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The MEM Company, Inc. Case

2. The second strategy alternative that the MEM Company should consider is a revision of the company's distribution structure to include mass marketers in the distribution chain for the company's English Leather product line.

3. The third strategic alternative that the company should consider is the adoption of an effective market testing procedure for new products, coupled with a discontinuance of the overriding of market testing results by arbitrary management fiat.

4. The fourth strategic alternative that should be considered by the company is the development of its own prestige product line to be marketed in the industry's exclusive segment.

The cosmetics industry in the United States produces and markets both cosmetics and toiletries. The major players in the industry are Alberto Culver, Avon, Chesebrough Ponds, Fabrege, Gillete, International Flavors and Fragrances, Noxell, and Revlon, although not all of these firms are independent entities.

Industry sales are growing. Operating margins in the industry are relatively high. Net profit in the industry is also strong. The industry is moderately leveraged. The industry return on total capital (longterm debt and equity) is strong.

Cosmetics are by and large discretionary products. Thus, retail sales are heavily influenced by both advertising and new product introductions. Product differentiation through advertising is essential in the successful marketing of cosmetics. Cosmetics, however, are relatively recession proof, and demand tends to remain strong even during economic downturns.

In the contemporary market, skin care products are strongest, while fragrances are weakest. Demand for other personal care cosmetics and toiletries remains strong.

The prestige segment of the fragrance market has been hurt by inexpensive imitation fragrances called knock offs. Additionally, changes in packaging and distribution processes have created some problems for prest...

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