Case Study La Shampoo 14/08/2011 Senay Sumercan 23307188 Evandra Tamzil 21215553 Jimmy Adrian Yulianto 21761728 Nuttapong Sungkhawun 21431760 Fastrelia Astrelia 21763038 In 1989 La Shampoo had began a very slow descent, but the company had not really addressed the problem till about two years ago. The problem? La Shampoo’s ability to keep up to date with the demands of the market. La Shampoo failed to comply with the principle component of brand sustainability and growth; the brands need to stay relevant, and what defines relevance changes over time.
La Shampoo had lost its relevance to the market, and as a result customer loyalty was declining. The failure to address the problem earlier also suggests that managerial issues were present. On a more positive note, La Shampoo still has a core group of customers that are loyal. In its efforts to increase market share and boost sales, two radically different recommendations were constructed and presented. One recommendation put forward was Eric’s proposal to compete on price. The pros and cons of this proposition put forward are demonstrated in the table below.
Pros | Cons| Reducing the price is effective for the short term as it can provide the incentive for price sensitive customers to benefit from the price reduction and encourage purchase of La Shampoo. | Once the price has been reduced, we cannot reverse this reduction and increase the price in the future as this may lead to loss of continual sales and incur brand switching. | This approach may enable La Shampoo to buy some time, to then find a better solution for there problem. | Reducing the price may not necessarily lead o loyal customers, however encourage customers to stockpile La shampoo | Will provide a higher volume of sales. | Competing on price will diminish the perceived brand image and quality of La Shampoo by indirectly promoting La Shampoo as a lower quality product as customers relate price with quality. | | Profit margin per item is decreasing. La Shampoo has to sell a higher quantity then before. | | This approach will lead to competing brands to also lower there price an instigate a price war. | Another recommendation put forward was Beth’s proposition to develop a strong brand campaign.
The pros and cons of this proposition put forward are demonstrated in the table below. Pros Re-launching the brand can give the brand a new spin, meaning it can potentially attract a new customer base. Taking advantage of the current confusion in the market, which relates to the brand loyalty. It could recapture lost position in the market by ensuring their place in the market Give La shampoo the opportunity to reposition itself within the market Cons It takes time and effort, which the company’s resources are dwindling already. Therefore it is a huge risk to the company in terms of financial success.
The re-launch might upset the core customer group which have been loyal with the brand for a long time (the older generation) Developing a campaign is timely for the company. | This proposal can hurt the brand if the campaign is unsuccessful. | Due to the problem of a decline in customer loyalty, which in effect lead to a decline in sales of la shampoo, Caroline has to introduce a new campaign that has a sharp enough cutting edge in order to retain pervious customers and attract newcomers. The target market in this case is women aged 15-30 years old. The strategies that the company needs to implement are; firstly, it needs to eposition La Shampoo into this target segment as a contemporary, high in quality, more valued and a stylish brand. Secondly, as the image of European mystique was no longer relevant in today’s trend thus, the company needs to make an innovation by introducing a new packaging. Thirdly, La Shampoo needs to convey their campaign message by highlighting the product benefits and nutrient in order to represent the customer needs and relevance. This task cannot be achieved in a short time frame in order to form natural part of the consumer’s behaviour over the long term.
Hence the campaign needs to focus on retaining their existing customer by intensively promoting the product benefits along with their closest relationship between their company and customer. The new campaign has to change the former image and adapt to today’s environmental trend. The campaign should highlight the new look of La Shampoo whilst emphasising a better quality and attributes of the product. The message should promote a variety of benefits and nutrients that are contained in the shampoo, and how it still effectively provides remarkable result to the users.