New Head And Shoulders Olive Oil Extracts Product

Head & Shoulders (H&S) is one of the most renowned brands of Proctor & Gamble (P&G). Launched first in 1961, it is now in the P&G list of hot selling brands with a sale of over USD 1 Billion (Wikipedia, 2010). H&S today sells 13 different products ranging from Classic Clean to Intensive Care (H&S, 2010). Core line being dandruff protection, H&S products are being prepared on sub-themes like hair and scalp type or even flavouring (e.g. menthol or citrus).

A renowned survey (Ecologist, 2010) reveals that dandruff shampoos like H&S are made with detergents to which anti-flaking agents are added. Zinc pyrithizone contained in Head & Shoulders can cause be irritating skin. It has also been agreed the use of oil extracts could help relieve this irritation. With rather un-referenced myths about dandruff shampoos like H&S stripping off hair colour rather quickly leaving them greyed prematurely in young ages. Olive oil has been used as a remedy in hair and skin treatments for centuries. Its constant application to hair is described as a guarantee of long lasting hair (eHow, 2010) in Asian & European remedies. Hence a new unique H&S product (i.e. New H&S with Olive Oil Extracts) could give a very classic mix of anti-dandruff features with extra hair treatment through olive oil extracts.

As this product is an extension of the H&S product-line, it would not be feasible to simply state the damages of an anti-dandruff shampoo for promoting this new product. Although a very fair advertising statement could have been the one identifying the damages of the anti-dandruff shampoo and benefits of olive oil extract, it could have backfired in a sense that it would have undermined all the previous marketing efforts that were undertaken to promote other 13 H&S currently running products. It could hurt the brand itself if the advertising for promotion of this product is not carefully done. It should be made sure that the advertising theme conforms to the organization objectives and missions and does not undermine the efforts previously made to promote the currently cash-cow or star products.

2 4Ps in Perspective of New H&S Olive Oil Extracts

Marketing decision or more specifically the Marketing Mix can be categorized in the four classes i.e. Product decisions, Price Decisions, Place (i.e. Distribution) decisions and Promotion (or Advertisement) Decisions.

2.1 Product Decisions

The first category of decisions of the marketing manger is to control different perspectives of its newly manufactured product. Name of the product or brand is the far more important thing in marketing. In case of brands, the name should conform to the organization mission and objective statements while in case of newly introduced products, this name should conform to its brand. H&S with Olive Oil Extracts being a product extension of H&S conforms to the main brand i.e. H&S.

2.1.1 Functionality

Product extension pertains to introduction of a product in a similar category while brand extension is the extension of the brand to a totally different category. 13 products of H&S are a classic example of product extension within a brand while Virgin is a good example of brand extension as it has many shares in distinct communication & media categories. H&S conforms to the functionality aspect of product/brand decision. Introduced H&S as per the basic functionality of the brand remains an anti-dandruff product with same anti-flaking agents as in other 13 H&S products. However, it comes with additional benefits of olive oil for improved hair.

2.1.2 Quality and safety

Quality and safety are two other aspects on which matter when the decision about a introducing a product is being made. New H&S is to conform to same quality and safety standards as guaranteed in P&G products.

2.1.3 Styling and packaging

Brands are the social mirror of company. It took Gold star years to get known by L.G. once they decided to change the brand name in 1995 (LG, 2010). Trademarks are erected into minds of people and hence, to benefit from the reputation of a brand, it is vital to conform to the same styling standards. New H&S will has standard H&S styling with word Head & Shoulders prominent on the pack. H&S is known to change packaging styles frequently. Very current style for packaging may be adopted.

Another important aspect of the packaging of new H&S is its availability in 50ml low price mini pack. Reason for introducing such packaging is to engage the clientele that may be reluctant to purchase H&S otherwise. Customers in counties in Indo-China region have cost as one of the most important factor in terms of purchasing a product. This mini packaging would entice them to purchase this product.

