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Background
CleanSpritz is a subsidiary of MJ Brenner which has been suffering a revenue decline in the last 5 years. CleanSpritz’s product line was mainly a diluted all-purpose surface cleaner spray. However, due to concerns from customers about environmental and health-related issues possibly associated with cleaners, the company in 2009 adjusted the chemical composition of its product by 15% but performed poorly yet in sales compared to competitors. Also due to a perceived drop in spending power (post-recession) and in response to demand for a cleaning concentrate version, it introduced a concentrate version (3:1) sold in a 16oz packaging. This will encourage the reuse of existing spray bottles and reduce environmental pollution associated with frequent product distribution. This attempt didn’t reverse the declining trend of revenue.
Furthermore, the company began research in 2010 into the production of a 99% biodegradable version only to be ready in 2014. Unfortunately, the parent company, MJ Brenner, is concerned about the viability of the CleanSpritz brand and intends to cut down investment so as to boost other subsidiaries. The team at CleanSpritz is frantically looking for the saving strategy that will return the brand to winning ways (revenue growth).
Problem statement
CleanSpritz brand has been suffering revenue decline on the average of about 7.5% annually for the last 5 years and wishes to reverse the trend. The demand for “green” products grew across the industries in the early 2000s, but sales of green household cleaning supplies represented 3% of all sales as of 2011. The baffling concern is what is fueling the reaction in the marketplace? Is it price sensitivity propelled by post-recession economics or environmental concerns driven by a desire to save the planet and self? CleanSpiritz is now faced with a decision of which product option will help save the brand considering all the variables in the marketplace.
Objective
The objectives of the CleanSpritz brand include the resurgence of net sales or revenue and ensuring environmental friendliness. There is a growing market segment that is environment and health-conscious. If CleanSpiritz does not react to the developing trend where the threat of new entrants promising and providing “green” products will keep getting stronger. Also, the competition in the marketplace already has variants of green products with the potential for expansion. In addition, the purchasing power of the target market is critical. This will inform the retail price of the planned product(s).
Product options
One of the decision options for the team is to re-launch an existing concentrated variant. The initial launch of the product was low-key and is believed to have impacted its success. However, the concentrate variant isn’t environmentally friendly. It has generated an ethical concern if the product and its upgraded packaging should be passed off as environmentally friendly.
A second consideration is to introduce a 4:1 concentration with a dissolvable packet. This will reduce the challenges of biodegradable packaging and cheaper retail price because of lesser fixed cost.
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