Innovation in designing products - Essay Example

When the war ended, Wolff Egan to search around for a new career, and teamed up with former advertising copy;Ritter Jack Adams Lowe to attempt to sell the cream to consumers. The pair invented the existence of a mysterious tropical plant which they called the Ulna, from which they claimed their “oil” was derived. Understanding the marketing power of less-is-more, they decided to say as little as possible about the precise purpose of this Oil of Ulna.

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Instead they called it a “mysterious beauty fluid that makes you look younger”, and began selling it door-to-door in South Africa under the auspices of heir newly formed company Adams National Industries, based in Durban. Against the odds, Oil of Ulna began to sell very well indeed, and Adams quickly established a thriving mail order operation, selling the product to other countries. During the asses, the company began exporting to Australia and the I-J, followed by North America and Mexico in the early asses.

In many cases they adapted the product’s branding and packaging to appeal to local tastes. As a result, Oil of Ulna became Oil of Lay in the UK and Australia, Oil of Lola in North America, Oil of Olga or LULAS in Latin America and so on. By 1967, Adams National Group was generating worldwide sales of around $mm, still almost entirely from mail order or door-to-door sales. That year it was literally stumbled upon by US pharmaceutical group Richardson-Merrill, which had also been trying to establish a line of female beauty products.

One of the company’s Australian field sales managers reported that customers were spurning Richardson-Merrill’s products in favor of this mysterious Oil of Lay brand, and after some months the larger company tracked down Wolff in Durban and bought him out. As Oil of Lola, the brand was already doing a small amount of business in he US, but Richardson-Merrill put its own marketing muscle behind the product to fully establish the brand. At the time, the market for face cream was effectively split between luxury products such as Esteem Lauder at $30 or more and low-cost brands such as Nonzero priced at under $2.

Richardson-Merrill firmly established Lola as a mid-market brand (around $10), and by 1980 had boosted the sector as a whole to sales of around $mm in the US. Of this Lola carved out a commanding one-third share of the market, growing sales from around $mm in 1967 to more than $mm in the US, with another $mm in revenues derived from other territories. At the same time, the company took advantage of a series of generous government tax breaks by manufacturing the increased supply of the product in Puerco Rice).

Richardson- Merrill sold off its prescription pharmaceuticals business in 1981 and became Richardson-Vicki. Three years later it was the target of a hostile takeover bid from Anglo-Dutch conglomerate Milliner. The group recruited soap company Procter & Gamble as a white knight, and was absorbed into P in 1985. At the time, the main appeal of Richardson-Vicki to P was the Vicki ETC range, and the group took overall years to decide what to do with more marginal brands such as Lola. However a beauty cream and a lotion for sensitive skin were introduced in 1987, and a cleansing lotion in 1990.

Following the expiry of several of Dove’s patents, P&G introduced an Lola beauty bar in 1993, opening up direct competition with the Milliner brand. A body wash and shower gel was introduced in 1994, quickly notching up sales of around $mm, equivalent to a 27% market share at the time. Then in 1996, the group unveiled the Oil of Lola Age Defying Series, a collection of skin care products utilizing alpha-hydroxyl-based skincare technology. By the late asses, the original Oil of Lola had been spun off into more than 30 separate products under the shared umbrella brand.

Following local customers, in Asia, these include a range of skin whitening beauty products, under the Lola Fairness brand. Not all of Lay’s brand extensions were successful, however. In the mid-asses Procter & Gamble announced a concerted move into the color cosmetics segment. Lola was by then the world’s best-selling facial moisturizer, with a near 27% market share in the US, supported by a wide portfolio of other products ranging from ageing creams o shower gels. In the new health-conscious age of the asses, it certainly appeared to make sense to combine skincare and color cosmetics in one product.

