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Distribution Channels
Chic Soap
You are asked to help formulate the marketing plan for the entrepreneur starting Chic
Soap. The concept behind Chic Soap is simple; it sets out to incorporate fashionable
perfumes such as Obsession, Raffinee and Opium into a high quality white soap base.
The product would then be packaged using the logo of the perfume plus a Chic Soap
common background. The advantages for the perfume supplier are: a guaranteed outlet
for its perfumes at full retail prices; and a low cost trial route for potential customers. The
advantages for Chic Soap are: the use of already established perfume concepts to
promote the soap; and access to the distribution achieved by the perfumes. You are asked
to identify the segment towards which the product is directed, the product benefit that is on
offer, the way in which the segment will be serviced; how the distribution channel will be
supported, what promotional planning will need to be included and an outline cash flow.
1. The distribution channels available for the sale of toilet soaps of various qualities are
independent chemists, department stores, multiple chemists, supermarkets, and grocers.
There were an estimated 200,000 outlets selling soap in the United Kingdom. Most of
these sold mass market products which retailed at £0.25 per 150 gm bar. Premium soaps
made up only a small proportion of the market and were available in a limited number of
outlets which included independent chemists and department stores.
2. The main competitive products in the premium sector were soaps such as Roger and
Gallet, Penhaligon range, Yardley, Morley and three internationally available premium
soaps. The prices for the 150gm bar for the 5 main ranges were: £1.60, 1.75, £1.85,
£1.95, £1.45. There was some evidence that the price elasticity of the premium product
sector was fairly low. Consumers bought the product primarily on perfume and image
rather than any other product attribute. Very high prices were charged for soaps that were
part of ranges such as Rive Gauche; around £3.00 for the 150 gram equivalent. As the
companies sold very little soap in these ranges they were not particularly worried about the
effects of other products cannibalising brand sales. They were prepared to see Chic
Soaps take on the sales of perfumed soap to a wider market.
3. The size of the total toilet soap market was around £190 million at retail. The top quality
premium soap market was estimated to be 7 per cent of the total; it was growing slowly as
the deodorant market came under pressure because of the environmental problems
associated with aerosol sprays; other growth factors included the expansion in showers,
and the expansion in the number of single homes.
4. Retail outlets made about 20 per cent gross on premium soaps. They tended to hold
only limited stocks, and did not therefore want the product in as large a quantity as mass
market products which were available in cartons containing 50 or 100 bars.
5. Many of the independent chemists were serviced through wholesalers. Such
wholesalers accounted for about 70 per cent of the market. Wholesalers expected to make
around 8 per cent. There were about 100 wholesalers that serviced the independent
chemist; of these around 20 national chains accounted for 80 per cent of the total
business. The national department stores (around 350) bought product direct.
6. Research suggested that the main consumer of premium soaps was female 35+, socio-
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