Product Development and Operations  -Business Finance

Your Role This week, you’ll assume the role of a Category Manager for the Beauty Products category at a national discount retail store. Step 1: Product Life CycleRead the Product Report for Alikay Naturals Moisturizing Black Soap Shampoo. The Product Report contains important information that will help you to identify where the product stands in the Product Life Cycle and give you clues about what changes customers might like to see. Respond to Rochelle and her team at Alikay Naturals based on the information in the Product Report.Identify where Moisturizing Black Soap Shampoo is currently positioned in the product life cycle and describe the rationale for your position.Compose 3 questions that Rochelle should pose to her team to better understand the product’s positioning and potential at this particular stage in its life cycle. (E.g., if you have determined the product is in the Introduction Phase, you might suggest the question: How have competitors priced similar products?) Step 2: Product ChangesBased on what you’ve learned:What recommendation(s) do you have for Alikay Naturals to improve or replace Moisturizing Black Soap Shampoo?Step 3: New Product DevelopmentRead the New Product Proposal, which contains three examples of possible products that could be developed to replace Moisturizing Black Soap Shampoo. Based on the information in this proposal and the customer feedback in the Product Report:If you had to recommend one product, which product would you recommend they create? Explain your decision.Determine which type of innovation this represents from among the four main types discussed this week. Briefly explain why you chose that type of innovation.Note: You should complete Step 4 after reading the material in Week 3 Step 4: Production MethodsBased on your understanding of Alikay’s position in the product life cycle and expected sales volume:Which production method do you think Alikay is using for the Black Soap Shampoo? Explain your rationale.
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ASSIGNMENT
DUE DATE
Product Development and Operations
Category Manager Analysis
Week 3
PRODUCT REPORT FOR ALIKAY NATURALS
MOISTURIZING BLACK SOAP SHAMPOO
Product Description:
Finally, a way to get your hair and scalp truly clean with natural
ingredients. Traditional cleansers tend to strip your hair
of its natural moisture, leaving your scalp dry and itchy. This
sulfate – free shampoo cleanses and moisturizes at the
same time. Made from natural Raw Black Soap, it gets deep
down into the scalp to remove product buildup. The tropically scented blend contains a natural mix of Coco Seed Powder,
Plantain Skins, and Tea Tree Oil to protect and moisturize the
hair from scalp to root. No artificial thickening agents have
been added, but don’t be fooled by the watery texture. This
shampoo gets the job done. This product is 100% natural
and 100% organic.
Product Background:
The Moisturizing Black Soap Shampoo product was launched in 2014, with the majority of
sales coming from national retail stores. The product has not undergone any significant
changes or improvements, with the exception of its packaging.
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
1
Sales Report:
2015
Units Sold
Revenue
Turnover
(Avg. days on shelf)
Market Share
(% of total discount retail
store shampoo sales)
2016
Q1
Q2
Q3
Q4
Q1
Q2
381,0 09
365,775
366,0 08
338,990
296,990
275,776
$4,572,108
$4,389,30 0
$4,392,096
$4,067,880
$3,563,880
$3,309,312
3.1
2.9
3.2
3.6
3.9
4.1
3.8%
3.7%
3.7%
3.4%
3.0%
2.8%
QUICK DEFINITIONS
QUARTERS
The financial world splits the year into four quarters, each 3 months long
Q1: Quarter 1, January – March
Q2: Quarter 2, April – June
Q3: Quarter 3, July – September
Q4 : Quarter 4, October – December
UNITS SOLD
The number of total products sold in a given time period
REVENUE
The money received by a business for the sales of its products in a given
time period
TURNOVER
The average number of days individual products sat on store shelves
waiting to be sold in a given time period
MARKET SHARE
A company’s market share is its portion of total sales in relation to
the market it operates within. For example, if a company sells $100 million
worth of tractors a year domestically, and the total tractors sold in the
United States is $200 million, the company’s US market share for tractors
would be 50%.
User Survey Summary:
Consumers who purchased the Alikay Naturals Moisturizing Black Soap Shampoo at any
one of the national discount retail stores were asked to complete a survey. 2,000 consumers
responded.
