Case 1: The Perfect Sundial

Summary: Gwyn Lawrence noticed a lack of sundials as garden ornaments in California. Since the Californian weather is ideal for sundial
use, he started designing the perfect sundial. He faced numerous issues during production, including high costs, technical limitations
and guarded production information. He overcame these issues, by seeking expensive alternatives. However, the product did not appeal
to consumers, due to high price, heavy weight and large size. Gwyn redesigned the sundials, making them smaller and cheaper to
produce, and modified the distribution point from garden centres to gift shop, targeting the tourist population. Sufficient market research
and analysing consumer needs could have mitigated various issues faced.
Characteristics: Gwyn Lawrence is a classical example of the caveats of insufficient market research and
misaligned strategy.
Sundials are ancient technology, and serve primarily as ornaments, with their utility being a secondary function.
Gwyn discovered an existing market for ornamental sundials, and set out to design and market high quality, highaccuracy sundials.
Although Gwyn successfully acted upon an opportunity, and a market, which was not being satisfied by a
product, he failed on the following parameters:
1.
2.
3.
4.

He had a relatively significant first-mover advantage, but could not leverage this advantage to develop
and expand his market.
He was not able to develop production competence in a reasonable period of time.
He could not respond effectively and economically.
He did not survey the market, and did not understand its needs effectively.

Triggering Effect: The triggering effect for Gwyns entrepreneurial foray into the ornamental sundial market was
his trip to California. He assumed that the sundial would be the perfect addition to Californian gardens, with the
hot, sunny weather serving as a perfect environment for sundial technology.
Opportunity Recognition and Orientation: In creating a suitable product, Gwyn did not take into account the
needs of the customer, and although he recognized and opportunity in the form of an existing market for sundials,
his solution was not suitable to market needs.
Therefore, his product design strategy did not orient itself with market needs. Risk involved in producing the
sundial manifested itself in the form of a non-responsive market to Gwyns product.
Market Research: Since this case study establishes the need for market research at all stages, and specifically
prior to product design, market research is found to be lacking in Gwyns design approach. He recognized the
market, but not its needs. The sundial was found to be expensive to produce; costs which were transmitted to the
buyer. Furthermore, he had failed to establish whether a market existed to justify costs involved in the project. In
hindsight, the high fixed cost towards design research could not be recovered from the existing market.
Moreover, his distribution point of choice was garden centers. He failed to realize that sundials are given as gifts,
and therefore, a better choice would have been gift shops. Although he wished to market the product to homeowners, the product was often sought by tourists. However, inefficient design, heavy weight, large size, and high
pricing dissuaded potential consumers from purchasing the product.
Strategy Formulation and Implementation: Although the product was designed to last 500 years, this
timeframe was not a selling point to the consumer. The average consumer does not have a 500 year perspective
on sundials, which could have justified a high cost, due to extreme durability.
He conducted extensive production research, but his objective was not economic or efficient production, but very
strict product specification guidelines. No logical source is found for these product specifications, and it can safely
be assumed that the product design was based on multiple assumptions made about the market.
Quality was a crucial element of the product; however, the existing market did not require a high-quality product.
Hence, the consumer base was unwilling to pay the high price for a high-quality, ornamental product. The value
added by Gwyns product design was of no significance to the average sundial buyer.
Aftermath: Since his initial product line failed, Gwyn adapted his product to better suit market needs. He made
the sundials smaller, cheaper, and less accurate. He changed distribution points to gift shops and targeted
tourists, rather than home-owners. This resulted in better results. However, sufficient market research could have
mitigated the numerous issues faced by Gwyn, saving him time, equity and anxiety.

