Pantene Solution

7/25/2019 Pantene Solution

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Pantene Case SolutionPrepared for: Dr. Carlos Valdez, Chairman of the Board

Prepared by: Joshua Barber, John Brown, Elizabeth German, & Leanne Porter

August 22, 2014

Proposal number: 4804-0001 1

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TABLE OF CONTENTS

Problem Identification 3-4

Theoretical Marketing Strategy Concepts 5-6

Top Three Solutions 7-10

Solution #1 7-8

Solution #2 8-9

Solution #3 9-10

The Winning Solution 11-13

Financials 14-16

References/Appendix 17-21

Responsibilities:

Elizabeth German - Explanation of Case

Leanne Porter - Problem Identification

Joshua Barber - Theoretical Marketing Concept Identification

Joshua Barber - In-Class Activity

John Brown - Top Three Solutions and Winning Solution

Elizabeth German - Financials

Elizabeth German & Joshua Barber - References & Appendix

*Approved By All*

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PROBLEM IDENTIFICATION

Pantenes market share is in decline. In 2003, Pantene dropped 2.5 points while

the new competitor, Garnier, gained 5.1 percent within that year. Pantene is still the

market leader with 20 percent market share. The next biggest competitor, Sunsilk, has

about 10 percent. Pantene has set the high goal of responding to the decline with an

increase of 5% market share. Pantene is a respected brand with loyal customers, but will

have to make some changes to keep up with the marketing methods that are working for

the competition.

Pantenes current image is that of high quality that leaves hair soft and silky

which are qualities both rated high on the level of importance to the consumer. The brand

personality is described as being confident, elegant, and professional. This correlates to

Pantene selling better to the consumers over the age of 21 and slightly not as well to

those younger. Another category that Pantene lacks in is the package attractiveness.

Garniers brand personality is described as being modern, trendsetting, young, and

attractive. Attractiveness is an area that Garnier stands out against the competition, which

may be part of the explanation to their recent growth and success. This led to their most

profitable age group, which is the 18-20 years old category.

This decline is alarming for Pantene because even though the brand equity is high, other

brands are doing a better job at convincing customers to switch to a new brand and try

something new. This phenomenon can be put into two categories of Omegas, habitual

shopping decisions, and Delta Moments, a disruption causing the consumer to rethink and

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change. For commodity goods such as shampoo, triggering these Delta Moments is the

most effective way to create lifetime customers and increase market share. Pairing

Consulting has spent time digging into the market research. This led Pairing Consulting

to the realization that Pantene has the lowest number of Delta Moments among its

competitors and the highest number of Omegas (Table 5). This means that Pantene does

an excellent job at keeping the customers they all ready have, but has room for

improvement when it comes to getting the attention of new consumers. This can be

attributed to the brand image, not the quality of the product. Most in store Delta Moments

happen when the consumer is checking prices and/or browsing through several packs.

This directs the problem toward price judgment, packaging, or promotions.

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THEORETICAL MARKETING CONCEPTS

Marketing Research

This case study would not have been possible without the use of marketing research.

Market research encompasses many types of key measurements that can help to identify a

companys problems. It shows the quantitative and qualitative ranges of many attributes

like brand equity. It is the running concept throughout this study and is the reason

Pantene became aware of a problem that they were facing. This problem was the loss of

market share. Researching the environment and competition led the company to realize

that they were loosing market share. Digging deeper also allowed Pairing Consulting to

determine another problem facing Pantene. As stated previously, they had lower Delta

Moments when compared to other companys trigger moments. The company remained

strong in a plethora of areas including brand equity, perception, and emotive loyalty.

Marketing research, provided by Nielsen, also led Pairing Consulting to contribute

possible solutions to the company. The research showed that their lowest rating came in

the category of 18-20 year olds in the area of brand equity (Table 1). It also showed that

having the fewest amount of Delta Moments was something that needed attention.

Customer Acquisition and Retention

A major focus of this case study was on brand equity. Having a high brand equity

correlates positively with customer acquisition, retention, and development. Nielsen

determined that Pantene had a very high emotional affinity which helped in regards to

customer retention. The acquisition suffered a little because of the lack of trigger

moments. The emphasis should be placed on keeping a customer once attained as they are

worth more in the long run. Developing a long term relationship is key.

