Transcript Vaseline Petroleum Jelly

Vaseline Petroleum Jelly
Kurt Beloff
Donald Chase
Brendan O’Hare
Matej Okorn
Yejin Shim
Company Overview

Chesebrough-Ponds incorporated (CPI)
was formed in 1955 through the merger of
Chesebrough Manufacturing Company
and Ponds Extract Company.
 In 1976, the company had
– Six divisions.
– Net sales of $747 million.
– After-tax profits of $54 million.
Product Overview



Five different jar sizes.
– 1.75 oz. / 3.75 oz. /
7.50 oz. / 12.0 oz.
15.0 oz.
Two different tube sizes.
– 1.00 oz. / 3.75 oz.
Two forms.
– Regular.
– Medicated.
The Market and Distribution


Market For Vaseline Petroleum Jelly (VPJ)
– Heavy users are women aged 45+ (multifunctional
skin care) and mothers (baby care). Other specific
uses are for chapped lips and sunburns.
– Direct competition is mainly from private label
petroleum jellies which compete on price.
Distribution of VPJ
– Distributed mainly through grocery, drug, and mass
merchandise stores.
– Current distribution penetration is 92% for
grocery stores and 96% for drug stores.
Marketing For VPJ

VPJ sold by 130 person sales force
– Believe product is mature and requires price
promotion to stimulate trade interest.
– Focus is on the “headquarter accounts” rather
than individual outlets.

Three principal areas of VPJ marketing
– Advertising
– Consumer promotion
– Trade promotion
Marketing of VPJ (Cont.)



Advertising
– Advertising has historically shown the versatility of
VPJ as a skin care product for adults and children.
Consumer Promotion
– VPJ brand management has spent relatively little
money on consumer promotion.
Trade Promotion
– Primary method of VPJ promotion.
– In 1976, there were 223 days with a promotion
and 70% of trade sales were on promotion.
Industry Analysis

Petroleum jelly is a household staple used
by 90% of the population.
 Vaseline is the industry leader with a 90%
market share.
 Product is known for its versatility. Uses
include baby use, skin care, chapped lips,
etc.
 Remainder of market consists of
private label manufacturers.
Company SWOT Analysis

Strengths
– Success of company
– Large market share (90%)
– Strong brand recognition (97%)
– High distribution penetration
– 70% of homemakers view VPJ as economical
– No significant direct competitive petroleum jelly
products that effect VPJ market share
– Versatility of product
Company SWOT (Cont.)

Weaknesses
– Low brand visibility- 23% recall recent ads.
– Terms and timing of trade promotion


Trades get discounted price without requiring advertising.
In 1976, 70% of factory shipments sold on promotion
– Lack of sustained budget for advertising


4th qtr. advertising often cut to meet profit targets.
1977 plan to cut advertising budget by 50%.
– Salespeople focused on “headquarter accounts”
rather than individual retail outlets.
Company SWOT (Cont.)

Opportunity
– Consumer advertising rather than trade promotion
will lead to pull rather than push demand.
– Capitalize on Vaseline brand name to reinvent
VPJ and diversity the product line.
– Eliminate multiple-brand promotions and dedicate
advertising to VPJ exclusively.
– Turn light users into heavy users.
– Target VPJ to institutional users such as
hospitals.
Company SWOT (Cont.)

Threats:
– Uncontrollable economic conditions.
– Specific-use products which compete against the
versatility of VPJ (baby care, sunburn cream, etc.)
– Shift in trade promotion philosophy can lead to a
deterioration of relationship with trades.
– Direct competition in petroleum jelly market from
new brands of existing companies, such as
Johnson & Johnson.
Challenge

Although market share is 90% in
petroleum jelly market, we must compete
against specific-use products.
 New CPI product launches in 1978 are to
be funded by stable brands such as VPJ,
yet VPJ is expected to increase profits.
 Develop effective marketing strategies
with better allocation of budgetary
resources to increase consumer
sales and overall profits.
Options






Maintain status quo.
Reinforce and expand distribution of
larger sizes in all trade channels.
Increase trade promotions.
Increase retail prices to capture additional
profits.
Advertise to show additional VPJ uses
(lubricant, shoe shining, etc.).
Produce VPJ to institutional users.
Options (Cont.)

Eliminate multi-brand promotions to focus
marketing exclusively on VPJ.
 Convert light users to heavy users.
 Diversify VPJ product line into usespecific segments (e.g.: sun burn lotion,
skin care, baby care, lip balm, etc.)
 Retrain sales force by focusing more on
individual accounts.
Recommendations

Effectively coordinate VPJ advertising and
promotions to trade and consumers.

Extend VPJ product line through
introduction of new specific-use products.

Retrain and refocus current VPJ sales
force to capitalize on VPJ brand equity.
Coordinate VPJ Promotions



Decrease exclusive
trade-only promotions.
Run trade and
consumer promotions
simultaneously to
capitalize on synergy.
Require trades to
market VPJ to
consumers.
Incremental Sales Due To
Trade Promotion (Daily)
4000
3000
2000
1000
0
1972-1977
w/o Cons. Prom.
w/ Cons. Prom.
Extend VPJ Product Line

Introduce specific-use applications of VPJ
– Reengineer VPJ with additional ingredients
to target specific-uses
 Skin
care
 Lip therapy
 Baby care
 Medicated
Retrain Sales Force

Change perception of VPJ from a mature
product that requires trade promotion to
an exciting product with a new strategy
aimed at increasing consumer sales.

Change focus to include individual retail
outlets and institutional buyers.
Recommendation Rationale

Coordination of consumer and trade promotions
will lead to stronger consumer sales through a
focused marketing initiative.

Our new product line will lead to new sales
opportunities by capturing unprobed markets.

A reinvigorated sales force will help ensure the
success of the new VPJ product lines while
maintaining existing market share.
Conclusion

VPJ has been around for 100 years.
 With a new:
– Marketing focus;
– Product segmentation; and
– Refocused sales staff.
 Vaseline will be around for the next 100
years.
THE END!
Vaseline Petroleum Jelly
Leading ChesebroughPond
For the Next 100 Years!