Another key factor was the P&G’s declining hold on the cosmetics market, as faster-growing rivals Revolve and L’Oreal pushed the group into the #3 position. After two years in development, the group had begun testing a range of cosmetics in Germany in 1994 with some success, and followed this with a small-scale test in the US, which inevitably attracted the attention of competitors. More tests followed in the UK in 996, before the brand was formally launched in Germany again in 1999. P&G claimed success from the European roll-outs, stating that the range of lipsticks, foundations and eye-shadows had achieved “double-digit market share”.

According to industry estimates, P&G was targeting US sales in the region of $mm from the new brand extension, giving the group two of the top five cosmetics lines in the United States. (Revolve and Cover Girl were #1 and #2 in 1999 with sales of around $mm and $mm at retail respectively; sales of $mm would have placed Lola #5 behind Amiability and L’Oreal). P earmarked a spend of between $mm and $mm just for the cosmetics line, the biggest marketing spend at the time for any single product other than Toilette’s Mach Ill razor.

Yet P&G found the market much harder than it had anticipated, especially following a burst of rival launches, including a range of Neutron cosmetics from Johnson & Johnson, and new products from Revolves Alma brand. Although sales of Lola foundation were reportedly good, less obviously skincare-related products, such as eye-shadow, failed to do well. Having achieved little more than around 3% share of the US mass cosmetics market and ales estimated at around $mm – less than a third of target – P&G took the decision to cut its costs and pull the range in the summer of 2001.

Many critics pointed to the product’s protracted seven-year conception as another sign of P’s failure to embrace the fast-turnaround product cycle it promised in the late asses. Initial tests of Lola Cosmetics in 1994 gave competitors a whole five years to develop spoiler products. By contrast, Lola Facial Wipes, first conceived in 1999, launched quickly and with a greater comparative degree of success. In their first year these disposable face loots infused with moisturizer hit sales of over $mm.

In the mean time, the brand had also introduced its first “Age-Defying” products, and these proved far more successful than ordinary color cosmetics. In 1999, as the original copyrights on the different variations of the Lola/Lay/LULAS name began to expire, P&G took the opportunity to reduce confusion and standardize the product internationally as Oil of Lola in most markets. The “Oil of” tag was dropped in 2000, after research showed that the target market of younger women were put off by the suggestion that the product was “oily”. At the same time, US sales of Lola hit $mm, taking them ahead of the Dove range in the US.

In 2000, the group launched its first push into a premium-priced “mastitis” market with the launch of Lola Total Effects. Lola Registering followed in 2003. OPPORTUNITIES Future growth plans In order to grow in a highly competitive environment, P&G is pursuing a clearly drafted strategy with focus on two areas: increasing concentration on its core attractive businesses and enhancing its customer base. The company is sharply focusing on its core attractive businesses (the beauty and health market segments ND several household care categories) as these are fast-growing businesses.

For instance, the global market for personal care products has annual sales of over $39. 5 billion and is growing at a rate of around 5% annually. P&G intends to increase its customer base by acquiring under served and unseeded consumers. In line with this, the company is targeting developing markets; extending its distribution systems; and expanding its brand and product portfolio. Developing and emerging economies are expected to account for 90% of the world’s population by 2010, and this is expected o drive demand for fast moving consumer goods.

Increased investment in manufacturing capacity in developing countries P is planning the biggest increase in its manufacturing capacity in order to expand into categories and countries where it doesn’t have a brand presence. The company is investing 4% of sales in capital spending, including funding for new manufacturing capacity to support future growth. Over the next five years, P&G plans to add 20 new manufacturing facilities. Almost all of these facilities are in developing markets, and almost all will be multi- product category facilities.

By focusing on developing markets, the company would reduce the cost of serving these markets while also being closer to regions with the greatest long term growth potential. Acquisitions to expand portfolio P&G has made significant acquisitions in the recent past. For instance, in June 2009, the company acquired the Girth skincare brand. Girth is a leading super premium, male grooming brand available in high-end department stores, specialty outlets and online. Later in May 2010, P&G entered into an agreement to acquire Natural Pet Products, a privately-held pet food business.

