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Hillcrest case study copy

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  • 1. Hillcrest Products, Inc. I. Summary of Facts A. Market – Household products/Glass cleaner/Glass cleaning wipes 1. Two product types a. 32-ounce natural fiber, biodegradable refill b. Duo-Pak 2. Denver Post survey of consumer preferences a. Windex was purchased 70% of households b. All other brands did not reach 10% of market c. Strongly favored over previously used products 3. Economic market a. Monopolistic competition b. Many competitors with various, close prices B. Product 1. Hillcrest Products a. Glass cleaner b. Glass cleaning wipes c. Additional Hillcrest products 2. Two labeled package types a. A Duo-Pak b. 32-ounce refill 2. Benefits a. Core benefit: film-free b. Nontoxic c. Safe for environment 3. PLC a. Introduction stage- Glass cleaner b. Growth stage- Hillcrest Products, Inc. C. Price 1. $250,000 administrative and office salaries, $160,000 overhead expenses, $390,000 promotion budget 2. Unit cost: $2.36 for the Duo-Pak and $1.89 for the Refill 3. Unit cost with 50,000 or more units: $2.30 for Duo-Pack and $1.85 for Refill 4. Costs include: bottles, boxes, labels, cardboard, glass cleaner, cartons, freight and direct labor 5. $4 for the Duo-Pak 6. $3.34 for the Refill 7. Elasticity a. Relatively elastic b. Consumers are sensitive to price D. Promotion 1. Advertising, sales promotion, and product publicity 2. Aggressive integrated marketing communications program 4. Expansibility a. Expansible b. Consumes are sensitive to promotion pricings E. Place 1. Supermarket chains a. Great Plains and Rocky Mountain areas 2. Separate food brokers 2
  • 2. a. Denver, Kansas City, Omaha, Oklahoma City, Wichita 3. Channel: HPI - supermarkets - consumers/users 4. Channel: HPI - food broker- retailers-consumers/users F. Other 1. Competitor's pricing a. $3.79 for Windex No Drip, $3.59 for Windex Original, $5.99 for Windex Original 64-ounce b. $3.49 Chinch 32-ounce, $5.49 Chinch 64-ounce c. $3.69 Clorox 35-ounce d. $3.19 Fantastic 32-ounce e. $2.69 Formula 409 32-ounce, $3.39 Formula Oxi Magic, $5.49 Formula 409 64-ounce f. $2.99 Glass Plus 32-ounce, $3.89 Glass Plus 64-ounce d. $2.79 Private label 35-ounce refill 2. Market research a. Consumers prefer the lighter, 12-ounce bottle b. Duo-Paks and Refills are packed twelve to a case 3. Suggested retail price a. Not established b. Plans to observe the customary 25% SRP as a retail margin 4. Contract with selected brokers a. Contracted for a 2 year, 10% broker's fee b. Broker fee is double the industry II. Problem/Opportunity A. Primary – Undetermined pricing strategy and SRP not established B. Secondary 1. Distribution 2. Packaging 3. Production 4. Advertising 5. Competition III. Recommended Action A. Primary – Recommend $3.99 for refill and $4.99 for the Duo-Pak based on psychological adjustments following the breakeven analysis (odd pricing) B. Secondary 1. Distribute to east and west coast regions 2. Introduce a single bottle packaging 3. Introduce additional cleaning related products to strengthen brand 4. Use promotional marketing techniques 5. Use price and feature characteristics to differentiate the product