Proctor & Gamble Scope Case Analysis

Industry

This mouthwash market was initially developed by Warner-Lambert and was pioneered by the brand Listerine. In 1977, Warner-Lambert launched Listermint mouthwash as a direct competitor to Scope. Before 1987, the mouthwash market was continuously growing at an average of 3 percent per year. In 1987, the market experienced a 26 percent increase after the introduction of a new flavor. In 1976, Scope was the leader in the Canadian market.

Problems.

Proctor and Gamble-Scope is faced with a very important decision. They need to prepare a marketing plan for P&G’s mouthwash business for the next three years. They want to know how they are going to be able to capitalize on the emerging market segment within the rinse category that focuses more on health-related benefits” than the traditional breath strategy of Scope. If the company does pursue this, there are several concerns that they have. How should P&G respond to the newest competitor in the mouthwash market? What strategy should be pursued for Scope in the future to ensure continued profitability?

Decision questions:

1. What action, if any, should Proctor and Gamble (P&G) take as a mitigating strategy against Plax in the mouthwash market in Canada? 2. How can Scope maintain its current position in the Canadian mouthwash market?

Decision tree

• Whether to add new ingredients to position Scope as a plaque-fighting mouthwash. • Whether to launch a new product line and risk cannibalization to compete with competitors such as Plax. • Whether to do nothing and continue with their breath strategy.

Current Market Position of Scope in the Canadian Market

Scope is the current market leader among mouthwash products used in Canada. Scope’s benefits are advertised as preventing bad breath and as a good, pleasant-tasting product. The product is green in color with a pleasant mint taste. Between 1989 and 1990, Scope held approximately 32.5 percent of the Canadian mouthwash market. The closest competitor was Listerine with approximately 16 percent of the market. About 40 percent of people who use mouthwash indicate the primary reason is to get rid of (or avoid) bad breath. Scope is priced below the average cost of competitors in the mouthwash market. The Health Protection Board (HPB) classifies products into two groups: 1) drug status and 2) cosmetic status. Because Scope does not actually affect a body function (i.e., prevents cavities or plaque), HPB places Scope in the cosmetic status category. Scope has not been recognized by the Canadian Dental Association (CDA) as a product that fights against cavities or against gingivitis/plaque.

Scope Competitors

Market Share of the Canadian Mouthwash Industry

Scope’s competitors and their 1990 share of the Canadian mouthwash market include Listerine at 16.6%, Listermint at 10.6%, Cepacol at 10.3%, Colgate oral rinse at 0.5%, Plax at 10.0%, Store Brands at 16.0%, and miscellaneous other brands at 3.7%. Listermint is a direct competitor since it also claims to be good-tasting and to fight bad breath. This is the mouthwash market segmentation.

• Breath-focused brands for fresh breath include Scope and Listerine.
• Health-related benefits for fighting plaque can be found in Plax, Cepacol, Listerine, and Colgate.

Situation Analysis: The Market
The market is mature, with sales increasing but at a decreasing rate. However, the market is still large enough to warrant interest and responds well to innovation (such as flavored mouthwashes and pre-brush rinses). 65% of sales occur in drugstores, while 35% occur in food stores. However, Scope sells better in food stores than in drugstores, which suggests that consumers view the brand as good-tasting but not health-related. Retailers are the key distribution channel, and competition for shelf space is increasing. P&G’s reputation and existing retail networks would support new initiatives.

Buyer behavior:

• A new consumer segment has emerged that may be worthwhile pursuing.
• Consumers want to prevent plaque and receive health benefits.
• Plax has changed some consumers’ habits relating to mouthwashes.
• Using a pre-brushing rinse can improve brushing results.
• Mouthwash users can be segmented based on frequency of use.
• The largest group are medium users (2-3 times per week).
• Mouthwash is a convenience product that stimulates brand loyalty; however, brand switching is not unlikely.

