1

2 Introduction: Scope, a green, mint-tasting mouthwash is one of the leading brands of the healthcare division of P&G company; a world leader in consumer goods. It was introduced in 1967 and was positioned as a great tasting, mouth refreshing product that provides bad breath protection. It became market leader in 1976 and since then it had been enjoying largest market share in Canadian mouth-wash market. Evolution of Canadian Mouth-wash Market and current market environment: Listerine, a germ-killing mouthwash, that eliminated bad breath, remained the leader of Canadian mouthwash market until 1967, when Scope was launched. Scope soon took over its place and became the market leader in 1976 because it was the first product of its kind which provided bad breath protection and also offered great taste. Later on other companies also came with new mouthwash products with slight improvements and positioned them as not just germ-killing mouthwash but also helping fighting plaque and keeping gums strong. In 1988 Plax was introduced as pre brushing rinse. It claimed that rinsing with Plax and then brushing normally fights plaque up to three times more than normal brushing. Its launch was a success and it grabbed 10 percent share of total market in 1989. It is clear from exhibit 4(given case information) that although retail sales have increased in the period 1998-1990 but it is because of the overall expansion of the market. Market of mouth-wash products is increasing at a rate of 5% per year. Market share of Scope had decreased from 33% to 32.3% in this period. Next big player in the market and also Scopes nearest competitor is Listerine with market share of 16.6% followed by Listermint (10.6%) and Capacol (10.3%). Plax has apparently created a niche market for

plaque-fighting mouthwash product, which is 10% of the total mouth-wash market. It is the only player in this category. Other brands like Listerine are also expected to promote their product as plaque fighter and enter in to this segment. As the whole mouthwash market is expending at 5% rate, it is expected that this plaque -fighting mouth wash market segment will further grow in future. Rest is the mouthwash market shared by different brands, more or less positioned around Bad breath fighting and good taste providing benefits.

Mouth wash Market in 1990 Plax (10%) Scope (32.3%) Listerine (16.6%) Listermint (10.6%) Capacol (10.3%) Colgate (0.5%) Store brand (16%) Other(3.7%) 'Plaque

fighting Mouthwash' niche market3 Consumer Analysis :

Most important for any marketing plan is the customer of the product and his/her needs. It is the starting point of any marketing strategy. Need Category :

As evident from exhibit2 (given case), 75% of Canadian households use one or more mouthwash brands. Given case information describes Rest 25% do not use it because

They dont believe they get bad breath

Believe brushing alone is enough

Find alternatives like gum and mints more convenient As mentioned in the given case information most important reasons behind using mouthwash are

It is a part of basic oral hygiene

It gets rid of bad breath

It kills germs As mouthwash is a low investment and low involvement product, a buyer doesnt do much research and buying process is less time consuming. Doctors recommendation, friends advice and advertisements play significant role in decision of consumers to buy and try the product for the first time. After which it is their self evaluation of product, which brings them back to the product. Buying Process: A hypothesis on how the product was bought could lead to possible routs of reaching the targeted customers. On the basis of own observation, investigation and intuition, a general buying process of Scope mouthwash should look like this: Smell breathes what should I use? mouthwash ask wife for advice make trip to store read labels

 buy scope mouthwash use observe buy Scope mouthwash next time Buyer and User: The Demographical Segmentation Buyer and the user of a product may be different. Their perception and reason behind using a same product, a mouthwash, may be different. Depending upon age and the social stage of consumers, on the basis of general observations, intuitions and investigations, following can be a segmentation of the different users of mouthwash products: (A) Child Stage (4 yr-10 yrs, living in parental home): For this category of users, their parent, generally mother buys the product, though fathers opinion also matters. Mothers main concern behind buying a mouthwash would be hygiene. They will naturally prefer a product which could help fighting germs and preventing inflamed gums by plaque over any mouthwash which prevents only bad breath. Although it is worth considering that children will always want a product which could offer great taste. 4 (B) Youth Stage (young, single/married not living in parental home): In this category user him/her self is the buyer. These consumers are fairly brand cautious and an advertisement stimulating the notion of need of good breath for social acceptance and appreciation can trigger the need and convert it in to want of that particular mouthwash brand.

(C)Mature Stage (Age over 40): Reports say that most of the Canadian population is suffering with gum related problems by this age. Dent ists recommendation plays a significant role in buyers decision. Normally this segment buys from the local drug dealer. The Behavioral Segmentation: As shown in Exhibit 2(case information given), in 1990, 75% of Canadian households used one or more mouthwash brands and on average, usage was three times per week for each adult household member. On the basis of frequency of usage, another every important segmentation of mouthwash buyers is done.* Heavy Users: once a day or more Medium Users: two-six times a week Light Users: less than once a week *Ref: Given Case information Positioning Strategies of main players in market: Mouthwash Consumer Segmentation Heavy Users (40%) Medium Users (45%) Light Users (15%)5 Listerine : It was launched as a germ -killing mouthwash that eliminates bad bre ath but now its repositioning itself as plaque fighting product that helps prevent inflamed gums caused by plaque.

Capacol : positioned close to Listerine, as a germ-killing mouthwash. Scope: Positioned around good taste and bad breath preventing mouthwash. Listermint

: It was positioned as a direct competitor to Scope as good tasting mouthwash that fights bad breath.

Colgate Fluoride Rinse : It has got Canadian Dental Association Seal and positions itself as it fights cavities and has a mild tast e that encourages children to rinse longer and more often.

