Introduction of Suave brand • Suave belongs to Helene Curtis Industries, Old, reliable hairdressing product of Helene Curtis • Mother company has 4 marketing divisons, Suave $100 million brand in fiscal 1984 • Suave is famous for hair care product (leading shampoo brand in unit sales) • Suave is an absolute low-price brand with low margin and profit
The Shampoo Market • Shampoo market was highly fragmented • Most shampoo marketers targeted the 18-34 year old age group (heaviest users) • Sales had been relatively flat in recent years • Forecast growth predicted slow, steady rate of population despite of the fact that female frequency of use had peaked (2,83 times/week) • Based on share trends (exhibit 1) Suave has the highest market share
Competition overview • Shampoo market is loaded with new products supported by heavy advertising and promotion • Five major competitors were to launch new brands with unprecedented marketing support. (new low-price shampoo) • The industry advertising to sales ratio declined from 13.2% to 10.1% • Historically nine out of ten new shampoos failed
Issue: (What would be the ideal marketing cost allocation to be more effective at sales side?) • Advertising cost pressure and there two options to spend it. 1, increase adv. Budget by 30% and $7,1million would be spent on Tv commercial and $0,7 on print. 2, all television spending in prime time and total budget is $10,2 million • Vice Preisdent was considering about two plans
Market/Suave sales mix • Retail support was critical in the shampoo market 50% of the sales were through food stores, 30% through drug stores and 20% mass merchandise outlets (Suave sales : 65%!/15%/20%) • Retail margin: 30%, shelf position is very important, Retailers push their own brand
Brand loyalty • Achieving success in shampoo market was establishing brand loyalty • The industry was notorius for fickle consumers and it’s mainly influence by TV...