Proctor & Gamble Scope Case

Topics: Marketing, Brand management, Product management Pages: 13 (5134 words) Published: May 1, 2013
Case Analysis:
Procter & Gamble, Inc.: Scope

Problem Statement
Procter and Gamble’s mouthwash product, Scope, had a 32% share of the Canadian mouthwash market in 1990.  However, Plax, a new category pre-brushing mouthwash launched in 1998, poses a continuing threat to Scope market share.  In early 1991, Procter and Gamble’s brand manager for Scope, Gwen Hearst, must decide on a course of action for maintaining the profitability of Scope.  She is tasked with developing a three-year marketing plan for Procter and Gamble’s mouthwash business.  Decisions include how to respond to the emergence of mouthwashes, such as Plax, that focus more on “health-related benefits” and whether a line extension or brand extension would be most advantageous to the company in profiting from this emerging market segment.  Hearst can also recommend that Procter and Gamble (P&G) not pursue a line or brand extension.

Situational Analysis
Market Analysis
The Canadian mouthwash market is a competitive market that hit its peak growth in 1987 with a 26% shift upwards in sales. The market is still in the mature growth stage with a 5% yearly increase in 1990. The market had total retail sales of $68.6 million in 1990 with approximately 65% of those sales coming from drugstores and the other 35% coming from food stores. The market is comprised of after-brushing rinses, pre-brushing rinses, fluoride rinses, and flavored rinses. The growth potential for market profitability in the Canadian mouthwash market is possible due to the innovative development of pre-brushing rinses such as Plax as well as flavored rinses that reduced the “sting” of regular mouthwashes. The introduction of Plax was a major turning point in the Canadian mouthwash market with competing brands suffering considerable market share loss after Plax’s introduction. In a 1990 study, 75% of Canadian households used one or more mouthwash brands at least three times a week for each household member. Procter & Gamble’s Scope brand of mouthwash is the dominant brand with 32% of the market share with four other brands comprising another 48%. There are several economic barriers that present potential threats to entrants in this market. Companies looking to introduce products in this market must take into account regulations set forth by the Health Protection Branch as well as The Canadian Dental Association. Certain companies that have a pre-existing product who are looking to introduce that mouthwash into the Canadian market will also find an issue when it comes to artificial sweeteners because the main sweetener in the U.S. is banned in Canada and vice versa. Also, companies must be willing to invest heavily in their marketing campaign since competition is fierce due to new competitors. In a 1990 survey, 40% of mouthwash users rinsed as part of their basic oral hygiene routine and to reduce bad breath. Consumers will need to know the oral health care benefits of products in order to decide which one is best for their oral care needs; this focus on health care benefits is the growing trend in consumers’ decisions to use mouthwash. The threat of new entrants remains high despite these barriers to entry because of the growth potential in the Canadian mouthwash market.  There are two avenues in which companies can compete in the mouthwash market: drugstores and food stores. Currently, certain brands perform better in one versus the other, and some brands perform equally well in both. With 65% of sales coming from the drugstore avenue, potential entrants may benefit from taking the less utilized route of food stores.

Customer Analysis
The 75% of households that use mouthwash was segmented into heavy, medium, and light categories based upon usage. Heavy users on average used mouthwash at least one time a day and comprised 40% of all mouthwash users. Medium users rinsed on average two to six times a week and comprised 45% of users, and light users on average rinsed less...
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