As a trainee working for the laundry detergent brand manager at P&G France, you are being asked the following questions in order to prepare a brand review.

Question1: What have been the main changes on that market during the past year?
Whatever the financial context in France, we can observe that customers are staying loyal to their own brand. The three major leaders, which are P&G, Henkel and Unilever, are keeping their leading position (respectively 27.2%, 20.7%, and 20.3% volume share in June 2011) and the other brands are fighting at the bottom of the graph. However since last year a new competitor is emerging in the laundry industry. As the first graph shows, Henkel is the challenger that have win market share, in December 2010, Henkel have increase his volume to 24.3% rivalling with P&G (26%) and leaving Unilever (17.7). How can we understand the rise of Henkel last year? We will try to explain this main change by comparing data from value share related to the distribution laundry in France.
On graph 1 (figure 1), we can find the laundry market represented by curves. In the past (until 2010) the laundry market was largely dominated by our brand P&G, but during the past year (June 2010 to June 2011), the volume of sales has undergone an earthquake. By analysing this graph we can find an emerging challenger to P&G, which is Henkel. On the second wave we can see a conglomerate of minor challengers that are Colgate, NLN, Reckitt Benckiser and other companies.
It is always interesting to compare volume with the value share: in the second graph (figure 2), we are staying the leader with a value share view between 31% (June 2010) and 32.7% (June 2011), but concerning our challenger we can easily identify the rise of Henkel against Unilever. It is interesting to understand that the increase of volume does not imply an increase of value (Henkel in June2010:23.1% to June2011: 22.5%). We deduce that promotion have affected sales.
In order to understand how Henkel have succeeded to go over Unilever, we can analyse the distribution in France of the laundry market. The figure 3 shows a very sluggish Weighted Distribution, so we can not consider this point, the figure 4 shows the impact of the promotion, we see that the evolution of the brands are closely related, but we can note that Unilever do a lot of promotion but they are staying third in the past years. So maybe if we do not do too much promotion we can win share value. The graph 4 shows also a counter-weight between the 3 leaders-challengers and the minor brand. We can suppose that during the period of Christmas, laundry detergent are less important purchase for family-customers so the leaders decrease their promotion (November 33.8% to 22.5% in December 2010 for P&G, 35.6% to 21.6% on the same period for Henkel and 39.7% to 22.3% for Unilever) , at the same time the minor brands increase their promotion, maybe they have enjoyed the decrease of the majors aiming to take majors’ market shares. Just after December in January the 3 leaders-challengers reengage a lot of money in order to recuperate their market share. But this change does not explain the evolution of Henkel.
The figure 5 is really interesting because it shows that last year Henkel have set up an action to increase his share of shelf (23.6% July 2010 to 26% august 2011).We have overlooked this point (P&G, share of shelf 28% July to 25.5% in august 2011), so we need to review this point in order to take back and increase our market share. This way, we have brought P&G sales volume closer to Henkel sales volume. This should explain the main change on the laundry market share.
The last figure, figure 6 is interesting too, since one year Henkel have increase his SKU per distribution point, this should lead them to increase the volume share. We can conclude that the market is very competitive and we need to focus on the next steps in order to keep our market share. The main change is the rise of Henkel but without that the market seems to be very constant.
Question 2: What is your analysis on your brands performance on that period?
We produce 5 laundry brands, each has its own particularities and its own potential customers. For example, Ariel and Dash2en1 are both for customers with a low sensitivity to prices, the first one emphasizes its efficiency and the other one the good sent it lets on clothes, whereas Vizir, Bonus and Gama target customer with a high sensitivity to prices. Each brand has its own proprieties and thus its own strategies.
No doubts that Ariel is the leader brand of P&G. For the last FY1011, Ariel represents 69,25% of the P&G laundry value. Ariel is the brand most represented in stores with an average number of sku’s per distribution point around 22,43, higher than all the other brands. What is important to notice with this brand is the very good use of promotion. Indeed, it is known that the promotional peaks are in January and September, meaning laundry selling’s skyrocketing during this period and promotion are keys to the success brands. And it can be seen that during September 2010 and January 2011, Ariel 42,3% and 55% of the sales was on the sales. Thanks to its great adaptation to the market’s needs and opportunism, Ariel for those months particularly had largely participated to the increases of P&G value share market.
On the opposite, Bonux has another strategy. Less present on the market as its very low penetration rate shows it (1,% of the Heavy Duty Low Sud), it appears that Bonux has the worst results ever. In fact, for the FY101, the value share of Bonux in the total result of P&G is lower than 2%. During the months with a lot of activities in the laundry sector, the value share of Bonux decreases or in the best cases, remains stable. Thus for example in January 2011, while the total value selling rose of 9 point, the value share of Bonux dropped again. The weak dynamism of Bonux can be explained by the lack of distribution of the brand. It appears that in France, Bonux has been step by step removed from stores. More than that, new competitors like Henkel provide now same kind of brands (which emphasizes low prices and efficacy). Thus, the brand of Henkel named Xtra, which benefits of a constant effort of promotion and a very large diffusion in the stores rises and have the best results ever.
