Transcript A roll-out launch Wolfgang Breuer and Richard Kohler

A roll-out launch
Wolfgang Breuer and Richard Kohler
Should BC-18 product be based on pan
European product or through adoption of
more than one brand name to reflect local
market needs.
 Competitors have increasingly been
imitating P&G’s innovative products and
marketing strategy.
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P&G was founded in the US in 1837.
 Today, it is the world’s biggest
manufacturer of packaged consumer
goods.
 Global leader in health and beauty
products, detergents, diapers and food.
(Pampers, Ariel, Mr. Proper, Camay etc.)
 P&G’s profit is generated by its
international operations which is the
fastest growing part of the business.
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P&G bought in 1985 the Richardson-Vicks
Co. (with brands like Head and
Shoulders, Vidal Sassoon, Pantene)
 In 1987, the Blendax Group (dental care
and beauty products)
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Billion dollar brands
Ariel is a brand of laundry detergent/liquid available in numerous forms and scents.
Bounty is a brand of paper towel sold in the United States and Canada.
Braun is a small-appliances manufacturer specializing in electric shavers, epilators, hair care
appliances and blenders.
CoverGirl is a brand of women's cosmetics.
Crest/Oral B is a brand of toothpaste and teeth whitening products.
Dawn/Fairy is a brand of dishwashing detergent.[16]
Downy/Lenor is a brand of fabric softener.
Duracell is a brand of batteries and flashlights.
Fusion is a brand of men's wet shave razors and is the quickest P&G brand to have reached $1 billion in
annual sales.
Gain is a brand of laundry detergent, fabric softeners and liquid dish soap.
Gillette is a brand of safety razor and male grooming products.
Head & Shoulders is a brand of anti-dandruff shampoo and conditioners.
Olay is a brand of women's skin care products.
Oral-B is a brand of toothbrush, and oral care products.
Pampers is a brand of disposable diaper and other baby care products.
Pantene is a brand of hair care products (conditioners/styling aids).
Pringles is a brand of potato chips.
Ace/Tide is a brand of laundry detergent.
Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color).
Always/Whisper is a brand of pantyliners sold primarily in Asian markets.
Flash/Mister Clean is a brand of multi-purpose cleaner, and spray sold in the United States and Great
Britain.
Basic principles of P&G: “superior total
value” and should meet basic consumer
needs”
 This resulted in a strong commitment to
research to create products that are
demonstrably better than others. They
believe that through continual product
development, brands could remain
healthy and profitable in the long-term.
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Group of three or four people, assumes
general responsibility for its brand.
 Plan develop business objectives,
strategies and marketing plans.
 Selects advertising and media, develop
sales promotion, manages package
design and product improvement
projects and initiates cost savings.
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The haircare market- made up of sub- markets
Relevant market for BC-18 -> SHAMPOO AND
CONDITIONERS
1985 use per head shampoos- 400 (SU 1000)
1985 use per head conditioners-180 (SU 1000)
Shampoo market highly fragmented
Introduction BC-18 technology in 1986
Brand Pert-> brand Pert Plus
P&G key brands (Vidal sasson, Pert, Pert Plus,
Ivory, Head&Shoulders
Competitor brands (Suave, Flex)
Long term marketing goal for BC-18market share of at least 10% by the end
of 1989/90
 POSITIONING: provide great looking hear
in convenient way
 TARGET GROUP: all people
 SOURCE OF BUSINESS: new users
 PRICE: US $3.20 for the 15 oz size
 Strong TV advertising- in first year, from
March to December
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Steady growth of shampoo and
conditioner market (increased hair
washing)
 Conditioner+shampoo user below the
44% in USA
 Focus on: West Germany, Great Britain,
France, Scandinavia and Benelux.
 Important competitors: Unilever, Colgate
and L’oreal
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Big gap between the top and bottom
price
 Value based market share was very
important
 To send the brand message, media
suport was a key driving force
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 The cost structure of the existing P&G shampoo
brands.
P&G face to some restrictions:
The available production capacity:
capacity of the 1st year: 2000 MSU
2nd year: 4000 MSU
3rd year: 8000 MSU
But: with 6 months’ notice it have been possible
extra 500 MSU capacity
Lead times
 The development of a new 200ml bottle takes a
lead time of 12 months
 The lead time of developing new 250ml bottle
will take 6 months
Would you undertake a “roll-out” launch, and if so in
what country order? What are the decision criteria
for this order? In answering this question you
should take into account the expected sales volumes
as well as the given capacity restriction.