2.1.4 Support & Services

Valuing customers through support and services has been one of the key characteristics of H&S in general and P&G in particular. H&S gives value to their customers and provides them with nicest season deals. It is an innovative brands and never hesitates to experiment to provide its customers with variety of products. H&S with Olive Oil Extracts becomes yet another innovative product which is a classic blend of herbal (i.e. olive oil) and are contemporary (i.e. anti-dandruff minerals) ingredients.

2.2 Price Decisions

Another important component of 4Ps i.e. marketing mix is the price decisions before introduction of a product.

2.2.1 Pricing Strategy

Around half of the world population lives in Indo-China region. The share their thought about traditional remedies for health and beauty. Anti-dandruff shampoos like H&S have many local competitors offering traditional touch to their shampoo brands and hence being widely adopted. Although multinationals like H&S are widely trusted and adopted, some facts (like intensive use of chemical ingredients in H&S) and myths (like constant use of H&S causes grey hair) give a reason to its competitors to make the people believe that their products (though much inferior in quality) are better than H&S. Hence introduction of H&S with Olive Oil Extracts would leave no reason for its critics and expected to sell like hot cakes. Local products sell at almost the same price as H&S and hence skim pricing (Skimming, 2010) strategy could be adopted to earn financial benefits. Similarly in Europe, Far East and America, penetration-pricing policy (Pricing, 2010) could be adopted in order to attract new customers.

2.2.2 Seasonal Pricing & Bundles

H&S is know by its enticing offers in terms of sales and discounts. Summer is targeted for its European launch and as the product is already been proposed to be sold on introductory low prices, it would not be feasible to offer bundles at this point in time. However after the introductory price offer is over, bundles offers could be targeted for the winter and charismas season. Reverse logistics (i.e. returned items from customer or stores) could be benefited from in terms of offering sales on returned products to clear out the stock seasonally.

2.2.3 Price Discrimination

Although not directly, but the different standards of pricing for various geographic sale regions becomes a price discrimination phenomenon which H&S with Olive Oil Extracts has adopted.

2.3 Distribution Decisions

Logistics are one of the important factors in every business. Following decisions pertaining to distributions may decide the success of a newly introduced product.

2.3.1 Distribution Channels & Market Coverage

Distribution channels are called two-level when a manufacturer sells its products directly to the customers. It is a well-known practise in bakery and restaurant business. H&S as a company is unable to sell its product directly to the customers and hence, up to five-level distribution channel could be adopted before the product finally reaches the customers. In terms of distribution strategies, exclusive strategy could not suit a FMCG like shampoo product and hence for new H&S, exclusive strategy would not be feasible in Europe. In Asian markets however, multinationals like P&G adopt exclusive strategies and sell the rights of distributions to promoting agencies. Companies like SmithKline Beecham and Reckitt Benckiser have also used this strategy successfully for year in South Asian countries.

2.3.2 Inventory Management and Warehousing

It would be feasible for FMCG product like new H&S wilt Olive Oil Extracts to be stored off the shore in countries where warehousing is inexpensive. European geographical region can be covered through warehousing in Africa while setting up warehousing in South Asia and Latin America could cover Asia and Americas respectively.

2.3.3 Transportation and Reverse Logistics

Warehousing and logistics are two interconnected aspect of distribution decisions. Success of a marketing plan lies in logistics. Either forward or reverse, cost of logistics could play a pivotal role in success of a newly established product. Warehousing locations intelligently selected could effectively decrease the logistic costs. An ideal strategy for the new H&S would be to ship it to its relevant warehouses based in various geographic areas suggested above. Subsequent shipments and logistics to the stores (and ultimately the customers) could then be proceeded with from those warehouses. H&S ships their shampoo in large containers to 3rd world countries where they are locally packaged. This save the space and promotes the local packaging industries of relevant regions. The same strategy has remained a success story for many of such brands and would be adopted for this newly introduced product as well. In terms of reverse logistics, returned products could be managed locally through either resale or disposing-off or recycling where appropriate.

2.4 Promotion Decisions

In today’s information intensive world it is very hard to attract a potential customer without promotions and advertisements. Hence it becomes to come up with effective decisions about promotion of the product. As per (All Business, 2010) promotions decisions may compel a promoter to think over the following issues more thoroughly.

