Arctic Power - A Case Analysis Essays - Cleaning Products

Arctic Power - A Case Analysis ARCTIC POWERA CASE ANALYSIS CURRENT SITUATION It is the summer of 1987. Arctic Power laundry detergent has contracted with the consulting firm of Smith and Jones, LTD to assist Arctic Power in determining their strategic direction and their product positioning. BACKGROUND AND HISTORY Arctic Power, a laundry detergent specially formulated to clean in cold water, is part of Colgate-Palmolive Canada family of products. Colgate-Palmolive Canada is a wholly owned subsidiary of the multinational corporation Colgate Palmolive. In 1986 Colgate-Palmolive had worldwide sales of $4.9 billion with profits of $178 million, with Colgate-Palmolive Canada having sales of $250 million. Colgate-Palmolive Canada (CPC) has a wide variety of household and personal care products. Among the most popular CPC brands are ABC, Arctic Power, and Fab laundry detergents, Palmolive dish soap, Ajax and Irish Spring body soaps, Ultra Brite and Colgate toothpaste, and Baggies storage bags. Colgate-Palmolive Canada uses a product management system in which product managers are assigned specific responsibility for a specific brand such as Arctic Power. Their overall goals are to increase sales and profitability of their brands. The project manager is responsible for all the marketing functions, including planning, advertising, selling, promotion, and market research. An assistant product manager is assigned to work with the product manager. Prior to the late 1970s Colgate-Palmolive Canada supported their brands on a national basis, then changed strategy as CPC realized they were spreading their resources too thin. During the late 1970s through the early 1980s, CPC shifted to a regional strategy. While Arctic Power was still distributed nationally, by the end of 1981, its share of the Canadian national market was 4% (consisting of an 11% share in Quebec, 5% in the Maritimes, and 2% elsewhere in Canada). As a result, Arctic Power was heavily marketed in Quebec and the Maritimes, with promotion support being withdrawn from the rest of Canada. This regional approach was successful as Arctic Powers share of the overall Canadian market increased to 6.4% in 1985, capturing 18% of Quebec, 6% of the Maritime markets while dropping to less than 2% elsewhere in Canada. 1986-87: THE WESTERN CAMPAIGN With the success Arctic Power had in their regional strategy, Arctic Power launched a campaign to increase their market share in the provinces of British Columbia and Alberta. Their 1986 campaigns objectives were to maintain modest overall volume growth in Quebec and the Maritimes while developing the B.C and Alberta markets. The short-term objective was to sustain unit growth while building cold water washing dominance. The long-term objective was to become the number three brand of detergent with a 12% market share and deliver an 18% contribution margin. Arctic Powers marketing strategy was to target women between ages 18-49, skewed towards the 25-34 age segment. This was to be accomplished through advertising in the media, consumer promotions, and trade promotions. The media strategy objective was to achieve high levels of message registration through high message continuity and frequency. The objective of the consumer promotions campaign is to increase the rate of usage in Quebec and the Maritimes by increasing purchase frequency. The objective in British Columbia and Alberta is to increase the rate of trial. The copy strategy in Quebec/Maritimes was to convince consumers Arctic Power is the superior detergent for cold water washing. The benefit is when consumers are washing in cold water, Arctic Power will clean clothes and remove stains more effectively. The copy strategy in B.C./Alberta was to convince consumers cold water washing is better than hot. The benefits from cold water washing are it reduces shrinkage, color run, and, energy costs. The objective of the trade promotions is to maintain regular and feature pricing equal to Tide (the #1 detergent by far in the Canadian market) and encourage prominent shelf facings. Distribution targets are 71% in B.C and 56% in Alberta. A total of $3.46 million will be spent on trade promotions with $1 million targeted to B.C. and Alberta. Results of the Western Campaign The results of the campaign clearly had an impact, particularly Alberta where brand and advertising awareness had increased. However, market share had risen and then it dropped towards the end of the campaign. While the gain in market share in a mature, slow growing market can be encouraging; the cost