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
2
User Survey Summary (cont’d):
ALIKAY NATURALS MOISTURIZING BLACK SOAP SHAMPOO USERS (%)
Strongly
Disagree
Disagree
Neither
Agree
or Disagree
Agree
Strongly
Agree
My hair looks and feels
better after two weeks
of using Moisturizing
Black Soap Shampoo
8
22
32
22
16
I like the density and
consistency of   Moisturizing
Black Soap Shampoo
relative to other shampoos
22
41
16
12
9
Moisturizing Black Soap
Shampoo leaves my
hair more hydrated
than other shampoos
6
26
18
21
29
Alikay Naturals leaves
my hair smelling
great relative to other
shampoos
22
31
20
18
9
Moisturizing Black Soap
Shampoo gives my
scalp a deeper clean
than other shampoos
2
8
18
43
29
Moisturizing Black Soap
Shampoo prevents
my scalp from feeling
dry and flaky
31
14
23
12
19
Moisturizing Black Soap
Shampoo will be the
only shampoo in my
shower in one month
32
14
23
12
19
I’d be more likely to
continue regular use of
Moisturizing Black Soap
Shampoo if it were
available at a lower
price point
4
22
44
18
12
What suggestions do
you have to improve
Moisturizing Black Soap
Shampoo?
“Too watery”; “Have to use too much to do the job”; “While I feel
like the product works, I’m not a fan of the scent”; “I’d like something I can put on my hand versus directly on my scalp”; “While it
cleans effectively and dries out my scalp less than other shampoos, I wish it would treat dandruff”; “Seems like the quality has
declined since I first tried it”
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
3
NEW PRODUCT PROPOSALS
Alikay Naturals Organic Bloom Shampoo
This custom product is designed to clean and moisturize hair while stimulating significant
hair growth without residue buildup. This all-natural, organic blend includes 14 of the best
essential oils and herbs that strengthen the hair at its foundation. Hair follicles absorbessential nutrients to promote growth and nurture fresh, new, shiny hair. Our product includes many botanicals, such as Olea Europaea (Olive) Fruit Oil, Simmondsia Chinensis
(Jojoba) Seed Oil, and the rare Emu Oil, which regrows hair by increasing cellular activity at
the scalp. This one-of-a-kind product helps customers’ hair bloom and flourish, leading to
impressive and almost unbelievable results.Some testers have even seen up to four inches
of hair growth within ten weeks.
Alikay Naturals Moist Black Soap Shampoo with Dandruff Control
Our original Moist Black Soap Shampoo is renewed and improved to promote a healthy
scalp. Melaleuca alternifolia (Tea Tree) Oil prevents dandruff by reducing scalp infections,
fungus and inflammation, and Horsetail Powder, a plant powder, reduces dandruff due to
its silica content.These essentials break down undesirable residue at the roots to support a
clean and moisturized scalp.This product may be ordered online with custom scents mixed
according to your preference.This new twist on a classic favorite is bound to revive hair and
scalp.
Alikay Naturals Coconut Protein Shampoo and Conditioner
Indulge your senses with this exclusive blend of organic coconut milk to nourish your hair,
hydrolyzed keratin to add strength and elasticity, and weightless coconut oils to add hydration and balance. This thick formula is fortified with Prunus Amygdalus Dulcis (Sweet
Almond) Oil, a natural protein that envelops the hair shaft to build strength and elasticity,
add softness, reduce frizz, and revitalize incredible shine. This tropically-scented shampoo
will make your hair look, feel and smell great.
Non-User Survey Summary:
An online survey was conducted asking consumers that 1) frequent any one of the national
discount retail stores and 2) have never used the Alikay Naturals Moisturizing Black Soap
Shampoo about their shampoo preferences. 4,000 consumers responded.