Vizir is a special case, because it’s only liquid laundry. It approaches only a specific market and we can see that since 2009, the volume share and value share of Vizir remains low but stable. It is as if this laundry doesn’t need any publicity, when you use Vizir it’s because you have to. It’s a powerful laundry, but not with a good sent and not expensive.
As the second brand of the group,Dash2en1 represents an important part in Procter’s share market. Its sales have been increasing over the last six months, with a significant rise of volume and value share and a share shelf that gained 0,7 point between December 2010 and June 2011. We can observe the same evolution in the average number of sku’s per distribution point, which is higher than in past years, maintaining itself above 11 since the promotional peak of January 2011. As for Ariel, good results in sales can partly be explained by promotions, indeed the boosts occurred over the first months of 2011 are half due to promotion intensity since between 30.8% and 46.7% of Dash products sold during this period were on promotion. Despite a 0,1 point loss in its value market shares at the end of June, the brand remains the leader of the second tier laundries with 6.3% of the market. But they are still a threat for us, notably in terms of penetration in the laundry market since Super Croix reached 11.3 and Omo 12.9 over the last rolling year whereas Dash2en1 hardly got 11.7 …
For Gama the situation is really different; with only 2.9% of the market shares, and a poor 6.8 formarket penetration rate, far behind its competitors such as Xtra, Persil or PL, respectively 17.5, 13, and 33.9. As a small brand, Gama proposes only two products, Gama Powder and Gama Liquid, hence a low average number of sku’s per distribution point (around 4). The mark experienced its lowest value share in March 2011 with only 2.2% in a promotional peak period and ended the year in loss compared to a year ago. The buyers of Ariel or Dash products are little sensitive to price and the notion of loyalty and fidelity to the brand is really significant according to the low change in their consumption behaviour toward them despite economic troubles, price variations and so on; whereas for Gama or Bonux, consumers are highly concerned by the price and seek efficacy for a reasonable price, therefore sales are much more variable and promotions very useful to boost them.
Question 3: What will you do, for each of your brands, to improve its relative position? What is your action plan for the next six months?
Now the problem P&G is facing is that the volume share of Henkel has ever been equal to that of P&G before, which implies a threat from Henkel. The promotion intensity of Henkel is almost always greater than that of P&G since September 2010. So we think the promotion intensity should be higher.
We noticed a few issues about the whole communication plan of the laundry detergent of P&G. First of all, as young consumers, we don’t feel concerned about the advertising done on laundry detergent. We think the brand should focus a little bit more on youngsters, especially students, that represent a real market, also because every young consumer is the consumer of tomorrow, and it would be an opportunity to create already a loyalty with those consumers. So we would advice to create new commercials to target more students, even though they must not be the only target. For example we think that we could play on the intergenerational link between parents and children, for example by showing a whole family using the same P&G product (especially for Ariel), or the image of a building occupied by all kind of people (age, sex, origin…), who all use the same detergent. We also think that the creation of a new catch phrase, even catchier, could be a real way to be the first brand that comes to the mind of a consumer when he thinks about detergent.
For Ariel, the target customers are with low sensitivity to prices and they focus the quality and the efficiency of the laundry detergent. In the promotion, we have to transmit the information of Ariel’s quality and its functions but not the price. Also, we have to use some neoteric method in our promotion to make it more effective. For example, other than advertising it on mass media, we can also use internet like Facebook, Forums, Flash games, etc. The beginning of the year is a period of intense activity in the laundry market. As a consequence we should plan a few promotion mixes for Ariel products in order to insure our market shares in this period. The direct marketing should be restricted to a few flyers sent directly in households, with maybe a reduction coupon. An advertising campaign should also be undertaken on TV, radio and magazines, aiming at the “housewife under 50” : more advertising effort on TV at noon and between 7 and 10 p.m., on channels like TF1 or M6, selection of the radios (Cherie FM, RTL, Europe 1 and 2…), and the magazines. We would also implement bundles and promotion events in stores, which could also be the occasion to create privileged relationships with big retailers. With the very substitutable products in the laundry market, an effort could also be undertaken in pricing, even though Ariel aims at consumers with a low price sensitiveness. But this policy is only for the beginning of the year. After that, we would recommend to implement a new product policy, to benefit from the ecology wave : indeed one of our competitors, Unilever, with its brand Skip, launched the first “ecological” laundry detergent (Skip Petit et Puissant). We thus recommend to create a new detergent to match with the evolution of the market.
