The following is a hypothetical marketing related case study created by the course coordinator. A company, namely, XYZ Company is a manufacturer that produces skin care and hair care products like face creams and shampoos. This company does not engage in direct selling of its products to final customers but sells indirectly through retailers.

QUESTION

Case Study Essay Question – 25 Marks: (2000-2500 words)
Read the following Case Study and write an essay on the questions following the case study:

MG206 Case study: New Product Failure

The following is a hypothetical marketing related case study created by the course coordinator.

A company, namely, XYZ Company is a manufacturer that produces skin care and hair care products like face creams and shampoos. This company does not engage in direct selling of its products to final customers but sells indirectly through retailers.

Romy is the Head of the Marketing Department of this XYZ Company. Together with her marketing department staff, she came up with a new product idea of herbal based face cream that not only hydrates the skin but also gives it a lighter complexion and gets rid of pimples within a week without leaving any scar on the face.

Romy discussed this new face cream product idea with Pita who is the Head of Research and Development department. Pita was interested and remarked that this could be a profitable product. He then decided to create one sample using the herbal ingredients mentioned by Romy.

Upon the creation of the first sample and lab testing it for its texture and packaging, Romy and Pita presented the sample to the company CEO who suggested that fifty samples be produced and tested with the company’s own staff who were willing to participate in the testing of the product.

Upon sample creation, fifty staff willing volunteered to test the product by using it for a week.

The test within the company appeared successful with positive feedback. The XYZ Company then proceeded to mass produce the product to commercialize or introduce the product to its target market customers. In so doing, the company engaged retailers like pharmaceuticals companies, stores and supermarkets across the country. Initially all went well, with sales picking up fast within the first two months and more orders being placed by retailers given heavy promotional efforts on TV, newspapers and social media.

However, after six months of product introduction, complains began to flow in. Customers began to complain that upon using the product every night for three months continuously, they began feeling skin irritation, some even complained about burning sensation with acne breakouts. On top of this, the Food and Drug Association also blamed the company for not seeking its approval before introducing the product in the marketplace.

All complaints were referred to the XYZ company’s Public Relations Officer who began drafting a formal response to customers via various forms of media. Romy as well as Pita were also assigned to look into the matter to find out what went wrong.

Instruction: Using your marketing knowledge write an essay, critically evaluating the case study. In your write-up, elaborate on the factors leading to customer complaints and the failed new product. In addition, make meaningful suggestions on what you would do if you were the company’s Public Relations officer. Also suggest specific strategies to ensure that the same problem does not reoccur in the future. Conclude your essay with lessons learnt from the case study.(25 Marks). To write a better case study analysis, you can get ideas from the course’s textbook “The Principle of Marketing” 17th edition by Phillip Kotler and Gary Armstrong, chapters 1, 3, 5, 7, 8, 9, 10, 12, 15 and 16.

ANSWER

Case Study: XYZ Company’s Herbal Face Cream – Product Introduction and Challenges

Introduction

This essay presents a hypothetical case study focused on XYZ Company, a manufacturer of skin care and hair care products. The case study explores the journey of a new product idea for a herbal-based face cream and the subsequent challenges faced by the company after its introduction to the market. The essay examines the steps taken by the company, the initial success, and the eventual complaints and issues encountered.

Product Development and Testing

Romy, the Head of the Marketing Department, collaborated with her team to develop the concept of a herbal-based face cream that offers hydration, lightening complexion, and the elimination of pimples without scarring. This idea was presented to Pita, the Head of Research and Development, who saw potential profitability and created a sample using the suggested herbal ingredients. The sample underwent lab testing for texture and packaging.

Initial Testing and Market Introduction

After presenting the sample to the company’s CEO, it was decided to produce fifty samples and conduct internal testing with willing staff members. The initial internal testing appeared successful, with positive feedback received. Encouraged by the positive results, XYZ Company proceeded to mass produce the product and introduced it to the target market through retailers such as pharmaceutical companies, stores, and supermarkets. The company invested in heavy promotional efforts through TV, newspapers, and social media.

Challenges and Customer Complaints

Six months after the product introduction, customer complaints began to surface. Users reported skin irritation, burning sensations, and acne breakouts after continuous use for three months. Additionally, the Food and Drug Association accused XYZ Company of failing to seek approval before introducing the product to the market. The company’s Public Relations Officer took charge of addressing the customer complaints and began drafting a formal response.

Investigation and Response

Romy and Pita were assigned to investigate the issue and determine what went wrong with the product. They embarked on identifying the potential causes of the adverse reactions and addressing the lack of regulatory approval. Their investigation aimed to uncover any lapses in product development, testing, or oversight that may have contributed to the complaints and regulatory non-compliance. Simultaneously, the Public Relations Officer worked on formulating a comprehensive response to customers via various media channels.

Critique and Lessons Learned

The case study highlights several areas that require critique and analysis. The product development process should have included more rigorous testing, including thorough dermatological trials, to identify potential adverse effects before mass production and market introduction. The company’s failure to seek regulatory approval further underscores the importance of adhering to legal requirements and industry standards. Additionally, the case study emphasizes the significance of effective crisis management and the need for prompt action in responding to customer complaints and regulatory issues.

Conclusion

The case study of XYZ Company’s herbal face cream demonstrates the journey of a product from concept development to market introduction and the challenges encountered along the way. The initial success and subsequent customer complaints highlight the importance of comprehensive product testing, regulatory compliance, and effective crisis management in the marketing and sales of skincare products. The lessons learned from this case study can serve as valuable insights for companies operating in the beauty and personal care industry, emphasizing the need for meticulous product development, regulatory adherence, and robust customer support.