Procter & Gamble Inc: Scope
Scope was introduced in 1967 by Procter & Gamble, is a green mint tasting mouthwash,and was positions as a great tasting mouth refreshing brand that provided bad breathprotection. Scope held 32% share of the Canadian market for 1990. In 1970 Scope becamethe market leader in Canada, with many competitors, such as Listerine mouthwash that waslaunched by Warner Lambert in 1977 and it was a direct competitor to Scope, it had nearlythe same characteristics as Scope with a 12% of the market share during that time. But themajor competitor for Scope was Plax, a brand by Pfizer Inc, which was launched in Canadain 1988 on a platform quite different from the traditional mouthwashes, and gained a 10%share since launched. Plax detergents were supposed to help loosen plaque to makebrushing effective. Before the entry of Plax, brands in the mouth wash market werepositioned around two major benefits that are fresh breath and killing germs, whereas Plaxwas positioned around a new benefit as a plaque fighter and claims Plax removes up tothree times more plaque than just brushing alone.In studying the current situation and preparing for a strategic plan, Gwen Hearst reviewedthe available information and surveys for the mouthwash market and Scope showed that75% of Canadian household use 1 or more mouthwash brands. The company’s marketresearch revealed that users could be segmented to “heavy” users that comprised 40% of all users and to “medium” users that comprised 45% of all users and to light users thatcomprise 15%. The company also made a research on why consumers use mouthwash,and the results were: consumer’s basic hygiene, it gets rid of bad breath, it kills germs andmany other reasons. Also surveys were conducted of mouthwash user’s image of the major brands based on several attributes such as, reducing bad breath, killing germs, removingplaque and others. Plax achieved a strong image on removing plaques and healthier teethand gums, whereas scope scored a weaker image on those attributes. In analyzing theCanadian mouthwash market share the data showed that Scope had the highest marketshare among all brands, but there was a big difference in the share held by Scope in foodstores 42%, versus drug stores 27%. Competitive data were also collected for advertisingexpenditures, and the results were that most of the advertising expenditures were of Scope,Listerine and Plax accounting for 90% of all advertising. As for the retail prices, bothListerine and Plax had the highest prices among other brands in food stores, whereasScope, Listerine and Listermint had the highest prices in drug stores. And in comparingScope market share between Canada and USA, the results showed that Scope in Canadatakes 33% of the market share, while USA Scope’s market share was 21.6% that came after Listerine, where Listerine held 28% of the mouth wash market share in America.After the introduction of Plax by Pfizer Inc whereby P&G were loosing market share, andafter studying the current situation and making several surveys and market researches,Hearst challenge was to the 1st problem which is to develop strategy that ensures the continued profitability of Scope in face of competitive threats and especially by Plax thatgained 10% share of the product category. So her specific task was to prepare a marketingplan for P&G mouthwash business for the next 3 years. The 2 nd problem is how will P&Gmaintain their profit and make sure that the Scope brand is always the first mouthwashproduct ranking among consumers? The mouthwash market is changing everyday with theemergence of new products and product features. As a result, P&G wants their Scopebrand to be the first choice among consumers.In the case of product development, PDD has demonstrated that Scope reduced plaquebetter than brushing alone because of the antibacterial ingredients in it. So the (ProductDevelopment) PDD has recently developed a new pre-brushing rinse product that performedas well as Plax but didn’t work any better than Plax in removing plaque. The key benefit of this recently launched product is that it tastes better than Plax. However, PDD’s preferencewas to not launch a new product, but instead to add plaque reduction claims to Scope.Since the basic argument was that it is better to protect the business that P&G was alreadyin, than to launch a completely new entry. As for the case of sales, the sales people hadnoticed that Plax sales were increasing in the market place, and believed Scope shouldrespond quickly, so they suggested that a brand must be unique and different enough fromthe competitors in order to be listed in the store shelves, or otherwise the category salesvolume would spread over more units.Market researchers suggested that Hearst look at other benefits or alternatives beyond justa “plaque reassurance on scope” or a “a better tasting pre-brushing rinse” Whereas thepoint of view from finance, on one hand Plax had a high price so a new rinse might be aprofitable option, on the other hand they were concerned about the capital and marketingcosts which would increase. The purchasing manager estimated that the cost of the newingredients of a line extension would increase by $ 2.55 and the packaging would cost$0.30. As for the advertising agency it favoured a line extension, since adding any new claimfor scope is a huge strategic shift for the brand that would confuse the consumer anddecrease the market share, because relating 2 different ideas is very difficult (breathrefreshment & good tasting) (removes plaque).Hearst and the business team have two options, on one hand a line extension or newproduct positioned against Plax could be introduced into the market and in the other handdoing nothing and just looking at claims other than “breath” instead of adding a new product.
Launching a new product
“new pre-brushing rinse” would cannibalize a part of Scopesales, also the delivery, marketing and capital costs of P&G will increase if a new rinse waslaunched and the user of Scope would be confused since he/she saw in the old scope abreath refreshment, taking into consideration that the new rinse is not any better than Plax in reducing plaque, but at the same time it may increase the market share of P&G andincrease its profit. Whereas adding a new claim for Scope would not increase the volumeof sales, but it could prevent current users of Scope to switch and it would stabilize thebusiness, and even though the advertising agency thinks that it’s hard to relate two differentclaims, it should try to relate them in order to make an effective advertising that includesboth “breath” and “plaque” claims. Since adding plaque reduction to breathe refreshmentand good tasting is an additional benefit that the scope consumer can benefit from and itmay attract the potential users that scope aim at. Also P&G has to collect more informationto see what the consumer needs and improve it within the same product; especially that it isbased on a philosophy of satisfying the customer needs. Scope was positioned around twobenefits that are refreshing breath and good tasting, and it should stick to this position withother additional claims or benefits if it can, so it should not launch a new product thatconfuses the customers but stick to this position that it has in the market place and that isconsidered to be its competitive advantage. It’s better to protect the business that P&G isalready in for many years and just add a plaque claim, than launching a completely newentry that is not secured.
Questions:
1)How will P&G develop a strategy that will ensure the continued profitability of Scopedespite competition?
2)
Should P&G take risk of introducing the completely new product for 3 years plan?Discuss the advantage and risk involved.
3)
How will P&G maintain their profit and make sure that the Scope brand is always the firstmouthwash product ranking among consumers in Canada?