Setting clear goals for promotion

Setting a budget

Seek out partnerships (Co-sponsors)

Promotion decisions involve the following.

2.4.1 Promotion & Advertising Strategy

Promotion strategy can be Pull or Push (Pullpush, 2010). Pulling promotion policy is to advertise intensively to bring-about its consumer demand. It requires high amount of funding to promote the item through this strategy however, the benefit of this strategy is the direct interaction of company with its customers. On the other hand, a pulling strategy is to promote the product through company’s sales force to wholesalers, from wholesalers to retailers and from retailers to the customers. An ideal example of such advertisement strategy is of IPhone 4 that was advertised more by the cell phone companies like O2 than Apple itself. Similarly Nokia also adopts the same strategy. For new H&S with Olive Oil Extracts on the other hand would adopt mainly a push strategy in regions like South Asia where customer decisions are influenced by the advertisement. This strategy would also be successful in Europe and Americas however, high street retailers like Boots, Superdrug and Tesco etc. could also be used for pulling strategy.

2.4.2 Personal Selling

Customers may not access the high street retailers in many cases and hence it may also be good strategy to sell the product through personal selling that may involve door-to-door selling or selling to the local grocery store. Former is widely adopted in South Asian countries. This strategy would again adopt five-layer distribution model where new H&S will be sold to wholesalers, then to promoters and it subsequently reaches the customers though stores or sales representatives.

Figure One:- Five-level Distribution Model for New H&S Olive Oil Extracts

2.4.3 Sale Promotions

Sales promotions could be eye catching and force a customer to buy out of time and even if he is not actually in need of that item. New H&S is being introduced at a reduced short-time introductory price and is bound to attract clientele.

Moreover H&S packs are made available in 50 ml mini packs and every pack offers customers to fill an on-site survey about this new product to make the customers realize that H&S always cares about the opinion of its respected customers.

2.4.4 Marketing Budget

After running an intensive promotional campaign for the new H&S on the electronic media, marketing budget of this product could be subsequently reduced through switching to print media at a later time. New H&S will also benefit from P&G trademark and joint advertisements would be run (for different kinds of P&G products). Selling in mix-&-match (i.e. new H&S in conjunction with other P&G products) would also be considered. Doing so will not only decrease promotion costs but also increases the sales as the mix-&-match offers are more attractive than 2-for-1 offers within the same product line. It is notable that this mix-&-match strategy would be adopted in conjunction with promoters and wholesalers.

Figure Two:- Promotion Model

3 Sample Advertisement for New H&S Olive Oil Extracts

Figure Three- Sample Advertising

4 SWOT Analysis of for H&S Olive Oil Extracts

4.1 Strengths

Itself being one of the well renowned brands.

Working under the umbrella of Proctor & Gamble

Financial strength

High quality & customer loyalty

Diversity in product lines

Advanced logistics

Approval of ISO and other standardizing bodies

4.2 Weaknesses

Having low-price competitors

Use of very strong chemicals for dandruff relief (can cause itching and irritation)

Influenced by myths (more use of chemicals may turn hair grey)

Less popular in rural areas (in terms of South Asian clientele)

4.3 Opportunities

Organic revolution (more people want organic. Olive oil is organic component in New H&S)

Globalisation (Access to all markets)

Population

Increase in buying power of people

Literacy of clients

4.4 Threats

High competition

Recession effecting purchasing power

Religious & cultural issues (Ban on multinational products)

Increase in cost of raw material (chemicals used in shampoo and plastic for packaging)

5 PESTEL Analysis for H&S Olive Oil Extracts

5.1 Political

Globalisation (Access to all markets) will enabled H&S to target new potential markets

Changes in government and its policies and political instability in rather volatile regions like South Asia that is one of the very attractive consumer markets for new H&S.

5.2 Economic

Recession and financial melt-down

Increase in taxes (e.g. increase in VAT rate in the UK and imposition of a new VAT in Pakistan)

Increase in fuel prices and thus increase in price of logistics

H&S conforms to various international standards and hence the production may incur higher cost. Thus the resulting product is costlier than its local low-quality competitors. Inflations and customer’s inability to purchase may also be a seriously addressable issue.

