Transcript Jaclyn Feder, Christi Louis Jennifer Muckley, Seena Sherman, Jennifer Zupnick
Jaclyn Feder, Christi Louis Jennifer Muckley, Seena Sherman, Jennifer Zupnick
The Problem
Should Drypers Corporation invest an additional $10 million in advertising in order to increase their brand awareness, create value, and increase market share?
Market Characteristics
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$4.5 billion in 1997 Market Segments - value price - 5% - premium price - 78.9% - private labels -16%
Value Priced Products
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Avoid high R & D costs Avoid national advertising campaigns Rely on in-store promotions, couponing, print advertising, and cooperative advertising.
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Consumers look for the best price and quality
Private Labels
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Stress price over quality and product features Invest minimally in consumer advertising and marketing.
Rely on retailers to promote their individual brand.
Premium Priced Products
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Heavily advertised High brand recognition Compete on a basis of product quality, features and benefits, and price.
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They are more expensive than value priced diapers yet much more successful.
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Spend a large portion of their budget on R&D and advertising.
Corporation Goals
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Goal: Large scale brand recognition.
Build their product name into one that is sought out by the consumer.
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Drypers seeks to increase market share and stock price in 1998
SWOT Analysis
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Strengths
Product Innovation Product diversity 4th largest diaper producer 2nd largest seller of training pants in grocery stores Exclusive private label supplier for Wal-Mart in L.A.
Acquisitions and joint ventures in foreign countries Strong cash flow and sales growth Licensed to use Sesame Street characters
SWOT Analysis
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Weaknesses
Lack of national brand name recognition Less extensive national production distribution capabilities Comparatively less advertising budget No dedicated sales force in U.S.
Not present in mass-merchant distribution areas
SWOT Analysis
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Opportunities
Increase brand awareness through TV advertising Combine all labels to be under Drypers Increase market share by gaining a presence in mass-merchandisers Pursue international expansion opportunities Expand product lines to include additional consumer products Maximize license agreement with Sesame Street First mover advantage of germ-protection.
SWOT Analysis
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Threats Continual growth of market share by P&G and Kimberly-Clarke Minimal response to television advertising Decline in grocery store sales on diapers and training pants
Alternative #1 No TV Advertising
Advantages
- Safe, no risk-taking
Disadvantages
- Solves nothing - Not pro-active
Alternative #2 Television Advertising
Advantages
- Potential to reach a much wider audience - Increase brand awareness of consumers and mass merchandisers.
- Continuous opportunity to capture new consumers - Brand loyalty to Drypers - Stress their innovative product line - Stress their differentiated products
Alternative #2 Television Advertising
Disadvantages
- High cost - Failure can be detrimental - Brand loyalty of consumers to other products
Break-Even Market Share
Company Kimberly Clark Proctor & Gamble Drypers - Current Drypers - 10 Mil Television Budget 1997 (Millions of Dollars) 75.6 Market Share 41.20 $/Percentage Point 1.835 69.6 3.219 13.219 37.70 3.10 5.43 1.846 1.038 1.84
Break-Even Sales ($)
Total Domestic Sales Gross Margin Additional Sales Needed to Break Even (38.8/100 = 10 Mil/X) Percent Increase in Sales ($25,773,195.88/$191,300,000) $191,300,000 38.8% $25,773,195.88 13.47%
Recommendation
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$10 Million in Television Advertising Stressing: Differentiated Product One National Brand Name Sesame Street
Implementation
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Careful attention to design Research ad placement
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Early morning cartoons, daytime TV
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Leverage negotiations with mass merchandisers