Scope represents green, mint-tasting mouthwash and it is leading brand of the health-care division of P&G. It was first introduced in 1967 and was positioned as great tasting, mouth refreshing product that provides bad breath protection. This brand became market leader in 1976 and since then it has enjoyed the position of market leader. Procter and Gamble is one of the most successful costumer companies in the world, It markets its brand in more than 140 countries. Their purpose is to provide branded products of superior quality ad value that improve the lives of the world’s customer for now and next generations. By providing such offerings thy can get reward from customer in terms of sales and leading brand name in the market. Procter and Gamble operates in five operating divisions: Paper products, Food and beverages, Beauty care, Health care and Laundry and cleaning. Scope became market leader in Canadian mouthwash market in 1976 and until 1990 it has enjoyed the greatest market share. Plax was introduced in Canada in 1998 on a different platform from the traditional mouthwashes. Plax is the only player in the market segment of plaque fight. Generally, Canadian mouthwash market is growing at an annual rate of five percent, and plaque-fighting segment represent 10 % of this market. How should P&G respond to the newest competitor in the mouthwash market? What strategy should be pursued for Scope in the future to ensure continued profitability?
Nature of Demand
In 1990, 75 percent of Canadian households used one or more mouthwash brands, and, on average, usage was three times per week for each adult household member. Company market research revealed that users could be segmented on frequency of use; “heavy” users (once per day or more) comprised 40 percent of all users, "medium" users (two to six times a week) comprised 45 percent, and "light" users (less than once a week) comprised 15 percent. No information was available on the usage habits of prebrushing rinse users. Nonusers currently don't buy mouthwash because they either (1) don't believe they get bad breath, (2) believe that brushing their teeth is adequate, and/or (3) find alternatives like gums and mints more convenient. The most important reasons why consumers use mouthwash are:
It is part of my basic oral hygiene 40%
It gets rid of bad breath 40%
It kills germs 30%
It makes me feel more confident 20%
To avoid offending others 25%
Approximately 65 percent of all mouthwash sales went through drugstores, while 35 percent went through food stores. Recently, wholesale clubs, such as Price Club and Costco, were accounting for a greater share of mouthwash sales. Until the entry of Plax , brands in the mouthwash market were positioned around two major benefits: fresh breath and killing germs . In early 1987, flavors were introduced by a number of brands including Scope, Listermint, and various store brands. This greatly expanded the market in 1987 but did not significantly change the market shares held by the major brands. With the launch of Plax, the mouthwash market had segmented itself along the "breath-only" brands (like Scope) and those promising other benefits.
Extent of Demand
Until 1987, on a unit basis the mouthwash market had grown an average of 3 percent per year for the previous 12 years. In 1987, it experienced a 26 percent increase with the introduction of new flavors such as peppermint. Since then, the growth rate had declined to a level of 5 percent in 1990. In 1990, the total retail sales of Canadian mouthwash market was $68.6 millions.
The mouthwash market was initially developed by Warner-Lambert with its pioneer brand Listerine. Positioned as a therapeutic germ-killing mouthwash that eliminated bad breath, it...