Most recently, in July 2010, the company included its purchase of the Iambi Purr Brand from Sara Lee Corporation. Iambi Purr is a leading global air care brand with presence in 80 countries, and also has several toilet care products, with strong presence in Western Europe and Asia. These kinds of acquisitions will strengthen P&G’s presence across a range of categories and in turn augment its top line and bottom-line. Competitors Lay’s main competitors include Dove, Naive and Neutron and related products. Increasingly the brand is moving into the premium sector where it competes with the likes of L’Oreal and Esteem Ladder’s Clique.

See Personal Care Sector index for other companies and brands. 6. 0 NEW PRODUCT OR SERVICE IDEA AND FUTURE MARKETING STRATEGY Procter & Gamble (P&G) has said it wants to introduce its Lola skin care brand into 15 new markets worldwide this year, during a recent investor conference. Speaking at the Barclay Capital Back to School conference in Chicago yesterday, P&G’s vice chairman of global beauty and grooming brands De Shirley stated that the objective to grow the Lola brand would form a key part of its global growth strategy in the future.

Shirley stated that the emphasis for the brand this year would be new markets, and underlined Brazil, currently one of the fastest growing retail markets in the world, as a key focus for the push. The expansion of the brand is also expected to continue into 2011, with the ultimate aim being to increase the number of markets where Lola is sold from the current figure of 69 to 100 over the course of the next two years. During the presentation Shirley stated that the ramp-up would be fast, acknowledging that for development of the Lola brand We have been too slow in bringing innovation to the market place. “Eventually we will have a whole [Lola] portfolio in every market in the world,” Shirley said. Shirley also emphasized how the acquisition of the Gillette business has helped to develop the company’s emphasis on male personal care and grooming products, shifting the emphasis away from the core focus on female consumers. Stating that this would mean more future growth across the board for male grooming, Shirley specifically referred to growth from the Lola brand, which he said would become a core part of the strategic growth plans for the brand.

Over the years Lola has extended its reach beyond being a simple moisturizing product to clearly define itself as a leader in the fast-growing anti-aging segment. The fact is that the development of the men’s grooming market has led to significant growth in the areas of moisturizing and anti-aging products, something P will be hoping to tap into by extending the reach of the Lola brand. In fiscal 2009, P estimated that the Lola brand accounted for approximately $2. Bin of the group’s total $bin revenues. It is currently the leading skin care brand in a number of the biggest global markets, including China, the I-J and the US.

The company’s beauty and grooming operations have grown from a $bin turnover to $bin turnover in Just seven years, Roth that has been fueled by both organic growth and acquisitions, including the Gillette business. Lola which is very successful in abroad among the leading skincare brands is making its hold in India but on a slower pace. People tend to use the products they are used to rather than trying new ones. But advertising can do wonders to change the buying decision of people. It makes them aware of the product and at the same times gives a AD picture of the product.

People buy on the basis of what they see and hear from their surroundings. But sometimes, advertising an be misleading and can raise issues in the society (the animal test controversy of Lola). This can prove to be harmful for the Brand Image. Thus, advertising should be for the people to buy the product without affecting their beliefs. Lola is doing a great work by inventing new products and advertising them by taking endorsers with whom people can relate to very well. The brand would soon establish the same spot in India as it has in foreign countries. 7. 0 REFERENCE http://www. Debarks. Net/us/Lola_us. HTML http://www. Cosmeticians-Asia. Com/Market-Trends/P-G-targets-further-global- expansion-of-Lola-brand http://www. Urination. Com/Procter-and-gamble-co-the- in-beauty-and-personal-care/report http://www. Essays. Com/essays/marketing/the- Lola-brand-called-Lola-evolution-marketing-essay. PH HTTPS://prize. Com/ nonprogrammer/Lola-case-study-part-2/ Question 1 Please describe FOUR generic strategies: Answer Herbert and Dresser propose four generic strategies: develop, stabilize, turnaround, and harvest. The classification scheme has the following features: 1.