5.3 Social

Having low-price competitors

State sponsored ban on imported items

Social boycott of multinational products (for instance in Muslim countries)

Increased population means increased customers

Increase in cost of raw material (chemicals used in shampoo and plastic for packaging)

Illiteracy and lack of technical understanding

5.4 Technological

Rapid R&D results in improved product and ingredients every day and hence there is always a risk of competitor acquiring that technology and gaining technological advantage.

5.5 Environmental

Use of very strong chemicals for dandruff relief (can cause itching and irritation)

Influenced by myths (more use of chemicals may turn hair grey)

High competition

Use of organic items (would give the H&S with Olive Oil Extracts high acceptability)

5.6 Legal

As H&S in general and P&G in particular have got many global certifications, no legal issue pertains to the introduction of New H&S with Olive Oil Extract.

6 Porter 5 Force Analysis for new H&S Olive Oil Extracts

6.1 Threat of Rivals

New H&S with a unique Olive Oil formula not only removes the dandruff but also nourishes hair with historically trusted olive oil extracts. So far this product give new H&S an advantage over other but its rivals like Garnier, Boots, Pentene, L’Oreal, Elvive, Clinic and Nizoral may strike an oil-well and come up with a contemporary product in their brand-line that could snatch advantage back from H&S.

6.2 Bargaining Power of Suppliers

New H&S is a blend of contemporary anti-dandruff chemical agents and olive oil. As the prices of essential chemicals are on a hike, suppliers consequently get more demanding in terms of asking more price for raw materials. Similarly, as the new ingredient i.e. olive oil is also required for new H&S production, it will increase the H&S’s dependency on new suppliers.

6.3 Bargaining Power of Buyers

With variety of anti-dandruff products available in market and lack of knowledge of people about uniqueness of the new H&S it is quite possible that buyers switch to rather cheaper low quality products as per their preferences.

6.4 Threat of Substitutes

Olive oil is separately available widely in the market so the customers could prefer using hair oil separately and later washing their hair with H&S classic to be dandruff free. Although the process becomes cumbersome however this could act as a substitute for the New H&S.

6.5 Threat of New Entrants

With H&S established as one of the most renowned brands, new entrants might not effect already established H&S products. Skin and hair products are the ones with which customers usually do not afford to take risk. And hence a new entrant introducing such a product may not get successful at ones. In countries where people value cost than quality, new entrants with low prices (though low-quality) product may gain competitive advantage over new H&S.

Part 3

Individual Critical Reflection on Learning Outcomes

7 Company Valuing Customers

Proctor and Gamble is one of the most renowned fortune 500 companies of the United States (Wikipedia, 2010). The company is known for its advertising campaigns and customer satisfaction. One of the reason for its success is its high standards of value offered to the customers. Head & Shoulders is one of its successful star brands that earns her revenues of over 1.7 billion USD a year. Company offers value to the customers through following.

7.1 Sales and Seasonal Offers by H&S

End of every season, the company offers various kinds of sales and discount offers to the customers. These offer normally cover various product lines covered under the brand. These sales though mainly target at generation of revenues, one of the aspects of also is to enable low-income customers to purchase these H&S products. H&S comes regularly with exciting 2-for-1 and mix-n-match offers for its products.

7.2 Availability

One of the imperative qualities of H&S is its availability. Certain percentage of customers may not be able to visit high street stores so the key quality of FMCG like shampoo is its availability at local and small stores. Although it is much easier and cost effective in terms of logistics to provide the product at major stores, H&S ensures that its products are available at the local stores on the very same prices or even cheaper than high street ones. Such distribution strategy makes a long logistics chain and benefits H&S less in terms of earnings but in terms of customer care it is an effective move.

7.3 Surveys

Occasional online surveys on customer satisfaction are also one of the key attributes of H&S in terms of customer care. These surveys incur cost to H&S but it earns them in reward the customer satisfaction. The surveys are an important mean of knowing about the desirable improvement about the product and also collecting ideas about future products.

