Splash Corporation (Splash) is a leading producer of skin care and hair care products in the Philippines. Founded in 1985, Splash was now the country’s leading domestic producer of personal care products and was billed as “the next Unilever” by BizNews Asia magazine (page 5). However, competing with the top corporations in the world was no easy task, especially when these companies were producing low-cost alternative products. Splash knew that there was no way they could compete in a price war with their much larger competitors, so they had to compete on value if they wanted to remain a top company in the industry. At this point in 2006, the company is considering what brands and products the company should focus on, how to brand and market these products, and generally what strategy they should follow for the rest of the year. Situation Analysis:
The Philippines is a country in Southeast Asia comprised of 7,107 islands in the western Pacific Ocean. With 88 million people, the Philippines was the world’s 12th most populous country at the time. However, 40% of Filipinos lived below the poverty line of US $1, and more than 55% lived on less than US$2 per day (page 2). Surprisingly though, the cosmetics and toiletries industry in the Philippines generated P83 billion in 2004, and was projected to grow at a rate of 5 percent per year to reach P107 billion by 2009. Hair care, the industry’s largest category, contributed P19 billion in sales in 2004, and was projected to grow at a rate of 4% per year to reach P24 billion in 2009. With P17 billion in sales in 2004, and a projected growth rate of 9% per year, skin care was a quickly growing category despite the economic hardships that the people of the country were facing. Social:
In spite of its relatively low per capita GDP, the Philippines was ranked number five on the “vanity index”, which was determined by measuring the consumption of beauty products. While money is a constant concern, outward appearance and the need to feel beautiful is also extremely important to Filipinos. Thus, the Splash Corporation, along with their Splash Research Institute (SRI) was excited about the future of their natural, hair care, and skin care products. Additionally, there is a high degree of brand loyalty in the Filipino beauty products industry. Strong brand loyalty in this market removes some of the pressure resulting from rivals trying to steal market share through price competition. However, it also indicates that gaining market share in the Filipino beauty products market will be extremely difficult, and the only way to do so is to develop products that are not only lower priced, but are also superior in effectiveness and quality.
Before creating a marketing strategy for Splash, it is important to understand the six different types of Filipino consumers. The first two groups (classified as A and B) meet the criteria of the “upper class”. C1 and C2 constituted the “middle class”, D defined the “lower class” and E, was considered the “extremely low class”. Splash’s target market consists of the C1, C2 and D market segments. To attend to “the masses” as they were known, Splash products were sold in sari-saris which is a convenience store found in the Philippines. Often times, the products were sold in single-use packages so that they could be affordable to their target market that may not be able to afford large packages of their products. This was beneficial to Splash because the multinational companies under-served these markets (which constituted roughly 90% of the market), and Splash was able to declare its corporate mission to “uplift the pride and economic well-being of the Filipino”. Political:
It is also important to recall that the large multinational corporations control the high-income A and B markets. In addition, companies from China and Taiwan are coming in to provide cheaper products...