Problem Definition
Victorinox became the largest manufacturer of Swiss Army Knife as well as the key player in the sales of Swiss Army Watch after acquiring it main competitor Wenger SA in 2005. The CEO of the company, however, needed to find a way in which the company’s new venture into fragrance business, also acquired from Wenger SA, would gain a competitive advantage in its new market. He, therefore, gave Urs Wyss, the head of marketing for the company, the responsibility for assessing how best to run the newly acquired fragrance unit. Some of the questions the manager was to use as a guide included whether the company needed to design a business to venture into the fragrance business and if so how, whether the existing brands attributes were to be transferred to the new fragrance products and whether there was a need to change the old fragrance’ name to a new one.
Information Summary
Karl Elsener started Victorinox in 1884. This company located in Switzerland was aimed at delivering cutlery to the Swiss Army Soldiers. Ever since, the company remained true to its mission, which was to provide humanity with top quality products. To ensure that the firm dealt with competition and possibilities of imitation, quality, functionality, iconic designs and innovation became the company’s core values. The values made Victorinox the largest employer and knives manufacturer in Europe.
There was yet another company by the name Wenger SA that offered stiff competition to Victorinox. It specialized in manufacturing multifunctional knives and watches. The company also made deals with other businesses to produce their goods under its name hence ensuring good business relationships with various market players. This glory, however, did not last for long due to the September 11, 2001 terrorist attack. As expected, the attack had an adverse impact on the political environment and the global economy. Due to the dramatic decrease in knife sales, the Wenger Company got to the brink of bankruptcy. As a result, Victorinox became the only Swiss Army Knife in the world and after lengthy negotiations, it acquired Wenger Company (Fullerton and Weigand 146).
Information Analysis
Victorinox was able to broaden its product portfolio by acquiring the Wenger SA. The company was able to transfer the qualities of innovation, functionality and iconic design to the new products, which enabled it to shape the concepts that were necessary for market approach and product development. The new products included the Swiss Army knives, timepieces, luggage, households and professional cutlery, fragrance and fashion (Fullerton and Weigand 148).
At around this time, the Swiss Army fragrance whose sales totaled $9 million was only available in the United States and Canada. In general, there was a significant decline in the profits acquired by the Fragrance industry during early 2000 due to the fears of war. Other factors that led to a decrease were the fluctuations in the chemical and oil prices and reduced demand as most people were unemployed.
Problem Re-examination
As mentioned, there was underperformance in the fragrance industry. There was fluctuation in the chemical and oil prices, and the poor were economically unstable to afford luxurious products. With time, however, there was an income increase, and consequently, non-necessary products such as fragrances became affordable. With the growing desire for the people to have a better self-image, there were increased sales. As a result, the Victorinox Company could take advantage of the new improved sales and establish a fragrance business. Al it needs is a good market for the raw products and a proper marketing strategy. It is also important for the company to transfer its usual attributes to the new product to ensure high marketability. Inventing new ones might take time, and this could lead to losses. As long as the people love the original name, Swiss army, there is no need to invent a new name.
Formulation of Alternatives
Improve technology from moderate to high.
Establish global standard rules that will help regulate the fragrance market.
Advantages and Disadvantages
Advantages
The fragrance industry does not impose tariffs as barriers in most developed countries.
The increasing income among the middle class and has a positive effect on the demand as people are now more interested on self-image than before.
Disadvantages
Lack of global standards for fragrances hence local rules that vary from one country to another causing inconsistency in prices.
Little technology that has contributed to moderate quality
Only the major brands have a market. Hence, the unknown ones receive almost no sales.
Fragrances are considered as luxury. Hence, there is a limited market for this product.
Evaluation of Alternatives
High technology will aid in using the right proportions of the required chemicals during manufacturing hence improving the quality of the product.
There is also need to introduce global standards for the fragrance industry to ensure that common rules are used by all stakeholders. This means that proper rules and regulation should be created that will ensure that all producers get an equal market for their products. This will reduce monopoly.
Implementation of the Chosen Alternative Control
There is the need to make sure that there are enough start-up funds that will make sure that there is purchase of enough machinery that is necessary for the fragrance industry. The improved technology developed from the increased machinery will help the companies in pricing, packaging and distribution.
The introduction of new global standards will ensure that all the manufacturers have a voice in the market.
The company needs to ensure that it uses innovative distribution channels to capture its target customer and hence a good market share.
Control
If the Victorinox Company can apply the recommendations given, the Swiss Army Fragrance can acquire a reasonable market in the current fragrance industry that has a mass fragrance market of $8 billion hence improving the total sales of the company.
Works Cited
Fullerton, Gordon and Heidi Weigand. Introductory Marketing. London: Ivey Management Services, 2005. Print.
