Transcript Slide 1 - Angelfire

Jaclyn Feder, Christi Louis
Jennifer Muckley, Seena Sherman, Jennifer Zupnick
The Problem
Should Drypers Corporation
invest an additional $10
million in advertising in order
to increase their brand
awareness, create value, and
increase market share?
Market Characteristics
• $4.5 billion in 1997
• Market Segments
- value price - 5%
- premium price - 78.9%
- private labels -16%
Value Priced Products
• Avoid high R & D costs
• Avoid national advertising campaigns
• Rely on in-store promotions,
couponing, print advertising, and
cooperative advertising.
• Consumers look for the best price and
quality
Private Labels
• Stress price over quality and product
features
• Invest minimally in consumer
advertising and marketing.
• Rely on retailers to promote their
individual brand.
Premium Priced
Products
• Heavily advertised
• High brand recognition
• Compete on a basis of product quality,
features and benefits, and price.
• They are more expensive than value
priced diapers yet much more
successful.
• Spend a large portion of their budget
on R&D and advertising.
Corporation Goals
• Goal: Large scale brand recognition.
• Build their product name into one that
is sought out by the consumer.
• Drypers seeks to increase market share
and stock price in 1998
SWOT Analysis
Strengths
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Product Innovation
Product diversity
4th largest diaper producer
2nd largest seller of training pants in grocery stores
Exclusive private label supplier for Wal-Mart in L.A.
Acquisitions and joint ventures in foreign countries
Strong cash flow and sales growth
Licensed to use Sesame Street characters
SWOT Analysis
Weaknesses
• Lack of national brand name recognition
• Less extensive national production distribution
capabilities
• Comparatively less advertising budget
• No dedicated sales force in U.S.
• Not present in mass-merchant distribution areas
SWOT Analysis
Opportunities
• Increase brand awareness through TV advertising
• Combine all labels to be under Drypers
• Increase market share by gaining a presence in
mass-merchandisers
• Pursue international expansion opportunities
• Expand product lines to include additional consumer
products
• Maximize license agreement with Sesame Street
• First mover advantage of germ-protection.
SWOT Analysis
Threats
• Continual growth of market share by P&G and
Kimberly-Clarke
• Minimal response to television advertising
• Decline in grocery store sales on diapers and
training pants
Alternative #1
No TV Advertising
Advantages
- Safe, no risk-taking
Disadvantages
- Solves nothing
- Not pro-active
Alternative #2
Television Advertising
Advantages
- Potential to reach a much wider audience
- Increase brand awareness of consumers and mass
merchandisers.
- Continuous opportunity to capture new consumers
- Brand loyalty to Drypers
- Stress their innovative product line
- Stress their differentiated products
Alternative #2
Television Advertising
Disadvantages
- High cost
- Failure can be detrimental
- Brand loyalty of consumers to other products
Break-Even
Market Share
Company
Kimberly Clark
Proctor &
Gamble
Drypers Current
Drypers - 10 Mil
Television Budget 1997
Market
$/Percentage
(Millions of Dollars)
Share
Point
75.6
41.20
1.835
69.6
37.70
1.846
3.219
13.219
3.10
5.43
1.038
1.84
Break-Even Sales ($)
Total Domestic Sales
Gross Margin
Additional Sales Needed to Break
Even
(38.8/100 = 10 Mil/X)
Percent Increase in Sales
($25,773,195.88/$191,300,000)
$191,300,000
38.8%
$25,773,195.88
13.47%
Recommendation
• $10 Million in Television Advertising
Stressing: Differentiated Product
• One National Brand Name
• Sesame Street
Implementation
• Careful attention to design
• Research ad placement
– Early morning cartoons, daytime TV
• Leverage negotiations with mass
merchandisers
Any questions?