Taking the country with the highest priority, which
principles would you use in order to budget media
spending? Set out a rough media plan for the first
twelve months, with proposals for pomotion activities
in the first year. How should media and promotion
activities be budgeted for the following years?
European markets with background voiceovers changing
according to language of the country, elements can be changed
through the means of air-brush computer software e.g. the
background.
This will allow the company to cut down on promotional costs
SECOND YEAR
To maintain the growth of market share.
Sampling will go down, but should be raised again for the new
marketing cycle when decline begins.
. . . TV advertising can be reduced when the product reaches its
mature stage.
In the third year, all countries will make profits and the
company will break even point.
Examine the cost and revenue implications of the Europe-wide
introduction programme. Is there any loss to be expected in
the first years? Does this require a modification of the order
of local market entries?
In the table profit, there are any loss in the first year, for West
Germany, Great Britain, and Scandinavia.
Those happened because in the first year, they spend many for
media and promotion cost.
Great Britain and Germany are already profitable after the first
year but with the introduction in the other countries in the second
year, the gain in Great Britain and Germany will not compensate
the losses of the first year and the losses due to the introduction
in those countries.
What are the main issues to be considered in balancing a
pan-European introduction strategy with local market
needs?
For example, what are the possible alternative brand
name strategies? Should BC-18 technology be introduced
with a pan-european name,or with local brand names, or
even with a mixture of both approaches? Should a new
brand be created, or should an existing brand relaunched
in a new quality? What are possible criteria for that
decision?
What is longer-term marketing objective?
What are the alternative possibilities in relation to issues
of positioning, target groups, sources of business, pricing
strategy and packaging?
As we see, the BC-18 technology should
be introduced with a mixture of both
approaches—with a pan-European name
and local brand names. If we just introduce
with a pan-European name is bad for the
promotion of the BC-18. Local names
sound approachable. People are likely to
accept them. But if we just use local names
we will have some problems in selling them
in the whole Euro. So the best way is using
both of them.
BC-18 technology would offer the European
consumers 'Great looking hair in a convenient way'.
Currently P&G are practicing a strategy called
"Euro-Balancing" , it entails the concept of
standardizing to the maximum and implementing
localization only where necessary. By introducing a
single brand name for its potential market, P&G
does not have to create new marketing campaigns
for targeted countries. The European market is
heterogeneous, multicultural and multilingual;
therefore, the name chosen for the shampoo should
have to no connotations in a particular language's
history or religion. Moreover, the name should be
easily pronounceable in each culture.
Longer term marketing objectives
P&G is to become a leader in the European market
of two in one hair products. In Europe a steady
growth of the shampoo market and the conditioner
market could also be seen.
Positioning : combination of shampoo and
conditioner in one that is easy, time saving, and
everyday usage
Target group : everyone
Source of business : all users
Pricing : premium-priced segment; this is done in
order to keep up the image of the shampoo as a high
quality and innovative product.
Packaging : 200ml or 250 ml bottle
How do you specify the first-year marketing
objective? How does this relate to the longer-term
marketing objective?
The first year marketing objective is to attract new
European customers from competing brands to shift
to the use of shampoo to BC-18. The aim is to exert a
pull on the population in order to create a new
market niche inside the shampoo market and
encourage the people to use the new BC-18. In effect
BC-18 technology serves the core need of washing
hair and therefore it has to compete with the different
national brands which are often well established.
P&G is an international supplier of consumer goods it
is a "global leader in health and beauty care products,
detergents, diapers and food. P&G's presence in the hair
care market in the U.S has been strengthened by
innovative technology BC-18 and the replacement of an
old brand 'Pert' with 'Pert Plus'- a mild shampoo with a
fully effective conditioner. P&G decided to introduce BC18 in Europe. Traditionally, the European market is
highly competitive the main rivals are Colgate, Unilever,
and L'oreal. The European market is segmented (i.e.
value based) and sensitive to price changes (i.e. elastic
demand).The introduction of the new product BC-18
brings with it a new marketing strategy for the company.
In order to make a valued choice the 4P's of marketing
have to be considered.
Research indicates in Europe there are large price
differences among hair care products. P&G has decided
that it should place the new shampoo in the premiumpriced segment; this is done in order to keep up the
image of the shampoo as a high quality and innovative
product. P&G should charge premium price in each
country to be sold for 4.99 DM for the 200 ml bottle and
for 5.99 DM for the 250 ml bottle in all the countries
which had had been accepted during the consumer tests.
The company cannot charge a price very few people can
afford, this will also not be profitable for the company.