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Rocky Mountain Soap Company The Move Toward Sustainable Packaging Case Solution
The case is about ‘Rocky Mountain Soap Company’ whose co-owners Baty and Birch worked hard to build sustainability in their business environment that reflected their brand’s core values of ‘100% natural skin products’. Their next plan is to build sustainability into product packaging as consumers’ purchasing behaviors are continuously changing with time. Consumers are now inclined towards buying natural, organic and toxin-free products for three possible behavioral factors: environmental-consciousness, appearance-consciousness and health-consciousness. Such behavioral patterns are driving worldwide companies in skincare industry to make standard practice of bringing environmental friendly packaging of products in order to meet sustainability objectives. In consideration of these market trends, Baty and Birch have decided to bring sustainable packaging solution that will not be only safe for consumers’ health but will also benefit environment in the long run.
Following questions are answered in this case study solution
Identification: Background & Statement of Problems / Issues
Analysis of Alternatives
Recommendation(s) & Implementation
Case Analysis for Rocky Mountain Soap Company The Move Toward Sustainable Packaging
1.2 Challenges / Problems
However, there are several external and internal constraints that can bring major challenge to Rocky Mountain Soap Company’s (RMSC) sustainable packaging initiative. RMSC is currently facing intense competition in personal care retail industry as many large sized global companies including The Body Shop International Limited, Kiehl’s LLC, L’Oreal, Lush Retail Limited and Burt’s Bees Inc. are already developing differentiation strategies related to product categorization, sustainable packaging and cost reduction for achieving competitive advantage. Such intensifying competition can affect RMSC’s positioning in market if it is unable to bring attractive product packaging solution. Baty and Birch have considered three possible solutions to the problem of un-sustainable packaging, which are- recycle, reduce or re-fill. But, all of them involve certain risks such as- if they are financially feasible or not, and are they effective and efficient enough in terms of practical viability etc. Recycling alternative can be both in-convenient and un-profitable as it may incur high cost and need extra effort. For example, paper-based compostable packaging of lip quench product may cost $2.50/unit, which is higher than traditional plastic-based packaging cost of $0.56/unit. Other than that, it can also be time-intensive because of lengthy dis-assembly procedure. RMSC can also face higher research and development (R&D) cost in application of re-fill strategy because of company’s limited bargaining power and inability to avail the economies of scale advantages.
To develop a sustainable packaging solution that:
Involves lesser environmental costs.
Is financially feasible for RMSC.
Gains popularity among customers.
Builds strong brand image on sustainability grounds.
2. Situation Analysis
2.1 S.W.O.T Analysis
RMSC’s focus on ‘100% natural, organic and toxin-free products’ is itself a key strength, which shows company’s environmental and social consciousness. Toxin-free products are aimed to benefit consumers’ health. These products are protecting natural habitats and marine living things because they have minimal impact on environment when they are being drained out. Such exposure, experience and expertise of integrating the sustainability in product development practices can help RMSC to successfully introduce sustainable packaging solution to customers.
RMSC has built eco-friendly environment in its offices and stores, which can contribute in building trust among customers.
RMSC’s revenue has grown from CA $ 7,139 (thousands) in 2013 year to CA $ 13, 883 (thousands) in 2019 year and is expected to further grow in future. A good financial performance indicates that the company is progressing rapidly in skincare industry.
It was noted that RMSC had opened 700 wholesale accounts and expanded to 6 major retail sectors in 2017. The continuous expansion is bringing brand’s popularity among customers. RMSC can benefit from the existing brand image and popularity and can be able to get huge support from customers in favor of sustainable packaging solution.
RMSC is currently competing with major industry players, which depicts that company’s brand power is strong enough to challenge the key market players.
In 2012, RMSC was ranked as one of the top ten admired corporate cultures in Canada. This award had significantly contributed in enhancing performance, building good image among customers and achieving sustainable competitive advantage.
RMSC is unable to avail economies of scale advantage due to its limited size. This leads RMSC to have weaker control on cost. It was observed that cost of goods sold (COGS) was increased from 24% to 27% in 2017-2019 time period, which further reflects its inability to handle production costs.
Although, RMSC is giving tough competition in skincare industry market but it has still lesser expertise in developing sustainable solutions as compared to big market players like L’Oreal, The Body Shop and Kiehl’s etc.
RMSC has also comparatively lesser financial resources and networks than large sized industry players in market.
Consumers’ demand for organic and natural products are growing due to which many large sized companies are shifting towards production of healthier and eco-friendly products in personal care retail market. Although, organic products are quite expensive than traditional products, customers are still inclined towards purchasing organic products because they are becoming health and environmental conscious. This strong customers’ base is bringing opportunities for RMSC to develop eco-friendly product solutions like packaging sustainability.
According to statistics, skin and personal care industries that target males’ customer segment are expected to grow from 2016 to 2022 by 5.4% on global scale. Previously, only women were targeted by such skincare industry retailers and manufacturers. This changing trend of bringing new target markets is developing broad base of customers for RMSC. By targeting both customer segments, RMSC would have option to attract broad range of customers through its core product characteristics, as well as through its sustainable packaging practices.
Recent trend of sale/purchase through e-commerce platforms like Amazon, eBay etc. is becoming popular worldwide. Retail companies of grocery and skincare industries are rapidly shifting towards online distribution channels to deliver products worldwide. This recent trend is benefiting small sized growing companies like RMSC. RMSC can compete with key industry leaders through creating positive and user-friendly experience for customers, providing forums for customers’ engagement and placing products packaging reviewing option.
Intensifying competition in personal care market can threaten RMSC’s positioning in market as many big industry players are moving their focus from traditional plastic based product packaging to paper based or other alternative product packaging solutions that have minimal impact on environment.
Skincare companies are already taking effective measures related to product packaging for environmental protection in response to stringent environmental laws and environmental-conscious organizations’ campaigns. This can lead to increase bargaining power of suppliers that provide alternative packaging materials like biodegradable plastics, and also increase research and developmental costs to such extent that may affect RMSC’s profitability on large scale.
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