New Product Failure

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.