7.4 Research & Development

R&D could be interpreted in two ways. One in terms of gaining and maintaining competitive advantage over rivals while more importantly in terms of maintaining customer trust and loyalty. A product without active R&D may go stagnant and in-turn compel the customer to switch to a new brand. Not in terms of updating products through technology, there is a strong need for a brand to regularly get innovative products introduced.

7.5 On-site Hair Wash

The on-site hair was strategy was introduced by H&S in Pakistan where an H&S van would visit the public spots and offer them free hair wash. It was then broadcasted as their advertisement campaign. This strategy has made many H&S customers feel that H&S gives them value by considering them real actors and letting them rather realistically act in its commercials.

7.6 Help Line

Customer help-line had been made available in Pakistan for a very long time to help the customers decide the better product as per their hair types. People have benefited from the suggestions and guidelines provided by H&S professionals.

8 Contribution of Proposed Advertising Strategy in Valuing Customers

8.1 10% Introductory Discount

10% introductory discount to the customer is yet again an effort that conforms to the company’s customer care policy. This strategy will also let the customers’ switch to the new product easy.

8.2 Customer Survey

As a part of advertisement, customers will be invited to fill-in a short survey on this innovative product. It will not only realize customers that their views are valued in H&S but would also pave a way for new innovative products in future.

8.3 Innovation

This product which itself is an innovation is also to give value to customers who are loyal to the brand. Customers may not switch the product even if it does not suit them just because they do not trust other brands. This innovation would bring confidence and pride in loyal customers.

8.4 Mini Packs

To facilitate a large number of rather low-income customers, 50 ml mini packs of new H&S with Olive Oil Extracts is being introduced. With the different sorts of large packaging available already this attempt would encourage more customers to buy. It again conforms to the policy of H&S to provide products affordable to everyone.

9 Critical Reflection Achievements of Three Learning Outcomes

9.1 Analyzing Elements of Marketing Mix

Marketing Mix can be considered as one of the most dynamic legacy marketing model. With main emphasis on 4Ps i.e. Product, Price, Place & Promotion this model offers an insight into many marketing concepts. It would not be wrong to state that if followed in its true spirit, it could result in very workable marketing plan.

Product part of the marketing mix covers the dynamics of product or service. It ranges from product name to all its specifications. It covers various aspects of a product from its launch till the point its set for disposing off. In other words product related decisions are taken care of in this phases.

Next decision phase in marketing mix is the price decision phase. In most of the cases, price setting plays a pivotal role in initial success during launch of a product. It surrounds product’s initial pricing and offers associated to the product at its launch.

Another important component of the 4P model is Place or distribution. Logistics are important both in terms of decreased product costs and timely delivery to the customer’s nearest stores. Effectiveness of this phase may results in improved pricing for customers and increased savings to the company.

Promotions being the final part of marketing mix are the core of the particularly initial launch of the product. Promotions keep the product live in the eyes of consumers and is also a vital component in attracting new customers.

Critical View: Although the marketing mix forms the basic structure of a marketing plan, it has some inherent shortcomings that have raised the need to launch more progressive models. One of them is 5Ps model that iterates the need of more desirable distributions like process, people and packaging etc.

Subsequent models like porter 5 force model takes into account the environment in which the product is being launched. To win a competitive advantage, it is important to know the competitors or expected competitors and hence this model describes such characteristics pertaining to the environment. SWOT and TOWS matrices are the ways to analyze the self capabilities of a company. It then could be used to compare it against rivals. Similarly PEST and PESTEL analysis help assess the environment in which the product being launched.

Although its limitations are there, Marketing Mix can still be categorized as one to the simplest models around. Many models have been organized around this model and it give a very descriptive flow of events that are considered imperative in a marketing plan.

9.2 Critical Appreciation of Marketing Research Techniques

Surveys are one of the effective ways to gather data about a person’s opining on a topic without physically interviewing him. Critically, surveys intend to concise a whole scene into few questions that require a high skill that everybody may not have. Minor error on surveyor’s part may spoil all the effort. Another shortcoming of surveys is the understanding level of the audience. It may be possible that the question may not be understood properly. Surveys normally ask for very few choices of answers and hence the person who is being surveyed may not respond in appropriate way.

