Established in 1964, Minnetonka Corp. started in the business of soap and toiletries marketing. It worked its way into expanding its market to include toothpaste in 1984 and fragrances in 1985 and again in 1988. This is a case study analysis on how Minnetonka captured value, given that the core value-creation proposition of each of its products is easy to imitate.
Adam Brandenburger, Vijay Krishna
Harvard Business School (795163-PDF-ENG)
Apr 21, 1995
Case questions answered:
- How does Minnetonka Corp. capture value, given that the core value-creation proposition of each of its products is easy to imitate?
- What strategic reasons does Taylor have to sell the specific business units he sells, at the specific time he sells, to the specific buyers to whom he sells — rather than selling these units at other times to other buyers, or keeping these units and selling others?
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Case answers for Minnetonka Corp.: From Softsoap to Eternity
How does Minnetonka Corp. capture value, given that the core value-creation proposition of each of its products is easy to imitate?
Minnetonka Corp. captured value by boldly attacking industries such as soap, toothpaste, and fragrances through (1) innovation and (2) product and brand extensions.
The bar soap industry had slow growth of 2-3% a year, limited innovation, and competitors. (Minnetonka, 3). Through the development of the “Incredible Soap Machine” and the SoftSoap brand, Minnetonka Corp. turned the soap industry on its head with its propriety liquid blend of “shampoo-type detergents, glycerin, and lanolin” and its invention of the pump-operated plastic bottle (Minnetonka, 3).
This product innovation created an entirely new category of liquid soap – eventually a $400M industry! Liquid soap represented a direct substitute to the lackluster bar soap industry. Furthermore, the pump invention was a technological breakthrough at the time. Liquid soap could now be dispensed in a cleaner, more sanitary way at a fraction of the price – “SoftSoap in 10.5-oz dispenser was equivalent [to] five to eight bars of soap.” (Minnetonka, 4). That is an enormous difference and a huge value driver for Minnetonka Corp.!
Another big process efficiency for SoftSoap was the high-speed filling lines that could easily shift between products and formulations (Minnetonka, 4). This provided a cost advantage through economies of scope in that the total cost of producing two types of soaps using the shared lines was less than producing a soap separately – providing a significant cost advantage (MCS, 68)!
Minnetonka Corp. did a masterful job of capturing value through…