of 45,750,000 units and a contribution margin of 36 cents per unit. The only costs with the change would be equipment purchase of one million and 1.5 cents increased cost per cap due to a different kind of plastic.

        Consumer tests (exhibit 2) were very positive toward this change as studies showed they preferred the dispenser cap over the current cap. When testing went to a controlled area of Phoenix, Arizona, units increased from 45,750,000 to 50,205,400 nationally. This was above Debbie’s expectations. However, she did not consider the standard deviation of 2,131 units. This standard deviation was high relative to the mean of 5,31 units per store, something Marion Hoffman was concerned about.