Personal Interviews is another way of market research that is widely used around. One of the shortcomings of the interviews again is the precise nature of questions to be asked and hence requires high skills of the interviewer to prepare the questionnaire. Timing constraints on interview are also an important factor. Limited time may leave questions unasked. Getting time from CEO level administration for interviews may also prove difficult.

Observations let study the environment briefly. One of the shortcomings of such techniques is that the observer may take a wrong opinion about the things. Moreover ethically most of the people do not like being observed.

Field Trials is another technique in which product is picked in a selected market to gather customer response. One of the shortcomings of such approach is that if the product fails, it could spoil the product name forever. Similarly competitors may acquire that product to develop their version of the same product and hence R&S goes wasted.

Focus Groups is another technique for marketing research. Focus groups provide subjective data. One of the problems in the focus groups is the biasness on certain issues that may spoil the outcomes from this activity.

9.3 Use of Marketing Terminology & Concepts

Marketing is a very diverse field with many intermingling theories and concepts. Where behaviour related theories of reasoned action are covered in consumer behaviour, they are also studies in Porter’s 5 Force model under Buying Power. Similarly theories like PEST analysis give economics of marketing the Pricing part of Marketing Mix also discusses pricing. In Porter’s Five Force model logistics are also covered while in Place phase of 4P model, the inbound and outbound logistics are discussed.

Social issues under PEST analysis are closely connected with Threats and Opportunities section of SWOT analysis. Many threats are discusses in Porter’s 5 Force Model while the same could be discussed under Threats phase of SWOT analysis. Hence identifying the boundaries may prove difficult however these model still individually attempt to cover as many as possible aspects of marketing plan.

10 Module Learning Related Questions

Expectation at the Start of Module:- One of the basic expecting at the start of this module was to be enabled to develop an appropriate business plan developed for an organization of my choice. The aim was to understand the basis issues and important aspect of a marketing manger’s job. And to understand the meanings of marketing strategy and what aspects of the business environment are required to be looked at for devising a successful strategy. To understand the role of various models of marketing that could help device a strategy.

Experience Brought to Module:- I had studied many to the theories before but was not aware to device a business plan from the concepts that I had in my knowledge. I possessed a grip on theoretical aspect of many models but practicality was lacking.

Experience Used to Achieve the Learning Outcomes:- Having knowledge of theories, it was easy for me to cope with the practicality that was the main focus of this module. I wasted no effort to remind these theories by heart as they were already in my mind. What I focused was the application of these concepts. Taking an organization and applying them to it. Through a repeated practise of case-study solving, I am capable of devising a rather appropriate strategy for my organization.

Views on the Process:- It was a step-by-step learning process. Like mentioned before, the aspect of practicality was there in the learning. I had revised my concepts. Learned new things like 4P models and learned how they are interconnected. Later I took various case studies during the course and applied my knowledge onto them to see what organization used what strategy.

Prior Knowledge:- The understanding of the basic marketing terminologies, concepts and theories was required to go smoothly. As the study under the module was focused on the business process and it even started up with the case studies hence it was pivotal to know them all.

How I am Likely to change:- This process helped me learn develop business plans for the organizations. It has also helped me assess myself through repeated rounds of class discussions on the basic concepts and business case studies of various natures. It has also helped me on understanding the my future job where I may be required to device a strategy for my future employer.

My Feelings undergoing the Process:- It was nice to learn and even nicer to experience a switch in my approach from a theoretical approach to a purely business oriented practical approach.

Questions on the Learning Outcomes:- Typically I was all clear about the concepts and theories. I found however during devising the business plan and studying other case studies during the class sessions that that many theories are interrelated. I also understood that the one of the basic models is the Marketing Mix model from which, the other contemporary models are based on. Efforts would be made further clarify myself on the 4Ps and its extensions. Studies would be continued in individual resources to see how the models like Marketing Mix have been replaced by contemporary models.

11 Conclusion

Part 1 of this work was a situation analys