We enter this case in January 2006. Phoebe Masters, the newly appointed product manager for hand and body lotions at Dermavescent, Laboratories, Inc., had to decide whether (or not) to introduce a new package design (5-1/2 or 10 ounce aerosol can) and whether she should move forward with a market test.

This case provides the opportunity to consider common issues in product management, namely product life cycle management, and the role of packaging in the marketing mix.

As we have discussed, organizations are always looking to grow their business. For the Soft and Silky brand, how do you “bend” the product life cycle curve upwards? Soft and Silky appears to be in the mature stage of its product life cycle.

This case also provides the opportunity to address risk (uncertainty and amount at stake) in a straightforward manner. Case data/information allows you to interpret focus group information and case histories, calculate margins and payoffs, compute the expected monetary value (EMV) of the two aerosol packages, and determine the value of “perfect information.” Valuing perfect information provides a benchmark when considering research outlays. You are to read Kerin and Peterson Chapter 3 section (pp. 55-61) on decision analysis and perfect information as a primer (note that these tools are embedded in a discussion of general case analysis).

For you margin analysis, you are given suggested retail pricing and associated distribution margins to derive the manufacturer’s selling price (Dermavescent Laboratories, Inc.). Your analysis should consider contribution margin per ounce. Note that the $10,000 supplier setup charge is a relevant cost only for the decision whether to introduce an aerosol can or do nothing. The setup charge is not a relevant cost to the can size decision.

For each of the four forecasts (given in case Exhibit 5), you need to