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
4
Non-User Survey Summary (cont’d):
NON-USERS, IN TARGET MARKET (%)
Strongly
Disagree
Disagree
Neither
Agree
or Disagree
Agree
Strongly
Agree
Having an organic
shampoo with all
natural ingredients is
important to me
2
9
14
52
23
I prefer a thicker
shampoo that is heavy
on proteins to revitalize
my hair
8
9
17
43
23
Most natural shampoos
I use are not rich in
proteins and don’t
provide additional
nutrition to the scalp
12
16
23
32
17
A daily dose of proteins
can strip out the
nutrients and therefore
is unsafe and unhealthy
for the hair
33
29
18
12
6
I use anti-dandruff
shampoo only under
a doctor’s recommendation
16
48
18
12
6
Men and women should
have different hair-care
products
32
22
14
18
14
In my opinion,
shampoos with protein
conditioners cannot
be used on colortreated hair
14
31
32
11
12
Assuming equal quality, I prefer a shampoo
+ conditioner in one
versus two different
products
12
6
54
18
10
I’d be willing to pay a
premium for a shampoo
that stimulates hair
growth
6
9
16
34
35
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
5
Non-User Survey Summary (cont’d):
NON-USERS, IN TARGET MARKET (%)
Strongly
Disagree
Disagree
Neither
Agree
or Disagree
Agree
Strongly
Agree
I feel herbal shampoos
tend to be watery and
need to be used in large
amounts to create a
good lather
12
14
28
19
27
I choose my shampoo
based on its specific
function
12
7
22
30
29
The scent of a shampoo
is just as important as
its effectiveness
19
22
15
24
20
Keratin and soy proteins
give a better shine
to hair than artificial
foaming agents and
synthetic colors
3
7
15
45
30
Dandruff shampoo
effectively prevents
a dry, itchy scalp and
flakes
12
10
9
44
25
The shampoo industry
is already flooded with
too many effective
options
22
32
23
14
9
I am willing to pay more
for high-quality,
effective hair products
8
18
12
37
25
I value an all-natural
shampoo that reduces
dandruff
3
18
8
40
31
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
6
ASSIGNMENT
DUE DATE
Product Development and Operations
Category Manager Analysis
Week 3
PRODUCT REPORT FOR ALIKAY NATURALS
MOISTURIZING BLACK SOAP SHAMPOO
Product Description:
Finally, a way to get your hair and scalp truly clean with natural
ingredients. Traditional cleansers tend to strip your hair
of its natural moisture, leaving your scalp dry and itchy. This
sulfate – free shampoo cleanses and moisturizes at the
same time. Made from natural Raw Black Soap, it gets deep
down into the scalp to remove product buildup. The tropically scented blend contains a natural mix of Coco Seed Powder,
Plantain Skins, and Tea Tree Oil to protect and moisturize the
hair from scalp to root. No artificial thickening agents have
been added, but don’t be fooled by the watery texture. This
shampoo gets the job done. This product is 100% natural
and 100% organic.
Product Background:
The Moisturizing Black Soap Shampoo product was launched in 2014, with the majority of
sales coming from national retail stores. The product has not undergone any significant
changes or improvements, with the exception of its packaging.
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
1
Sales Report:
2015
Units Sold
Revenue
Turnover
(Avg. days on shelf)
Market Share
(% of total discount retail
store shampoo sales)
2016
Q1
Q2
Q3
Q4
Q1
Q2
381,0 09
365,775
366,0 08
338,990
296,990
275,776
$4,572,108
$4,389,30 0
$4,392,096
$4,067,880
$3,563,880
$3,309,312
3.1
2.9
3.2
3.6
3.9
4.1
3.8%
3.7%
3.7%
3.4%
3.0%
2.8%
QUICK DEFINITIONS
QUARTERS
The financial world splits the year into four quarters, each 3 months long
Q1: Quarter 1, January – March
Q2: Quarter 2, April – June
Q3: Quarter 3, July – September
Q4 : Quarter 4, October – December
UNITS SOLD
The number of total products sold in a given time period
REVENUE
The money received by a business for the sales of its products in a given
time period
TURNOVER
The average number of days individual products sat on store shelves
waiting to be sold in a given time period
MARKET SHARE
A company’s market share is its portion of total sales in relation to
the market it operates within. For example, if a company sells $100 million
worth of tractors a year domestically, and the total tractors sold in the
United States is $200 million, the company’s US market share for tractors
would be 50%.