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Brand Strategy

Brand strategy is an ongoing process that should be updated regularly. Developing a

mission and a vision for each brand is an important step in the process. Having a clear,

concise, and SMART strategy allows for the development of a successful brand. It also

allows for the proper controls and evaluations of a particular brand. A company must be

able to see where they have came from and where they are headed. Marketing research

really helps a company to see a clear picture of their current situation.

Segmentation, Targeting, and Positioning

This marketing concept isnt new, but it has become a lot easier over the years with the

amount of technology available. Segmenting a market into different categories can help a

company by making the best use of limited resources. No company has infinite resources

and has to know how to spend their money wisely. It can be segmented in ways such as

geographical locations, age, gender, and income level. Pantene has many strong

performance indicators, but they perform the worse in the 18-20 year old category. This

knowledge allows a company to turn to targeting and positioning. If they realize that this

is a beneficial segment that could help achieve their long term goals, they could decide to

target that segment. Positioning the brand is a coordinated effort that should take a lot of

time to develop. There are many aspects that crosses many departments in an

organization to decide how to position a certain brand. Aligning a companys vision with

the positioning of their brands is something that Pantene excels at. A lot of their key

indicators are positive for the company and according to the marketing research suffers in

only a few areas.

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THE SOLUTIONS

Solutions #1

Change the product packaging. Pantene should consider colorful packaging and a

redesign of the bottle to present a more trendy color scheme. According to the perceptual

map of packaging, Pantene uses opaque packaging along with a flat top so that the user

can place the bottle upside down (Figure 12). If they redesigned the brand to move closer

to the trend setter line on the brand personality graph, they would be more associated

with three personality types (Young, Fashionable, and Modern), instead of confident and

elegant only. They should keep the flat top to not only provide ease of use, but also

because only one other company, Head and Shoulders, uses the same user friendly

design. Moreover, according to the brand-wise associations, Head and Shoulders is not a

significant threat to Pantene because Head and Shoulders ranks much lower in soft/silky

fragrance and overall quality (both companies are owned by P&G).

According to the perceptual map of packaging, Garnier has taken some of Pantenes

market share by using brighter colors on the pack label, an attractive shape, and a durable

lid that does not break off. This kind of package change could result in higher sales from

the younger, trendy segments. However, Pantene would risk its healthy/shiny fragrance,

and premium quality scores according to the brand-wise brand associations. The

transition to a modern and trendy color scheme could pay off in the short term, but may

erode the high brand equity of Pantene. If Pantene creates a modern, trendy bottle, the

differentiation between Pantene and Garnier would be less. The cost to redesign the color

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scheme would be extremely high, and most likely would force Pantene to run an

expensive advertising campaign to promote the redesign.

Solution #2

Adjust the offer with a free bonus bottle of conditioner, combined with modern and

colorful vertical aisle displays in order to trigger more Delta moments. According to the

price appropriateness chart, Pantenes price is a little above the amount the average

person is willing to pay for shampoo (Figure 15). Pantene needs to provide the consumer

with either a discount or free item to closer match the price value of Head and Shoulders

and Garnier while maintaining the premium brand image. According to the impact of

promotional activity graph (Figure 16), Pantene, Sunsilk, Cairol, and Garnier do not have

strong promotion led purchase triggers. Therefore, customers may not respond well to

large TV advertisements that promote a lower price. According to the switch trigger data,

people switched shampoo the most when browsing through several packs, and through

promotion (Table 4).

Pantene has the advantage of premium brand pricing, and should use an in-store bonus

item in order to stimulate sales. This method could result in Pantene being able to

maintain the premium product quality with a free giveaway product that makes the

shopper feel like they are getting a much higher perceived value. This could raise the

average consumers willing to pay price to match Pantenes current pricing matrix.

Pantene can target Garnier and Head and Shoulders customers with this method because

these customers are price sensitive according to the purchase triggers for brands data.

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Also, according to the activation index data (Table 7), Pantene is able to rely on its

stronger ad recall and brand recall once a competitors customer switches to Pantene.

