Minnetonka’s Value Creation and Rise to Dominance

Minnetonka’s Value Creation and Rise to Dominance

Introduction

Founded in 1964 by Robert Taylor in Chaska, Minnesota, Minnetonka Corporation has kept reinventing itself by producing products that gain market leadership and dominance. Taylor initially worked at Johnson & Johnson, a US health products company soon after his graduation from Sanford Business School. With $3,000 from his personal savings and at the age of 29, Taylor decided to create Minnetonka as a domestic gift soaps manufacturer (Harvard Business School 1). The company went public in 1968, at a time when it was selling soaps and other products to specialty stores and department stores around the country. One of its initiatives in remaining relevant within the soap industry was the constant introduction of new products that saw the rise in sales. The mid-1970s were a shaky period for the manufacturer as sales started to slow down following competition from companies such as Clairol and Gillette. These two companies had copied its shampoo line and introduced the concept to the mass market. Despite this, the company was able to introduce other products in a re-invention. It gained market dominance in the soap and cosmetics industry.

Capturing Value

Minnetonka’s approach to capture value in the products market has been through differentiation and widening of its product offering. As the company went public in 1968, it already had a variety of soaps that were being sold in department stores. Its bath line products included bubble baths, scented candles, glycerin soaps, body lotions, and other products for children. At one time, the company had 78 new products during the spring and this was meant to boost the company’s sales. In further differentiating its products and remaining relevant, the Incredible Soap Machine was developed in 1977, where liquid soap was dispensed in a pump operated bottle.

As a further way of creating value in its products, the company would introduce new products that were non-existent in the market. Despite the risk of introducing new products, the company managed to remain valuable and relevant such as following the introduction of its softsoap liquid soap. This new product had positive results from the market where it captured a 5-9 percent share of the bar soap sales. Advertising also largely played a role as it sensitized customers of the availability of the product in the market. By introducing its product first and engaging in marketing that saw the domination of the company in the soap industry, Minnetonka was able to counter the competition such that was likely to come from imitation of its products. Minnetonka had previously encountered imitation of its products by Clairol and Gillette in the mid-1970s for failing to introduce its products into the mass market (Harvard Business School 2). To avoid