For Dash2in1 and Vizir, because the volume shares are quite low comparing them with Ariel, it is not worthwhile to do a heavy promotion for them. Instead, we can put a sample of Dash2in1 and Vizir laundry detergent into the package of Ariel so that our customers have the chance to try it, because Dash2in1 has more functions than Ariel, and Vizir can be an alternative liquid laundry in P&G, so they may bring more benefits to our customers and assuming so many people never try Dash2in1 and Vizir by their low volume shares.
Bonux may be seen as the true dilemma of Procter & Gamble. This brand is weakening, loosing market shares and market penetration every month, and represents an always decreasing share of P&G’s benefits. As a consequence, we have to make a decision to change this situation: we could abandon the brand, loosing very few benefits and market penetration that would easily be recovered with another P&G brand, but we can also undertake a total reconstruction of the brand, to give her a second youth. The idea would be to create a whole new image of the brand: renew the aging packaging, design a new advertising campaign, with audio, video and paper ads, and sales promotions in partnership with low cost retailers like ED, Lidl or Netto.
Question 4: In a broader view and to get prepared for the 2012-2014 plan construction, taking into account that products category are getting more and more commoditized, how could we improve consumers satisfaction and create more value around our brands in the long run?
The study of the laundry market’s evolutions has underlined the rise of Henkel, which means that we cope with more and more challenges to keep our leader position. Thus, our next construction plan will implement actions to increase value around our brands and continuously improve consumer’s satisfaction. To achieve these objectives, we will concentrate our efforts on three actions lever: innovation, segmentation of brands and communication plans.
In theory, the value around a brand is measured by the ratio services, results provided by the brand over its price. From an economic point of view, it is much more strategic to increase the services and results delivered by our products rather than decrease the price. Consequently, innovation is very important. Indeed, our goal is to increase continuously the quality of our existing products so that they remain the best. And, for the brand for customers with a limited budget, innovation enables having the best price-quality. In this way, we have launched new researches.
- Packaging: Our future ambition is to create much more designer products to catch the attention of the consumer in the stores. Our design department will work on the style and economics. We will favour lively colours and original forms that will also facilitate the use. We can for example, work with talented designers like Philippe Starck .We also plan to invest in detergent drawer, which will be integrated into the product.
- High quality: Our top brands are specialized in both coloured and non-coloured clothes. But we have to combine these attributes in one product that would be multi-actions. Consumers will no longer have to sour out their clothes (black and with clothes could be washed together). Our goal is also to increase our removing agents’ powerfulness. Indeed, our chemical specialists try to create performed removing that could be integrated in our laundry products to eliminate all types of stains.
- Scent: we closely work with various laboratories to develop varied and subtle perfumes. Each washing must become a “sensorial experience” for the consumer. We also plan to base our campaign on the promotion of a new scent according the seasonal period and the country.
- Ecological products: it has become one of our priorities because most consumers are concerned about climate changes; they really favour brands that combine effectiveness and environment. We must reach our goals for 2020.
Then we also have to take into account that products categories are getting more and more customized. Therefore, it is increasingly important to focus on our portfolio brand to satisfy a wide range of consumers and create value around our brands. This implies several strategies. Indeed, if innovation is a key to increase value around our top-of-the-range products, our other brands’ appealing are largely based on their price.
Our entry point brand must be designed to be the less expensive as possible and satisfy low budgets. It means that we have to return to a very basic product. The removing formula will be designed for the most common tasks (mud, food…). There will only have investment in the communication of basic brand products. We will highlight products without artifice or surplus, just efficient and cheap. This basic brand will replace VIZIR.
The third thrust of our construction plan is communication. We plan to launch a lot of actions to increase our brands’ visibility and build loyalty with our consumers in the long term. We will launch by 2013 a loyalty card system. This new card (provided in the annex) could be used for all our laundry brands and will be a good way to reward our most loyal consumers. Indeed, a certain number of purchases will give rise to reductions on our products for the consumers. We will also organize monthly game between all the consumers that have subscribed to the system.
We will also target young people through our communication plans because statistics show that consumers often keep the same brand all around their lives. We will launch a special P&G launderette in which only the washing powder would be paying. Each time, consumers arrive with their own P&G washing powder, or buy into the laundrette, the wash will be free. In the long term, we are considering partnership with different launderette in big cities that will take part to the system. We think that when consumers buy their own laundry machine, they will buy our brands because they are used to doing so.
APPENDIX

Figure 1 VOLUME SHARE OF THE LAUNDRY MARKET

Figure 2 VALUE SHARE OF THE LAUNDRY MARKET

Figure 3 Weighted Distribution

Figure 4Promotion Intensity

Figure 5Share of shelf

Figure 6 Average number of sku's per distribution point