Transcript The Clorox Company - Haas School of Business

Brand Management
Agenda

Introductions - My Background

Clorox Company Overview


Consumer Driven General Management
Brita Case
Q&A
The Clorox Company
Performance

Portfolio of Strong Brands

Business Results

International Growth
Portfolio
Clorox
Corporate
Household
Products
Clorox
Equity
Food
Products
Home
Cleaning
Dressing
& Sauces
Professional
Products
Kingsford
Products
Charcoal
Cat
Litter
International
Insecticides
Laundry
Home Cleaning
Just acquired First Brands:
- STP, Glad Bags, Johnny Cat
- Complete restructure in progress
Armor All
Brita
Clorox Brands are
Market Leaders
#1 or #2 in Nearly Every Category!
Home Cleaning
 Laundry Additives
 Salad Dressing/Barbecue Sauce
 Insecticides
 Home Water Filtration System
 Automotive Care Products
 Charcoal/Grill Products

Revenue Growth
(Sales: $Millions)
3,000
2,741
2,533
2,500
2,224
1,837
2,000
1,547
1,985
1,634
1,500
1,000
500
0
1992
1993
1994
1995
1996
1997
1998
Profit Growth
1992-1998 Net Earnings ($MM)
298
300
249
250
222
200
200
167
180
150
99
100
50
0
1992
1993
1994
1995
1996
1997
1998
Revenue Growth
% Average Annual Growth Rate
1992-1998
Clorox is Growing Faster than Its Peers
12%
10.5%
10%
7.0%
6.8%
8%
5.2%
6%
3.1%
4%
2%
0%
Clorox
Gillette
Procter &
Gamble
Colgate
General
Mills
5-Year Total Shareholder Return
$243
1993
1994
1995
1996
1997
1998
Clorox
S & P 500
Peer Group
5-Year Total Shareholder Return
$281
$243
1993
1994
1995
1996
1997
1998
Clorox
S & P 500
Peer Group
5-Year Total Shareholder Return
$417
$281
$243
1993
1994
1995
1996
1997
1998
Clorox
S & P 500
Peer Group
Clorox Introduced a Record 41
New Products Worldwide in 1998
New Products
45
40
35
30
25
20
15
10
5
0
38
36
39
41
1997
1998
28
15
8
1992
1993
1994
1995
1996
Clorox is Aggressively Pursuing
Acquisitions to Fuel Growth
Brand
Year
Pine-Sol & Combat
1991
S.O.S
Black Flag
Armor All
Lestoil
8 Int’l Acquisitions
2 Int’l Acquisitions
7 Int’l Acquisitions
First Brands
1993
1995
1997
1996
1994/95
1997
1998
1999
International Growth
Clorox International business has
increased four times since 1992
5%
1992
18%
1998
Consumer Driven
General Management
Brita Case Study
Why was Clorox
interested in Brita?
Brita presented a growth opportunity
and a solution to consumer need:

High growth in bottled water category
 Expensive, inconvenient solution

Consumer concern about air/water quality

Medical studies on negative effects of lead
Brita Vision


Change the way Americans drink tap
water
Original Objectives:
 70% awareness
 8% household penetration
 Comparable profit margins
Early Consumer Insights


Purchase of Brita linked to dissatisfaction
with taste of tap water
Brita Early Adopters
Water involved (5+ glasses/day)
Believe that drinking water is a way to feel healthy
Urban, high income & educated
 Filtration not broadly recognized as
alternative to tap water
Direct marketers of in-line systems
Bottled water
Early Brita Copy

Focused on educating consumer

Benefits:
 Brita makes tap water taste great
 Support:
 Removes impurities like lead and chlorine
“Works/Taste”
The Beginning
1988-1992
Business Issues:

Cost Structure

Organization Structure

Financial

Distribution Channels
Fish or Cut Bait
1993

25
20
15
10
5
0
8% Target
0
1988
0
1989
0
1990
1
2
2
1991
1992
1993
1992
1993
HH penetration
0
1988
1989
1990
1991
Profits

Brita had achieved profitability
 Awareness: 22%
 HH penetration: 2%
 Distribution in 11,000 stores
Long term commitment to Brita
 Distribution expansion plan
 Increased marketing
investment
 New pitcher models
 Expanded consumer
understanding
Increasing Consumer
Understanding
Brita Users are drawn to the brand because it gives them
clear, clean, refreshing water and makes them feel that
they have done something good for themselves.
Values
Emotional Benefit Functional Benefit
- I care about
- Healthy
doing good things - Look/feel good
for myself
- Refreshing
- Not worried
- Clear, clean
refreshing water
Brita Features
- Removes
impurities
- Makes tap water
taste great
Consumer Beliefs
 Water is life essential
 Water must be pure to help me be my best
 Water has impurities; often can’t see or taste them
 People & their activities cause impurities
 Best water is pure from nature (waterfall)
Brita Copy

Focused on water in nature &
leverage emotions & benefits

Benefits:
 Brita makes your tap water clean, clear and refreshing

Support:
 Removes impurities like lead and chlorine
“There was a Time”
Open the Floodgates!
1993-1996
25
20
15
10
5
0

Aggressive Growth
 Awareness: 40%
8% Target
6
2
2
1993
1994
1995
9
1996
 HH penetration doubled
each year to 9% in 1996
HH penetration
 Expanded Distribution
from 11,000 to over
30,000 stores
0
1993
1994
1995
Profits
1996
Open the Floodgates!
1993-1996
25
20
15
10
5
0
Business Issues
8% Target
6
2
2
1993
1994
1995
1995
Profits

Filter Manufacturing

Infrastructure
1996
0
1994
Geographic Expansion
9
HH penetration
1993

1996
Ride the Wave
Today






25
20
15
8% Target 9
10
16 18
6
5
0
13
1
2
Exceeded Brita Vision objectives
2
Awareness: 70%
HH penetration: 14%
Market Share: 71%
Brita user loyalty: 85%
Distribution in 40,000+ stores
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
HH penetration

Over 70 failed competitors

One of our top 4 revenue brands
 Continues to grow at double
digit rate
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Profits
Future Challenges

Category maturity
 Drive filter sales
 Encourage current users to replace their pitchers

Competition
 Technological leadership
 Protect filter annuity from “universal filters”

Brita Equity
 Invest in new products or current line?
 Where should we take the Brita equity
Consumer Driven
General Management

Recognized Marketing Expertise

In-Depth Understanding of Our Consumer

General Management Responsibility
Brand Management
Skill Sets
Leadership
 Interpersonal Skills


Results Focus

Strategic Thinking

Analytical Problem Solving

Innovativeness