While completing their third year of science at university, Erika and Kurtis invented a new contact-lens colouring process they named NuView. They did routine market studies which found that 80% of those surveyed wanted to try NuView. Erika and Kurtis developed a business plan, obtained several new business start-up grants, and had their product medically tested, approved and registered.

One bottle of NuView contained enough solution for three months of normal contact lens use. As a result of consumer suggestions, NuView kept adding new colours and buyers could now choose from five different ones (red, green, blue, orange, and brown). To change eye colour a person would simply add two drops of NuView to each contact lens, wait five seconds, and the colour would last for 20 hours.

With their $200,000 start-up grants, Erika and Kurtis had sufficient capital to lease a small plant, do some preliminary newspaper advertising, purchase the required manufacturing equipment, and hire a full-time production supervisor and a part-time office assistant. They also paid to have a company Web site built from which products could be ordered and the company marketed.

To date, about 10 percent of sales occurred on NuView's Web site. However, in the most recent company survey, Kurtis found that 95% of the students contacted said they would prefer ordering NuView over the Internet.

With their equipment and staff, they estimated they could produce up to 1000 bottles of NuView per eight-hour production shift. Production output ranged between 250 - 550 bottles and these targets were set by Erika during monthly production meetings regardless of actual sales or marketing research results. Recently, the production supervisor mentioned that there were increasing amounts of unshipped retailer returned NuView stacked in cartons throughout the plant and that he had now rearranged the production equipment several times to make room.

Each bottle cost $4.00 to produce and was sold to retailers for $10.00 who in turn sold it to consumers for $20.00, which was also the price someone would by NuView for from the company Web site. During a routine Internet search, Erika discovered a news item about contact lens colouring tablets being developed by a leading contact lens manufacturer that was planning to give away the new tablets as a promotion when the product was launched next year.
With this new information, the staff decided they needed to make some decisions as how to best manage, market and manufacture NuView

Questions:

What are the key marketing issues in this case?

What is the root cause likely to be?

What alternatives are there for Erika and Kurtis and what are the pros and cons of each?

What would you recommend and why?

Additional Requirement

The scenario analysis based on Marketing. Nuview is a contact lens coloring company which is recently established. The target of this product is teens, youngsters and college going students. As a start up the company is doing well, until they come across news that a leading contact lens company is also planning to make entry into this line. With competition in sight, Nuview is in retrospection of their marketing plan.

Word limit 820