User Survey Summary:
Consumers who purchased the Alikay Naturals Moisturizing Black Soap Shampoo at any
one of the national discount retail stores were asked to complete a survey. 2,000 consumers
responded.
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
2
User Survey Summary (cont’d):
ALIKAY NATURALS MOISTURIZING BLACK SOAP SHAMPOO USERS (%)
Strongly
Disagree
Disagree
Neither
Agree
or Disagree
Agree
Strongly
Agree
My hair looks and feels
better after two weeks
of using Moisturizing
Black Soap Shampoo
8
22
32
22
16
I like the density and
consistency of   Moisturizing
Black Soap Shampoo
relative to other shampoos
22
41
16
12
9
Moisturizing Black Soap
Shampoo leaves my
hair more hydrated
than other shampoos
6
26
18
21
29
Alikay Naturals leaves
my hair smelling
great relative to other
shampoos
22
31
20
18
9
Moisturizing Black Soap
Shampoo gives my
scalp a deeper clean
than other shampoos
2
8
18
43
29
Moisturizing Black Soap
Shampoo prevents
my scalp from feeling
dry and flaky
31
14
23
12
19
Moisturizing Black Soap
Shampoo will be the
only shampoo in my
shower in one month
32
14
23
12
19
I’d be more likely to
continue regular use of
Moisturizing Black Soap
Shampoo if it were
available at a lower
price point
4
22
44
18
12
What suggestions do
you have to improve
Moisturizing Black Soap
Shampoo?
“Too watery”; “Have to use too much to do the job”; “While I feel
like the product works, I’m not a fan of the scent”; “I’d like something I can put on my hand versus directly on my scalp”; “While it
cleans effectively and dries out my scalp less than other shampoos, I wish it would treat dandruff”; “Seems like the quality has
declined since I first tried it”
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
3
NEW PRODUCT PROPOSALS
Alikay Naturals Organic Bloom Shampoo
This custom product is designed to clean and moisturize hair while stimulating significant
hair growth without residue buildup. This all-natural, organic blend includes 14 of the best
essential oils and herbs that strengthen the hair at its foundation. Hair follicles absorbessential nutrients to promote growth and nurture fresh, new, shiny hair. Our product includes many botanicals, such as Olea Europaea (Olive) Fruit Oil, Simmondsia Chinensis
(Jojoba) Seed Oil, and the rare Emu Oil, which regrows hair by increasing cellular activity at
the scalp. This one-of-a-kind product helps customers’ hair bloom and flourish, leading to
impressive and almost unbelievable results.Some testers have even seen up to four inches
of hair growth within ten weeks.
Alikay Naturals Moist Black Soap Shampoo with Dandruff Control
Our original Moist Black Soap Shampoo is renewed and improved to promote a healthy
scalp. Melaleuca alternifolia (Tea Tree) Oil prevents dandruff by reducing scalp infections,
fungus and inflammation, and Horsetail Powder, a plant powder, reduces dandruff due to
its silica content.These essentials break down undesirable residue at the roots to support a
clean and moisturized scalp.This product may be ordered online with custom scents mixed
according to your preference.This new twist on a classic favorite is bound to revive hair and
scalp.
Alikay Naturals Coconut Protein Shampoo and Conditioner
Indulge your senses with this exclusive blend of organic coconut milk to nourish your hair,
hydrolyzed keratin to add strength and elasticity, and weightless coconut oils to add hydration and balance. This thick formula is fortified with Prunus Amygdalus Dulcis (Sweet
Almond) Oil, a natural protein that envelops the hair shaft to build strength and elasticity,
add softness, reduce frizz, and revitalize incredible shine. This tropically-scented shampoo
will make your hair look, feel and smell great.
Non-User Survey Summary:
An online survey was conducted asking consumers that 1) frequent any one of the national
discount retail stores and 2) have never used the Alikay Naturals Moisturizing Black Soap
Shampoo about their shampoo preferences. 4,000 consumers responded.
