Sweet Leaf Bath Co. Harvard Case Solution & Analysis

SWEET LEAF BATH CO.

Introduction

Sweet Leaf Bath Co. (Sweet Leaf) was a company that was started by Rose Creamer and Stacey Guymer in 2007. It grew through craft shows and exhibitions.

Sweet Leaf Bath Case Solution case study solution

Critical issues

Since 2011, the company had witnessed minimal growth in its sales due to several reasons. The family members also have some financial problems due to which one of the partner worked outside the company to fulfill the family needs and only one of the partner could work full time with the company. For the company to succeed, it was necessary to increase the sales so that the partner who is working outside the company can divert her full attention towards the company. To be exact, an estimated sales amount of CDN$150,000 to $200,000 was needed in order to allow Guymer to withdraw the compensation from her full-time job. The critical issues for the company were:

  • The company’s sales growth was very slow
  • It faced a net loss in 2009 and 2010 due to minimal growth and high expenditure
  • The distribution plans and promotional efforts were not formalized
  • There was high competition from national, international and regional competitors
  • The company needed to find and chose effective promotional and distribution plans in limited resources and budget

Analysis

The partners observed a year of minimal sales growth in 2011 of just 12% as compared to the growth of last year of 218%. They realized that they needed to develop and improve their marketing strategy that would enable them to expand the business.

The annual website traffic was estimated at 4,500 visits in 2010 that reduced to 4,300 visits in 2011. Where competitors had a presence at 100 outlets; Sweet Leaf products were available only in 20 retail locations across Canada and the majority of these locations were within Ontario and consisted of gift shops, natural food stores and earth-friendly outlets. To reach half of the estimated sales needed, the company’s sales must increase by 192% this year.

Decisions Criteria

The decision that is to be taken to overcome the problem must fulfill the decision criteria.

  • The promotional and distribution channel must increase the revenues of the company to $75,000 this year and $150,000 by next year so that it can be termed as successful.
  • Since the funds were limited, they could not exceed a $5,000 advertising budget for the 2012 fiscal year.

Options analysis

Out of the many options available to expand the company’s distribution plans and promotional efforts; its owners must select those opportunities that will offer maximum benefits on a limited budget.

DISTRIBUTION OPTIONS

Sweet Leaf has three possible alternatives for distribution which are further sub-divided in some cases.

Alternative 1: Online Marketplaces

1a.) Etsy: It had approximately 6.8 million to 8.4 million unique visitors each year. Each item would cost $0.20 to post for a four-month period; the listing was automatically renewed at a cost of $0.20 when the product was sold. Along with that, fee of 3.5 percent on all sales were charged.

With this if we assume a conversion rate of 0.015%; then it would result in incremental sales of $74,100. When the costs would be deducted from this amount, the net sales would remain $71,278.5; thus, the company would observe the expected sales growth through this channel. Along with that, the cost was also within budget through this channel.

1b.) Pristine Planet: It had approximately 4,400 and 14,300 unique visitors per month. It would provide free exposure on social media and did not charge per transaction fees. To list up to 100 products, a two-month trial cost of $50 will be charged and then $50 per month afterwards. Since, this website is particularly restricted for fair-trade products; hence, the conversion rate will be slightly higher, which is assumed to be around 5%. However, the low number of unique visitors made it an unattractive alternative where the criterion of increased sales growth was not fulfilled.

Alternative 2: Distributor Contract

This alternative gives exposure to a large number of retailors. If the products are discounted; then more customers are likely to purchase the product. However, this alternative overruns the estimated budget if the number of retailers increases to 3. The gross margin will reduce from 51% to just 32% that will be a huge loss for the company. Hence, this alternative has more cons than pros.

Alternative 3: Vendor Shows

The normal vendor shows cost $2500 but provides a high gross margin of 69%. This particular alternative will cost around $3200 and will be a onetime cost for the company. As a result, end-consumers, retailers, suppliers and industry experts will learn more about product innovations by the company.

PROMOTION OPTIONS

Sweet Leaf has six possible alternatives for promoting, which are further sub-divided in some cases.

Alternative 1: Public Relations Consultant

The external public relations consultant would help the company to develop a print and online media presence with the goal ....................................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Sweet Leaf Bath Co. is a small scale , family-owned bath and body products company which is well-known for environmentally conscious products.

The company started off initially promoting its top-quality  products at shows and exhibitions through retailers. This experience helped this company a lot and the founders learned a great deal about the bath and body industry and various other issues and problems surrounding these products.

But, when a period of sluggish sales struck the company the owners decided that it was high time that they needed to discover and put into action a new marketing strategy which would allow them to grow in future. A lot of options were in front of them. Out of the many options, the partners must decide which options must be selected which would provide the maximum returns to the company on the limited budget.

by Melissa Jean

Source: Ivey Publishing

15 pages. Publication Date: Feb 04, 2014. Prod. #: W13604-PDF-ENG

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