Case 2: A House of Glass

Summary: The House Of Marbles was facing slow sales of its toys. It leveraged its market positioning, by introducing colourful marbles in
its board games. This resulted in a massive increase in demand for marbles, and the company restructured its business model to explore
the independent market in marbles. The increasing demand let them to acquire new production capability, and explore avenues to
decrease cost of production. To harness excess production capability, the company developed alternative markets for its products, while
creating a diverse product base to increase sales. In the final stages, the company completely changed its business model, and
strategically realigned itself with market needs.
Characteristics: The House of Marbles, facing a slowdown of toys, decided to focus their product range on
historically researched board games. The games often used marbles (complementary goods), and the company
decided to increase product attractiveness by introducing coloured marbles. These marbles developed into a
independent market, leading the company to high sales volumes of marbles. Due to increasing demand, the
company increased production capability and capacity, by acquiring production assets in the US, which led to
decreased costs of production.
However, the increased production capacity was in excess of market needs, therefore the company split its
production of marbles into two separate SBUs. The first catered to the high-end segment of the collectable
marble market, while the other manufactured low-cost marbles for aerosol manufacturers. Therefore they were
able to utilise their excess capacity, and gain new footing into unexplored market. Their acquired production
assets, allowed them to compete with steel ball bearings in aerosol products, leading to cost savings for aerosol
manufactures.
Triggering Effect: The triggering effect for entrepreneurial initiative was the slowdown in sales, which revealed a
independent market for marbles. The company pursued a diversification strategy, and entered new markets, by
acquiring production capacity and increasing capability.
Opportunity Recognition and Orientation: The Company discovered an unexplored independent market in
marbles. It diversified and expanded its product range to better serve market needs. It also increased product
quality and added value by turning normal marbles, into high end collectors editions. Organisational flexibility
allowed them to restructure their business model, and helped them realign with market needs, rejuvenating profit
streams.
Market Research: Market research played an important role in the success of this company, as they were able
to uncover new markets in aerosol manufacture for their excess production capacity of marbles. While increasing
product range, they also conducted market research to minimise production costs, making the sale of marbles a
viable profit stream. They did this by shifting production to the US, where production costs were lower due to low
cost of industrial fuel.
Strategy Formulation and Implementation: The Company implemented successful strategy initiatives, by
being flexible in their business model. When their existing product range failed to garner favourable market
response, their varied the product line, and were sensitive to market input. This allowed them to successfully
develop the marbles sales stream, and turn a secondary market into their primary activity.
Strategically, they focussed on increasing product range, market penetration, quality and lowering costs. They
turned a commoditised product; i.e. marbles, into a high-value collectors item. While other companies/small
scale marble artists may have existed in this segment, The House of Marbles successfully deployed economies
of scale to capture the market.
Once it was an established market operative, the company spread beyond national boundaries, catering to
international markets, and increasing its product range to include speciality toys that may have commanded
premium prices.
Aftermath: This is an excellent example of the need for flexibility in a business model. Most companies and
sectors are subject to changing market needs, and must be capable and ready to modify the nature of their
business to harness new and evolving markets. Moreover, a lucrative market must be sustained by profits. In this
case, since the baseline sales of marbles was not enough to sustain production and design costs, the company
harnessed its excess production capacity to fund its premium line of products. It is assumed that low margin, but
high volume sales to aerosol manufactures turned the high-margin, low volume segment of collectors edition
marbles, into a viable profit stream. Furthermore, the diversification initiative also spread to harnessing
international market, further boosting sales, and performing optimal utilisation of production capacity.

Case 3: Following His Nose

Summary: Ian Mitchell and his company, Applewoods, entered the natural cosmetics market fairly early (1978) Due to small size; the
company relied of distinctive packaging. Due to market needs, the company moved towards a customised product range. The company
had high product differentiation because of their focus on packaging and fragrance. To sustain growth, the company expanded into other
scented products, and fragrance became a core competency. To mitigate supplier unreliability, the company started producing its own
soaps. It turned its small production capacity into a strength, as it viably produced small batches of customised soap for hotels and chain
stores. The company also strategically positioned itself in diverse market segments, with two separate product lines catering to both
young and conservative customers.
Characteristics: The case of Applewoods, is a study in adapting to market needs, and how small size can be a
strategic advantage. The company started out in the natural skin and hair products segment. To compete with big
name manufacturers, the company combined distinctive packaging, with natural ingredients and attractive
fragrance. This brought them to the attention of major retail stores, who often required customised products.
Therefore the company changed its product range to serve commercial customers, as opposed to the retail
market. As a byproduct of their customised products, they developed expertise in fragrance. This expertise was
leveraged into competitive advantage, with the company venturing into diverse markets that were tied to a
common need for fragrance.
Triggering Effect: The older business model of natural skin and hair products was not sustainable, as
Applewoods could not effectively compete with other big manufacturers. To overcome this, the company
developed a core competence in fragrance, invested in production capacity, and eliminated unreliable supplier
issues.
Opportunity Recognition and Orientation: The company recognised the need for a soap and shampoo
producer that could offer small batches of customised products to hotels and retails chains. Since they could not
compete against big manufactures, the company converted their small size, which was an inherent weakness,
into a strength, emerging as a cost-effective solution for customised products.
Market Research: Market research was crucial, to establish areas where the company could leverage its
competitive advantage of fragrance into a range of diverse products. Furthermore, market research revealed that
the company could be successful in the market, when small batches of customised product were involved. As
part of its diversification strategy, the company addressed both market segments, by creating separate product
lines for demographics determined by age.
Strategy Formulation and Implementation: Market research revealed the need for a company providing
fragrance and customisation in the skin and hair product market. Applewoods realigned itself with market needs,
catering to large retail stores and hotels, offering customised products, and adding product branding to their
customers products. Thus, the value addition served by the company resulted in success for the company. As
part of their strategic management, the company acquired production capability in the manufacturing of soaps,
and eliminated issues cause by untimely supplier response. This also gave them additional capability to
economically produce small batches of soaps for the hospitality and retail industry.
The company shifted from a low sales-volume market of natural skincare products, to a high volume market for
fragrance and customised soaps. This was the turning point for the company, and allowed them to become one
of few firms operating in the specific market segment.
Aftermath: The Applewoods case illustrates the importance of recognizing and leveraging core competence, as
they have successfully achieved in the case of fragrance. Moreover, an important lesson demonstrated is how to
turn limited production capacity into a core competence, as they were able to make small batches of customised
soaps viable to produce.
Therefore, in market research plays an important role, but an equally important role is played by effective
strategic management, and analysing market needs. In certain cases, it may not be required to increase
production, as there are fixed costs involved with increased production capacity, that may not be recovered from
a market segment. On the other hand, product differentiation is crucial in success, and their distinctive packaging
and quality control brought them to the attention of major retail stores.