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
4
Non-User Survey Summary (cont’d):
NON-USERS, IN TARGET MARKET (%)
Strongly
Disagree
Disagree
Neither
Agree
or Disagree
Agree
Strongly
Agree
Having an organic
shampoo with all
natural ingredients is
important to me
2
9
14
52
23
I prefer a thicker
shampoo that is heavy
on proteins to revitalize
my hair
8
9
17
43
23
Most natural shampoos
I use are not rich in
proteins and don’t
provide additional
nutrition to the scalp
12
16
23
32
17
A daily dose of proteins
can strip out the
nutrients and therefore
is unsafe and unhealthy
for the hair
33
29
18
12
6
I use anti-dandruff
shampoo only under
a doctor’s recommendation
16
48
18
12
6
Men and women should
have different hair-care
products
32
22
14
18
14
In my opinion,
shampoos with protein
conditioners cannot
be used on colortreated hair
14
31
32
11
12
Assuming equal quality, I prefer a shampoo
+ conditioner in one
versus two different
products
12
6
54
18
10
I’d be willing to pay a
premium for a shampoo
that stimulates hair
growth
6
9
16
34
35
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
5
Non-User Survey Summary (cont’d):
NON-USERS, IN TARGET MARKET (%)
Strongly
Disagree
Disagree
Neither
Agree
or Disagree
Agree
Strongly
Agree
I feel herbal shampoos
tend to be watery and
need to be used in large
amounts to create a
good lather
12
14
28
19
27
I choose my shampoo
based on its specific
function
12
7
22
30
29
The scent of a shampoo
is just as important as
its effectiveness
19
22
15
24
20
Keratin and soy proteins
give a better shine
to hair than artificial
foaming agents and
synthetic colors
3
7
15
45
30
Dandruff shampoo
effectively prevents
a dry, itchy scalp and
flakes
12
10
9
44
25
The shampoo industry
is already flooded with
too many effective
options
22
32
23
14
9
I am willing to pay more
for high-quality,
effective hair products
8
18
12
37
25
I value an all-natural
shampoo that reduces
dandruff
3
18
8
40
31
STR AYE R U N IVE RSIT Y | COPYRIGHT © 2016. ALL RIGHTS RESE RVE D.
6
NAME:
INSTUCTOR:
DATE:
ASSIGNMENT 1
PRODUCT DEVELOPMENT & OPERATIONS – CATEGORY MANAGER ANALYSIS
DUE DATE: WEEK 3
Note: While representative of possible situations faced by Alikay Naturals, all scenarios in this assignment are
fictional.
REAL BUSINESS
Let’s roll up our sleeves and use what we’ve learned this week in a real-life business situation. Each week, you’ll
encounter a scenario where you will assume the role of a business person who works with or at a national
discount retail store, like a Walmart or Target. These companies provide important, everyday staples for millions
of people across the country and have become very successful businesses in the process.
Discount retail stores have locations in communities across the country. They often have strong and recognizable
brands that are household names. We will explore how business works throughout this course by taking on a few
of the many different roles at successful companies like these.
YOUR ROLE
This week, you’ll assume the role of a Category Manager for the Beauty Products category at a national discount
retail store.
WHAT IS A CATEGORY MANAGER?
Category Managers are responsible for related groups of products (for example, baseball equipment or
laundry detergents) for a retail business. They use research, information and insights about the category
to change shopper behavior and increase sales of the products in the category. They also work with the
suppliers of the products in their category to ensure that good products and services are available to
customers.
As a Category Manager, part of your role is to analyze data and information about how well a product is selling
to help the maker of that product improve the product and consider introducing new products. Rochelle and her
team at Alikay Naturals have asked you, the Beauty Products Category Manager, to review one of their products
and determine where it lies in the product life cycle. Additionally, they have asked you to recommend ways to
improve the product in order to increase sales.
1
BUS508: INTRODUCTION TO BUSINESS
INSTRUCTIONS
STEP 1: PRODUCT LIFE CYCLE
Read the Product Report for Alikay Naturals Moisturizing Black Soap Shampoo. The Product Report contains
important information that will help you to identify where the product stands in the Product Life Cycle and give
you clues about what changes customers might like to see.
Respond to Rochelle and her team at Alikay Naturals based on the information in the Product Report.
• Identify where Moisturizing Black Soap Shampoo is currently positioned in the product li …
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