Proctor & Gamble Scope Case Analysis Essay

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

Problems

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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 focused 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 so that they can position Scope as a plaque fighting mouth wash •Whether to launch a new product line and risk cannibalization, to compete with their 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 prevention of 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 plague), 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/plague. Scope Competitors

Market Share of Canadian Mouthwash Industry
Major brands% units
Scope32.5
Listerine16.1
Listermint9.8
Cepacol10.6
Plax10.0

Scope competitors and their 1990 share of the Canadian mouthwash market include Listerine – 16.6%, Listermint – 10.6%, Cepacol – 10.3%, Colgate oral rinse – 0.5%, Plax – 10.0%, Store Brands – 16.0%, Miscellaneous other Brands – 3.7%. Listemint is a direct competitor since it also claims to be good tasting and to fight bad breath. Mouthwash Market Segmentation

•Breath focused brands, fresh breath-Scope, listermint
•Health related benefits, plaque fighter- Plax , Cepacol, Listerine, Colgate Situation Analysis: The Market
Mature market
•Sales increasing but at a decreasing rate
•Market still large enough to warrant interest
•Market responds to innovation (ex. Flavored mouthwashes, pre-brush rinses) •65% of sales in drugstores, 35% in food stores
•But…scope sells better in food stores vs. Drugstores which points to how consumer views the brand (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 •Want to prevent plaque / health benefits
•Plax has changed some consumers habits relating to mouthwashes •Use a pre-brushing rinse to improve brushing results
•Mouthwash users can be segmented on frequency of use
•Largest group are medium users (2-3x per week)
•Mouthwash is a convenience product
•Stimulates brand loyalty, however, brand switching not unlikely Competitors
•Scope is the market leader (32% share)
•Achieved leadership over Listerine by promoting the “tastes good” benefit in addition to germ-fighting •Infers that “valued-added” product benefits are appealing to consumers in this segment •Has 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 “tastes great” benefit
•Scope positioned as strong in “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 reason for market leader position
•Pursuing a reactive strategy overall….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 SWOT Analysis

Strengths
Weaknesses

•Well recognized brand
•Fights bad breath
•Good taste
•Current leader in Canadian mouthwash market
•Priced below 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

ThreatsOpportunities

•Loss of sales to Plax
•Consumer preference for mouthwash that fights cavities and gum disease/plaque

•Add plaque fighting ingredients in Scope
•Gain additional market share as “drug stores” 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

•Long term competitive position will be compromised

Issues to Consider
•Consider positioning, buyer behaviour, 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 new product image and get retailer buy in •Captures opportunity in new segment and competes with Plax head-on •Higher price point may increase profits
•Product would address most reasons people use mouthwash. •Line extension supported by several P&G divisions
Cons
•Cannibalization of scope sales
•May confuse consumers
•Requires strategic shift in marketing/advertising
•Not in line with P&G philosophy and formula for success
•Health regulations may inhibit promotion flexibility
oProducts will need to pass stringent regulatory requirements to obtain HPA and CDA approval for plague removal.

Option 3b: Introduce a Flanker Brand to Compete With Plax – Excluding Scope Name

Pros
•Avoids possible negative impact with scope, customer confusion •Reduces cannibalization
•Enables P&G to gain market share in the health related benefits market segment Cons
•Requires considerable marketing $$ and time to build brand awareness •Retailers may not be as receptive

Financial Analysis

Cite this Proctor & Gamble Scope Case Analysis Essay

Proctor & Gamble Scope Case Analysis Essay. (2016, Jun 27). Retrieved from https://graduateway.com/proctor-gamble-scope-case-analysis/

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