Case Study: Sauve

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The shampoo market was a $1.2 billion industry that was at a maturity point in its life cycle. Unit sales within the industry had only been growing at a compound rate of 2% since 1978. Market share was extremely valuable; 1 point market share was worth roughly $10 million in sales and produced 40% gross margins. The Suave brand, a product under the largest division of Helen Curtis Industries, was “at a watershed”, thought Bob Thomas, the VP of marketing. With unit sales shares and operating margin percentages on the decline, as well as the competition for shelf space, the Suave brand faced a critical threshold. Fortunately, there were two proposals that could turn around the brand. Ellen Vallera, seven year brand manager for Suave, wanted to increase the ad budget by 30% to $7.8 million. Her plan was to use $7.1 million divided between daytime and primetime television with the remaining $700,000 spent on the brand’s first print campaign. Tom Kuykendall, newly hired brand manager for Suave, proposed a $10.2 million plan which placed all the television advertising in primetime. The success of Suave in the shampoo industry would depend on one of these plans. The Suave brand, though having declined in unit share percent from 12.2% to 11.5% in 1982-1983, still maintained one of the highest market shares amongst its competitors. This can be attributed to its intended target market and brand loyalty. According to company records, Suave targeted employed women (blue collar occupation) between the ages of 18-34 that were middle income parents with large households. This consumer type had the highest buyer index and was the prime focus of the company. Since this consumer was sought by many, brand loyalty was very important. One manager within the industry claimed there is no brand loyalty. That in fact, the brand changes from when the consumer sees an ad, to when the consumer walks to the shelf in the retailer. Despite this belief, according to a study...
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