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P&g Case Study Solution

Essay by   •  July 12, 2018  •  Case Study  •  749 Words (3 Pages)  •  489 Views

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BACKGROUND AND PROBLEM DEFINITION

Procter & Gamble, Inc. a leading FMCG company in the world, with one of its product ‘Scope’, was the market leader in Canada for mouthwash market in 1990 with 32% share. However, with Plax making inroads with 10% market share in just 2 years, P&G perceived it as a threat at the bay. Hearst, brand manager of P&G, now has a daunting task at hand to develop a marketing plan for following 3 years and maintain Scope’s profitability.

MARKET ANALYSIS

Available information suggests that 75% of Canadian household use 1 or more mouthwash brands. Further, the market can be divided into 3 categories base on frequency of usage 1- Heavy (40%), 2- Medium (45%), 3- Light (15%). Scope’s biggest threat Plax has already achieved a strong image on removing plagues and healthier teeth and gums, something which Scope lacks as a quality. Though, Scope was the market leader in Canada, but its share in food store and drug store was 42% and 27% only.

STRATEGY ALTERNATIVES

  1. Maintain but be dormant, Do nothing:

Technically Plax wasn’t placed with Scope in order to cut the market. But, Plax’s successful was visible to everyone. Exhibit 1 that compares the Margin of Plax and Scope suggests the high margin for the former one. So, if P&G doesn’t do anything. There is a chance of losing a huge market to them.

  1. Repositioning the Product

Scope is a market leader here with almost 32 %. The company have managed to establish loyal customer base. A sudden change in product might send confusing signals besides it’s contradictory to the ethics for which P&G stands for. Besides input costs like packaging, advertising will shot up for the revised product. Besides changing it from a normal product to a drug will bring it under multiple regulations.

  1. Line Extension:

This will require heavy input costs for promoting new products, placing them in the market, R&D, packaging and branding. PDD also informed that extra 20000$ will only fetch them a product as good as Plax not more than at. As per another research by the company, it doesn’t

Competition against Plax will be somewhat level headed but it will come with a huge cost. Heavy capital will be required to develop R&D          

CONCLUSION & RECOMMENDATION

After going through the analysis, I will recommend the company to go for repositioning its products in the market and focus on the drug stores. Since, Scope already has a 42% market share in the food shop category but 65% of mouthwash happens from drug stores. Besides, the R&D team had been successful in developing something similar to Plax if not better. This can always be marketed using the brand loyalty P&G enjoy. Also, evident from the case that advertising agencies are not too keen on promoting two qualities of a product owing to the risk involved in it. Another important fact that the market research that claims is that not many people are not going to change their brand loyalty.

Exhibit 1:

Scope

1990

Plax

1990

 

$/Unit

 

$/Unit

Net Sales

41.25

Net Sales

65.09

Ingredients

8.16

Ingredients

6.50

Packaging

5.10

Packaging

8.30

Manufacturing (50:50 Ration for Fixed and Variable.)

3.50

Manufacturing (50:50 Ration for Fixed and Variable.)

6.50

Delivery

3.12

Delivery

3.00

Miscellaneous (75% Fixed: 25% Variable)

0.64

Miscellaneous (75% Fixed: 25% Variable)

1.06

COGS

20.52

Total Costs

25.36

Margin

20.73

Margin

39.73

Exhibit 2:                                                                                            Exhibit 3:                                                                                        

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