Plax : A plaque-fighting, pre-brushing rinse , Claims that rinsing with Plax, than brushing alone, removes up to three times more plaque than just brushing alone.

The Issue

The Canadian mouthwash market is expending at a rate of five percent per year and plaque-fighting segment consists ten percent of this market. Plax is the only player in this segment as if now. The key issue is what strategy should P&G take up to capitalize on this emerging market segment. There could be three possible ways: (a)Product Improvement: Add some ingredients to Scope which will enable it to fight plaque and then reposition it as plaque fighting mouthwash through such claims. (b)Marketing Improvement: Do nothing, in terms of targeting the plaque fighting segment, but look at the other possible claims that could be made for better marketing of existing product. (c) Line extension: Launch a new product which will be positioned close to Plax. Analysis

: P&G choosing for product improvement i.e. adding ingredients to existing Scope, so that it could fight plaque, seems a viable option to save current market share. It would prevent existing customers to switch but researches show that it would not make any additional sales, further consumers may get confused and shy away from brand. Another key issue is that if retailers dont find it uniquely different from existing Scope they might drop its shelf-facing, which in turn will affect the sales of Scope or to avoid this P&G will have to pay $50,000 per Stock Keeping Unit. Assuming 5% per year growth of total mouthwash market, if Scope succeeds to retains its current market share of 32.4%, following would be the Gross Margin of Scope product in 1991 and 1992Table1: 6

1990

1991

1992

Total market

1,358,000

1,425,900

1,497,195

Market share

32.4%

32.4%

32.4%

Sales volume

439,992

461,992

485,091

P rice

per unit

$41.25

$41.25

$41.25

COGS

per unit

$25.93

$25.93

$25.93

Gross Margin

$6,740,677

$7,077,717

$7,431,594

Researches show that Scope has some antibacterial ingredients which fight germs and reduce Plaque. But the current strategy for marketing emphasizes only upon the breath refreshment and good tasting. If company chooses not to enter in plaque-fighter segment and focuses only upon improved marketing of existing product, some medical benefits could also be highlighted. Through careful repositioning of

Scope, consumers perception could be chang ed about Scope. Their attention could be drawn towards health related benefits of Scope. But market research shows that it would only help in retaining existing customers and would not provide any extra sales. Further any extra claim may confuse customers and sales may drop. In current market situation Plax has created a niche segment which comprises of ten percent of whole mouthwash market. It is expected to grow further as other players like Listerine are also expected to enter in this segment in coming future. If nothing was done, Scope would lose its market share. The last option left is to introduce a line extension to Scope, a mouthwash that fights plaque. Let us consider this option in detail. The product development division of P&G has recently developed a new pre-brushing rinse that not only performs as well as Plax but also does taste better than it. Keeping in mind the history of P&G to bring up products fulfilling customers unmet needs, it fits well as it caters the need of plaque fighting as well as providing better taste. Another concern is that if the new product line is to be launched, a product test costing $20,000 would be required. Market Research shows that this kind of a product may take two years to get 6.5% share of total mouthwash market in two years of its launch. There is also a threat of this product cannibalizing 2 to 9 percent of Scopes market share.

The Proposal:

By carefully considering all pros and cons of possible ways to pursue the new emerging segment of mouthwash industry, under the light of my analysis, I recommend P&G to launch a new product which fights plaque and tastes better than Plax. To avoid any confusion in consumers perception, it should be given a suitable, distinct name rather than Scope . As currently Plax is the only product in this segment, and is charging premium price of $65.09 per unit, any new product from P&G would also be accepted at a

price close to that of Plax. Furthermore, in order to give correct message to consumers that the new product is also of the quality of Plax, it should be priced close to Plax. Per unit price of $61.99 would be competitive and lower to Plax. Let us consider the pricing of the new plaquefighting product, say X, in detailTable2: 7 Product X (plaque fighting and good taste qualities)

$ per unit

Price per unit

61.99

Ingredients

8.16+2.55=10.71

Packaging

5.10+.30=5.40

Manufacturing

D elivery

3.12+1=4.12

Miscellaneous

2.55

COGS

29.78

Gross Margin per unit

32.21

As this kind of product is expected to cannibalize the Scopes share by 2 to 9 pe rcent, even if we take the pessimistic approach and consider 9 % cannibalization and if the product takes 2 years to get to the ongoing level of 6.5 % of total mouthwash market in 1992, financials and sales figures would roughly look like table3 below.

Table3:

1992

Product X

Scope

Total market

1,497,195

1,497,195

Market Share

6.5%

29.5

Sales volume

97,318

44 1

, 672

Price per unit

$61.99

$41.25

Gross margin per unit

$32.21

$15.32

Gross margin

$3,134,613

$6,766,4 1 5

Total gross margin of both products

Total:

9,901 , 028

Comparison of table1 and table2 clearly shows that this is more profitable option than trying to retain current market share by improving the product. Although a product testing cost of $20,000 is associated with launching new product and also advertisement for new product will also attract extra expenditure, but still in a long run overall it is more profitable. Bibliography : 1.

Kotler, P.(2008). Principles of Marketing (5th ed.) Prentice-Hall publications 2.

Procter & Gamble-Scope (Given case details). 3.

Silbiger A. Steven (2005). The Ten Day MBA(3 rd ed.)HarperCollins publications.