Pantene should also use colorful, modern vertical aisle displays in order to appeal to the

younger demographic. According to the brand personality data, the young brand

personality was close to the modern, attractive, fashionable, and feminine brand

personalities (Figure 10). These displays are likely grab attention of the younger crowd to

trigger delta moments and justify the higher perceived willingness to pay price premium.

The combination of an attention grabbing display along with a free bonus item raises the

chance of triggering delta moments in younger consumers.

Solution #3

Create a whole new shampoo product. The brand equity by age data reveals that Pantene

has a higher equity among higher age groups and mainstream people (Table 1).

Moreover, most of the competition has high brand equity with 18-20 year olds for their

respective company. For example, Sunsilk, Head and Shoulders, Palmolive, and Garnier

all have a higher brand equity score with 18-20 year olds than any other group in their

respective company. First, Pantene can start to target 18-20 years olds by creating a new

cheaper product that fills their needs. Head and Shoulders and Garnier are priced below

the willingness to pay price premium according to the price appropriateness data; Pantene

is above the average willingness to pay price. Also, by utilizing lower pricing strategies

between 2004 and 2005, Head and Shoulders took an extra 1.9% market share, and

Garnier took nearly 5% market share. These were the only two competitors that grew in

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market share between 2004 and 2005. However, if Pantene created a new product, the

costs could far outweigh the benefits.

Pantene might need to focus more on their strongest segments such as older and

mainstream customers, and less on weaker segments such as 18-20 year olds. Pairing

Consulting also felt that introducing a new variant would only add to their strengths.

They are good at introducing new product lines. Pairing consulting wanted to focus on

turning a current weakness into strength. This is far more valuable and would add less

expense. Furthermore, adding a new variant could further exasperate the perceived lack

of distribution intensity.

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WINNING SOLUTION #2

Adjust the offer with a free bonus bottle of conditioner combined with modern and

colorful vertical aisle displays in order to trigger more Delta moments while the customer

is in the store. These vertical aisle displays would be protruding curved cardboard pieces

that reached from the bottom of the shelves to the top. It would separate the whole

Pantene product line from other shampoos. The curved design would fit into their current

elegant personality trait. Pairing Consulting recommends adding colorful, modern, and

sleek vertical dividers with the promotion of the free bonus bottle explained on it. This

would allow Pantene to improve their brand equity with the younger crowd and catch

peoples eye just looking through packs. Furthermore, it would save the company from

having to completely redesign all of their bottles at a very high expense.

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According to the price appropriateness chart, Pantenes price is above the amount the

average person is willing to pay for shampoo. Pantene needs to provide the consumer

with either a discount or free item to closer match the price value of Head and Shoulders

and Garnier while maintaining the premium brand image. According to the impact of

promotional activity graph, Pantene, Sunsilk, Cairol, and Garnier do not have strong

promotion led purchase triggers. Therefore, customers may not respond well to large TV

advertisements outside of the store that promote a lower price. According to the switch

trigger data, people switched shampoo the most when browsing through several packs,

and through promotion.

Pantene has the advantage of premium brand pricing, and should use an in-store bonus

item in order to stimulate sales. This method could result in Pantene being able to

maintain the premium product quality with a free giveaway product that makes the

shopper feel like they are getting much more value for the price. Pantene can target

Garnier and Head and Shoulders customers with this method because these customers are

price sensitive according to the purchase triggers for brands data. Also according to the

activation index data, Pantene is able to rely on its stronger ad recall and brand recall

once a competitors customer switches to Pantene. A negative to this proposal is the

usage of more shelf space because of the packaged promotion.This is expensive, but

Pairing Consulting views this as a manageable risk.

Pantene should also use colorful, modern vertical aisle displays in order to appeal to the

younger demographic. According to the brand personality data, the young brand

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personality was close to the modern, attractive, fashionable, and feminine brand

personalities. These displays are likely grab attention of the younger crowd to trigger

delta moments and justify the higher perceived willingness to pay price premium. The

combination of an attention grabbing display along with a free bonus item raises the

chance of triggering delta moments in younger consumers. This solution could also meet

the long term goal of regaining the lost 5% market share while keeping costs much lower

than package redesign or new product creation. This solution intends to capture delta

moments more frequently while customers browse in store items.

