Our strategy was predicated on segmenting the Sonite market. In Period 2, the POPhily R&D project was completed. Brand MOLLY was launched in Period 3 to target the Savers segment within the Sonite product. Additionally, in period two, we started initial R&D investment within the Vodite product line, with just a minimal investment of $100k. In Period 3, we noticed that none of the competitors had started any R&D investment within the Vodite product and we shifted advertising, commercial, and R&D budget away from the Sonite market and increased the Vodite R&D budget to $2.9mm during Period 3. We felt that we could have at least a one period jump start on the new Vodite market and initially capture the entire Vodite Innovator segment market share.
Brand MOLLY had a strong introduction in Period 3, selling out its inventory. However, MOLLY’s production target was probably too low (as we sold out) and the decision to marginally increase the price in the next period backfired as our competitors dramatically lowered pricing to gain market share. (NEED TO ADD IN WHO GAINED SHARE HERE AND HOW MUCH PRICE DECREASED). Our strategy, to segment out the Sonite market, was effectively put on hold after the introduction of MOLLY in Period 3, as we invested $2.9mm in the Vodite R&D project and completed the project in Period 4, spending over $6.3mm into the project. We effectively maintained pricing in the Sonite market in our three brands from Period 3-Period 4 while we focused our funds in developing the Vodite product. While our market share decreased, our Earnings before tax (EBT) remained flat from Period 3-4 due to our pricing strategy. Our competitors lowered pricing on their professional and high earners products, while we barely cut our price, based upon the idea that a higher price was a positive for the branding of MOVE. When we re-launched MOVE in