Competitors:

• Scope is the market leader with a 32% share.
• Scope achieved leadership over Listerine by promoting the tastes good” benefit in addition to germ-fighting.
• This infers that “valued-added” product benefits are appealing to consumers in this segment.
• Scope has a brand reputation to uphold.

• Market share gained by Plax primarily from Listerine and Cepacol switchers.
• Hasn’t put much of a dent in Scope’s business.
• Current marketing strategy.
• Product image focuses on the “tastes great” benefit.
• Scope is positioned as strong in the “fresh breath” benefit but weak on “kills germs” and “health benefits/removes plaque”.
• If the new health benefit segment grows, this may weaken Scope’s share.
• Pricing strategy is to be at or below most competitors.

• May be a reason for the market leader position.
• Pursuing a reactive strategy overall with no anticipation of Plax’s arrival or new segment.

Objectives:

• To maximize market share and profitability of the Scope brand.
• To capitalize on new market segments wherever possible.

Scope of SWOT Analysis

Strengths
Weaknesses

• Well-recognized brand
• Fights bad breath
• Good taste
• Current leader in the Canadian mouthwash market
• Priced below the average cost of mouthwash products
• Some consumers perceive that Scope kills germs
• Preferred mouthwash purchased by supermarket shoppers

– Does not focus on plague removal

– Low percentage of drugstore market

– Does not have drug status” from HPA

– Does not have the seal of recognition from the CDA

Threats and Opportunities

– Loss of sales to Plax

– Consumer preference for mouthwash that fights cavities, gum disease, and plaque

– Add plaque-fighting ingredients to Scope

– Gain additional market share as a drug store” product

– Increase advertising

– Obtain HPB approval

– Gain CDA seal

Alternatives:

Option 1: Do Nothing

Pros:

• No possible damage to scope’s market leadership position
• Plax appeals to a different market segment
• No possible consumer confusion
• No additional advertising and promotion expenses
• No price increase needed due to new ingredients
• Avoids product testing cost
• No new advertising cost would be incurred

Cons:

• Scope may lose current competitive lead in mouthwash market
• If health benefits segment continues to grow, this represents a lost opportunity
• Doesn’t address consumer’s “new” need for good taste and plaque fighting
• Possible decline in sales

• The long-term competitive position will be compromised.

Issues to Consider:

• Consider positioning, buyer behavior, and financial impact.

Option 2: Reposition Scope to Include Plaque-Fighting Benefit Pros

• Reduces consumer switching to other brands.
• Potential to increase price.
• Scope name would aid acceptance.
• Prevents current customers from switching.
• Counter threat from Plax.
• Consumers already familiar with Scope brand.

Cons:

• Potential damage to market leader position.
• May be considered inconsistent brand positioning.
• Increases unit costs which means price increase necessary.
• Creates communication problem – two ideas of breath refreshing vs. plaque fighting.

Option 3a: Introduce a Line Extension to Compete With Plax – Using Scope Name Pros

• Scope name will help create a new product image and gain retailer buy-in.
• It captures an opportunity in a new segment and competes with Plax head-on.
• A higher price point may increase profits.
• The product would address most reasons people use mouthwash.
• The line extension is supported by several P&G divisions.

Cons:
• Cannibalization of Scope sales.
• It may confuse consumers.
• It requires a strategic shift in marketing and advertising.
• It is not in line with P&G’s philosophy and formula for success.
• Health regulations may inhibit promotion flexibility.
o Products will need to pass stringent regulatory requirements to obtain HPA and CDA approval for plaque removal.

Option 3b: Introduce a flanker brand to compete with Plax – excluding Scope name.

Pros:

• Avoids possible negative impact with scope and customer confusion
• Reduces cannibalization
• Enables P&G to gain market share in the health-related benefits market segment

Cons:

• Requires considerable marketing budget and time to build brand awareness
• Retailers may not be as receptive

Financial analysis