Can Sariwa Silk Squeeze In A New Segment? PDF

Quick Case HBP No. 8477 Can Sariwa Silk Squeeze In a New Segment? ST...

Quick Case HBP No. 8477 Can Sariwa Silk Squeeze In a New Segment? ST PO The Scenario In January 2024, B&T Goods International (B&T) planned to launch a tube form of its Sariwa Silk shampoo R brand in the Philippines. If successful, this product would then launch in several other Asian countries. Sales of the Sariwa Silk product line had grown by 18% in 2023 in Southeast Asia, but only by 11% in the O Philippines. Sid Mendoza, President of B&T International, decided that he needed to meet with Rex Lim, the head of marketing, to discuss the launch strategy and the possible impacts of the new shampoo tube on sales of other Sariwa Silk products. PY Background B&T specialized in premium personal care products. Established in 1998, it was known for its innovation O and high quality, as well as its eco-friendly packaging. In 2023, B&T had revenue of over PHP ₱8 billion, a 14% increase from 2022.1 One quarter of B&T’s sales came from the Sariwa Silk product line; annual C revenue for this line increased by 6% in 2023. B&T targeted growth of 15% for 2024 with the new product launch. Sariwa Silk had stock keeping units (SKUs) at different price points (see Exhibit 1), and in 2023 the respective sales for its 90ml and 170 ml bottles grew 18% and 14%. These two SKUs contributed 50% T of Sariwa Silk’s total revenue. Sariwa Silk's sales varied across regions (see Exhibit 2). O Exhibit 1: Sariwa Silk Product Portfolio N Size Pack Price (PHP) Contribution to total Sales of Buhay Silk Product Portfolio (volume in %) O 100 gm Tube 129 New product 675 ml Bottle 399 7 D 400 ml Bottle 239 14 170 ml Bottle 129 19 90 ml Bottle 69 31 6 ml Sachet 3 29 Page 1 of 3 Can Sariwa Silk Squeeze In a New Segment? HBR Quick Case Exhibit 2: Sariwa Silk’s 2023 Sales and Growth by Region Region Revenue (PHP in Million) Growth (%) Luzon 1008.7 3.8 Visayas 410.7 9.5 Mindanao 581.4 7.6 ST Total 2000.8 6.0 The Philippine hair-care market was approximately PHP ₱70.1 billion in 2021 and was projected to grow PO at a CAGR of over 3% from 2021 to 2026.2 The demand for organic and natural products was increasing more quickly.3 The Conversation R Sid was finally able to connect with Rex Lim, B&T's head of marketing. O Sid: I'm excited about the potential of the Sariwa Silk shampoo tube. It's the first of its kind in the market, offering customers precise usage and convenience for travel. PY Rex: True, but will it affect our current product lines and cannibalize our SKUs? Sid: The tube format will complement our existing products rather than cannibalize. Its key selling O points target a slightly different consumer need. C Rex: But won’t some of our customers switch to the tube form? Sid: Our research suggests it will attract more new customers. We will position it as a travel-friendly T product while highlighting the value and benefits of our bottles for regular home use. O Rex: Should we keep the same target for the new product for all three regions or plan different targets based on past performance? N Sid: What's the projected demand for each region? O Rex: Our market research shows higher shampoo sales in Luzon, but customers in Visayas have many tourist destinations, and there could be high demand for our new product there because it is D easy for travelers to carry. In addition, our major competitors, P&G and Unilever, are strong in Luzon, but Mindanao's market seems more fragmented, which could be an opportunity for us. Page 2 of 3 Can Sariwa Silk Squeeze In a New Segment? HBR Quick Case I had another thought. Should we change the sales targets for the Sariwa Silk 90ml and 170ml bottles given that the Sariwa Silk tube is between these product sizes? The Ask ST 1. Should B&T launch Sariwa Silk in tube form? 2. Suggest a segmentation, targeting, and positioning strategy for the new product. PO 3. What factors should B&T consider while deciding the 2024 targets? Suggest sales targets for the Sariwa Silk range of products (value-wise and volume-wise) for different zones. R —————————————————— 1 O The exchange rate is USD $1 = PHP ₱58.4 as of July 19, 2024, https://www.x-rates.com/calculator/?from=USD&to=PHP&amount=1, PY accessed July 19, 2024. 2 “Philippines Haircare Market Size and Trend Analysis by Categories and Segment, Distribution Channel, Packaging Formats, Market Share, Demographics and Forecast, 2021-2026,” Global Data, December 28, 2022, https://www.globaldata.com/store/report/philippines- haircare-market-analysis/, accessed August 27, 2024. 3 “Hair Care – Philippines,” Statista, March 2024, https://www.statista.com/outlook/cmo/beauty-personal-care/personal-care/hair- care/philippines#revenue, accessed August 27, 2024. O C T O N This Quick Case was prepared by Sandeep Puri of the Asian Institute of Management, Philippines, Rakesh Singh of the Institute of Management Technology, Ghaziabad, India, and Raj Agnihotri of Ivy College of Business, United States. HBR Quick Cases are O developed solely as the basis for class discussion. They are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. This publication may not be digitized, photocopied, or otherwise reproduced, D posted, or transmitted without the permission of Harvard Business Publishing. Although based on real industries and despite occasional reference to actual companies, this Quick Case is fictitious and any resemblance to actual persons or entities is coincidental. Copyright © 2024 Harvard Business School Publishing Corporation. All rights reserved. Page 3 of 3