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FINANCIALS

Creating a promotion that includes a bonus item attached to the Pantene shampoo bottle

is expected to greatly increase revenue. Pantenes highest brand equity is with

Mainstream adapters and a close second being Trendsetters. These two groups are

expected to be drawn to the free trial size bottle of Pantene conditioner, increasing

purchases quickly. The free attached gift and associated shelf displays will also reduce

Pantene customers from becoming transients triggered by a deal or flashy new package

on a competitors brand. This plan is intended to pull from a portion of Sunsilks

customer base including the Trialists and Considerers as they sample Pantenes

quality product.

Overall, a wide range and large number of customers will be influenced by this

promotion and therefore increase sales, without reducing the retail price or spending large

fixed costs on package redesign or new product implementation. This action, paired with

optimistic results of the economys future according to CMO.org, will undoubtedly

improve Pantenes sales. CMO.org presents an annual survey analyzing market and

economy projections. In the latest survey, 11.1% growth is expected when a company

targets existing products to new markets. While the program presented to Pantene will

retain current customers, the trial offer and shelf display will also entice new markets

including younger demographics and modern, fashionable individuals. These two

markets are typically customers of competing brand Garnier.

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Source: 2014 CMO Survey Report: Highlights and Insights Report

Due to a 5 percent increased Market Share that will be a result of this bonus offer in the

long run and shelf display; sale revenue is also expected to rise 8 percent for a result of

$80 million dollars. Approximately 20,000,000 additional bottles of shampoo and

conditioner, at an average retail price of $3.99, are expected to be sold in the following 12

months of implementing this promotion. The sales revenue increase will help to cover the

costs associated with this trial program and shelf display.

The free trial size bottle of conditioner and corresponding shelf display advertisements,

have minimal fixed costs due to the main resources already being implemented in

Pantenes manufacturing such as assembly lines and factories to create the shampoo and

conditioner solutions. The additional fixed costs that will be created follow:

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Templates/Molds for Creating Trial Size Bottles, Caps & Labels, $3,000.00

Design Fee for Bottles & Shelf Display Promotion, $10,000.00

100 Cardboard Displays for 100 Stores with floor displays ($20.00 Each),

$2,000.00

In addition to the current Variable Cost of $0.75 for making one full-size bottle of

Pantene shampoo, the following costs will be created to implement the bonus item offer:

Bottle, Cap, Conditioner & Label for Trial Size Bottle, $0.35/bottle

Wrap to Attach/Advertise Free Trial Offer, $0.10/bottle

Strips for Shelf Ends (Near Price Label), 1 Strip per Box of 12 Bottles, $0.10/

bottle

Partitions for Shelving, 2 Folded Partitions per Box of 12 Bottles, $0.20/bottle

The total additional Fixed Costs planned would be $15,000.00 plus Variable Costs of

$0.75 per bottle. The total Variable Costs for making one full-size bottle of Pantene

Shampoo with the bonus offer will then be $1.50. If selling the Pantene Shampoo bottles

for a Retail Price of $3.99, this results in a Contribution Margin of 62.4% and a Unit

Contribution of $2.49. It is expected that 20,000,000 additional bottles of Pantene

shampoo and conditioner will be sold as a result of this program. Note, the Variable Cost

of the full-size conditioner will equal the $0.75 per bottle cost similar to the shampoo

prior to the promotion, resulting in a higher Unit Contribution per sale for each bottle of

conditioner sold.

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REFERENCES

YadGupta, Seema. 2013, June 1. Nielsen: Market Research for Pantene. Indian Institute of

Management Bangalore. Retrieved 8/19/2014: http://coursepacks.xanedu.com/perl/

dview?

DIN=27287438&PACKID=470660&HLVL=15193&TYPE=CoursePack&ID=0.1363094

35414976

2014 CMO Survey Report: Highlights and Insights Report. Retrieved 8/19/2014: https://

faculty.fuqua.duke.edu/cmosurveyresults/The_CMO_Survey-Highlights_and_Insights-

Feb-2014.pdf

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https://faculty.fuqua.duke.edu/cmosurveyresults/The_CMO_Survey-Highlights_and_Insights-Feb-2014.pdf


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APPENDIX

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Documents

Pantene Solution