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Original Creations FBM Case Study
FBM Case Study SEM 1
Mary Shelley, the founder of Original Creations is disappointed. Her company, has just withdrawn from its latest venture after three unsuccessful months of trying to market a new product.
The company markets a range of original ‘lifestyle’ products using a direct mail brochure and the Internet. Products marketed include a rainwear range for dogs and cats, an automatic air freshener for bathrooms and ‘make-your-own’ birthday card kits. In its outdoor collection it markets a range of garden lights in the shape of garden flowers and outdoor clothes dryers. It has over one hundred individual personal items including hair clippers, blood pressure monitors, and exfoliate scrubs.
The company designs the product but does not manufacture their own products. These are made by other companies who either already make a similar product or have the product capability to make what the company asks them to make. Usually the company sends them a rough idea of the product and then the evaluate the prototypes. Once the company is satisfied with the product, they negotiate a contract based on price, volume, quality and delivery time. Original Creations uses a wide variety of manufactures both in the UK and abroad. Many of their foreign manufactures are based in China, and the communication with these companies are often difficult because of the language barrier, communication issues and cultural differences. The manufacturer sends their products in batches to the warehouse, where only spot checks are made to check the quality. The warehouse then packs the products and sends them off to the customers.
The company is always looking for new product ideas as the essence of keeping sales moving is novelty and interest. The product just withdrawn after three months in the brochure, and slightly longer on the website, was an extended toenail clipper whereby a person could clip their toenails without having to bend down. Not all products succeed, but Mary’s problem is that this is the tenth recent new product failure and she is worried that the company is losing direction.
The reason the company decided to withdraw the extended toenail clipper has a couple reasons. Firstly, sales are for lower than expected. Boxes of the toenail clipper are stacking up in the warehouse, not being sold and are taking up valuable space in the warehouse. Secondly, a large number of the clipper are being returned by the customers, who are complaining of the quality and its usefulness being less than expected. Some customers also complain that some goods are damaged when they arrive. Sales are too low to justify the cost of manufacturing and the returns are too high to justify a continuation of the product.
New products ideas come from an in-house team consisting of Mary Shelley, two of her directors Frank Smith and Jeff Stein, responsible for Operations and Project Management respectively. Operations is mainly involved in packing up the products, labelling and posting. The Project management division is responsible for special projects across the company and get involved in all areas where improvements are needed. They can be in operations, logistics, facilities management, sourcing of the products and other materials, transportation, etc.
Mary and her two directors are from technical backgrounds. Mary employs other managers. The HR manager runs a small group with mainly young and relatively inexperienced HR staff; the logistics and warehouse manager runs a group of mainly temporary staff recruited via employment agencies; the media manager is responsible for putting the brochure together every 3 months, and has recently set-up the website; a buyer manager handles the contracts with the companies who manufactures the products that are sold on by Original Creations; and the finance manager looks after finance and the general administration.
A small customer services team handles customer issues such as product enquires, payments, warranty, non-delivery and product complains.
The company employs a total of 40/50 people:
- In Operations 15
- In HR 5
- In logistics and warehouse 10
- The media team 3
- The buyers 2
- Finance and general admin 6
- Customer services : 2
The company only sells in the UK at the moment. Brochures are sent out to existing customers as well households who are identified through periodically analysing databases, purchased from marketing companies, on ‘lifestyle’ of customers. The website is maintained well, however there has been little investment in digital marketing.
Product idea generation is purely in-house and does not use focus groups. Idea generation sessions takes place on the last Friday of every month and usually results in about ten new ideas being put forward and discussed. As the major shareholder of the company Mary Shelley, takes it upon herself to select which, if any of the ideas should be taken further with a view to include them in the product portfolio. She uses her own judgement in this screening process as she feels that the growth of the company is down to her ‘feel’ for the market.
Once a product idea is selected, Mary and her team find someone who can make the product and it is then incorporated in the brochures and on the website. She believes that the best test of a product is whether it sells or not and for this reason no market research is conducted before its inclusion in the product portfolio. Once the product is launched, a small sample of customers are contacted randomly and asked to complete a questionnaire regarding their views on this product and other company products.
Mary has called for a management meeting including the directors and managers.
Mary is seriously concerned about recent product failures and is wondering if a different and perhaps more systematic approach to developing new products might be appropriate. She is asking her staff to put a project team together and advise her what the company might be doing wrong and how it might improve its new products development activities.