The strategic opportunity is to choose between international standardization and the Henkel European model of local heritage. Henkel’s main competitors are following the international standardization strategy resulting in optimization of product portfolios and significant margin growth. There are three strategic alternatives:
* Continuing the local brands in Spain and Italy
* Replacing the local brands with the flagship Persil brand * Holding the local brands as well as introducing Persil to the market The strategic recommendations are:
* To discontinue the Atlas brand in Italy and Dixan in Spain * Atlas’ market share has been on a consistent decline over the last three years * Dixan is competing for the same market share as Wipp, and it has a lower relative performance * Decrease marketing spends in Italy and increase marketing spends in Spain * Italian consumers are brand loyal and culturally driven * There is a direct relationship between marketing investments and sales revenue in Spain Insights & implications
Henkel owns two local brands in Italy: Dixan and Atlas. Atlas’ market share is rapidly declining, while Dixan has a strong position with high potential. In Spain, Henkel owns Wipp and Dixan. Where Wipp has a strong position that is gaining momentum whereas Dixan is losing speed. Wipp is positioned as an exceptional Tier A/ premium brand (Exhibit 2), which has a high positive perceived performance. This enables Henkel to produce a higher level of profitability. The other Henkel brand in Spain is Dixan, which has a slightly lower perceived perception. Instead of both brands competing for the same piece of the pie, Dixan should be discontinued and the company focus should be on Wipp. In Italy, Dixan has a strong competitive position. However, the other national brand, Atlas has declining marketing share and is not even amongst the top ten detergents in terms of sales. Thus Atlas does not...