Protor & Gamble Case Study

Background and Decision:

Procter and Gamble is one of the most successful costumer companies in the world, it markets its brand in more than 140 countries. Scope is green, mint-tasting mouthwash is one of the leading brands of Procter and Gamble Inc. which became market leader in Canadian mouthwash market in 1976 and until 1990 it has enjoyed the greatest market share. Plax was introduced in Canada in 1998 on a different platform from the traditional mouthwashes. Plax is the only player in the market segment of plaque fight. Generally, Canadian mouthwash market is growing at an annual rate of five percent, and plaque fighting segment represent 10 % of this market. Since Scope is not operating in plaque-fighting segment, key issue is development of strategy for Procter and Gamble to enter this market segment and to fight Plax. Gwen Hearst is responsible to develop a strategy that would ensure the continued profitability of scope in face of all of their competitive threats. The objective of Hearst is to prepare a marketing plan for proctor and gamble mouthwash business for the next three years. She is responsible for maximizing the market share, volume and profitability of the brand.

Analysis:

According to the data from the market research, around 75% of Canadian population are using mouthwash brands, and on average, usage is three times per week for each adult household member. Furthermore, market can be segmented according to the frequency of usage: a) “heavy” users (once per day or more) – 40%, b) “medium” users (two to six times per week) – 45%, c) “light” users (less than once per week) – 15%. Most important reasons for usage of mouthwash are: a)It is part of my basic oral hygiene – 40% b)It gets rid of bad breath – 40%, c)It kills germs – 30%, d) It makes me feel more confident – 20%, e) To avoid offending others – 25% .Regarding the distribution channels, Scope is mostly selling in food stores and that is why their share in food stores is 42%, while in drugstores 27%, and approximately 65% of all mouthwash sales went through drugstores.

Prior to launching of Scope, leader of Canadian mouthwash market was Listerine, a germ-killing mouthwash that protects from bad breath. When Scope was introduced, it has taken leading position soon because beside bad breath protection it offered great taste. However, in 1988 Plax was introduced as “pre-brushing” rinse and it was the first mouthwash to fight plaque. Plax established new segment within mouthwash market, segment of plaque-fighting and gained 10 % of total market. For the period 1989-1990, mouthwash market has grown by 5%, while Scope has started losing its market share which has dropped from 33% to 32.3%.

Alternative 1: Maintain status quo: Advantages: For the period 1989-1990, mouthwash market has grown by 5%, while Scope has started losing its market share which has dropped from 33% to 32.3%.Advantages: market leaders at 32.3%, Avoid cannibalization of scope, Avoid heavy regulatory requirement of health product, Target market of fresh breath. Disadvantage: Not address new competitors, Demand of market fresh breath may lower down.

Alternative 2: Extend the product line under Scope name: Extension through launching a new product which can provide their customers with the same product as Plax which in addition to breath refreshment helps in plague reduction.

Advantages: Penetration to new market segment, Increases market share by 6.5% in 2 years, an immediate reaction for Plax offensive strategy. Disadvantages: Threat of cannibalization of existing scope brand, Threat of confusing the current users, higher cost ($20000 for testing the product) especially in research and development department, marketing department.

Alternative 3: Create a new “flanker” brand to compete with Plax: Advertising and promotion (media, magazines, etc.), create health awareness, and build customer trust. Allows them to enter new market with new name which allows more chances of expansion. Not provide the sudden additional sales initially. New brand name will require some to reach out to masses. Further, if retailers do not find the product uniquely different from existing Scope, it might drop its shelf-facing and same