It is based on common (or overlapping) variables and characteristics of strategic types in other models. 2. It proposes strategies that are independent of other strategies, environmental situations, or organizational or product development stages. Thus, a harvest strategy could occur within a rapidly developing business. 3. It encompasses/ explains major and common types of generic strategies and their characteristics. 4. It has been tested using data from a sample of companies. Consistent and interrelated findings were found in the research results. The Develop Strategy.

Organizations using the develop strategy are relatively new businesses, firms with rapidly changing technology and product line, or companies entering new product-markets because of unfavorable conditions in the existing business arena. The develop strategy seeks long-term growth via new product and/or market development. Firms in this category pursue market leadership strategies. Intuits pioneering entry strategy in the personal finance computer software market is an example of the develop strategy. The Stabilize Strategy. Companies that want to stabilize are found in mature, stable industries (e. . Textiles, chemicals). In markets where buyers’ needs are relatively similar, management’s strategies emphasize cost leadership. In differentiated markets, market segmentation (or focus) strategies or some type of product specialization are employed. The strategy typically emphasizes high quality products and service and close contact with customers. In the tire industry Goodyear follows this strategy. The Turnaround Strategy. This strategy is appropriate for survival and rebuilding situations. Emphasis may be on improving cash flow and reducing costs or refocusing the organization.

Downsizing and other forms of restructuring may occur. The cost strategy involves actions to increase efficiency, where refocusing may include reorganization, diversification, and acquisitions (or mergers). The Strategy Feature describes Laura Ashley turnaround strategy. The Harvest Strategy. A business in this category is a candidate for removal from corporate portfolio. The factors driving the decision to harvest the business include poor financial performance, lack of compatibility with the core business, no competitive advantage, and poor fit with the future direction of the corporation.

General Electrics sale of its small appliance business to Black & Decker is an example of a harvest strategy. Generic strategies do not provide specific guides to action. Instead, they indicate direction or end results (e. G. Harvest). They offer broad guides to action. Specific action plans must be developed by management. Question 2 The renewal (reforming) of the traditional organization moves through THREE phases: vertical disaggregating, internal redesign, and network formation. Explain carefully.

Organizational Renewal: During the last decade massive changes were made in the size and structure of many business firms. These changes are described as rightsizing, reengineering, and reinventing the organization. Typically, the renewal (reforming) or the traditional organization moves through three phases: vertical disaggregating, internal redesign, and network formation. Vertical disaggregating. Disaggregating reduces the size of the organization by eliminating Jobs and layers of middle managers and flattening the hierarchy.

The conference board reports that 90 percent of its members downsized during the last five years, and about two-thirds of the executive representing a broad cross-section of business say downsizing will continue The resulting horizontal corporation may organize its activities into a small number of key processes (e. G. , new product planning, sales generation, and customer service). Multifunctional teams are the primary organizational units, and providing superior customer value is a key objective and measure of performance.

Employees are encouraged to make regular contact with suppliers and customers. Internal redesign. Organizational renewal is more than Just reducing staff, eliminating layers of management, and adopting worker empowerment processes. The second phase alters the internal design of the organization. The new organization forms are lean, flexible, adaptive, and responsive to customer needs and market requirements. Technology is a core advantage, involving innovation in designing products to meet customer needs, arranging supply and distribution outworks, and constantly staying in touch with the marketplace.

A priority of these organizations understands customer needs, offering value to customers, and retaining customers. Network Formation. The third phase of renewal involves the formation of relationships with other organizations. Although intergenerational relationships are often present in the traditional organization, companies are expanding these relationships with suppliers, customers, and even competitors. These new organization forms are called networks since they involve several collaborative arrangements. Benton displays several characteristics of the network organization.

Networks are more likely to be launched by entrepreneurs, since the traditional vertically integrated, hierarchically organized company finds difficulty in shifting to the network paradigm. Transformation means fewer people on the corporate payroll, different management challenges, drastic cultural changes, and complex collaborative relationships with other organizations. Nevertheless, traditional companies like General Electric are successfully transforming themselves to more flexible and adaptive network forms.