Consumer Behavior Case Study
August 4, 1999
Chesebrough-Ponds incorporated (CPI) was formed in 1955 through the merger of Chesebrough manufacturing company and Ponds Extract Company. In 1976, the company had six divisions with after-tax profits of $54 million on net sales of $747 million. Product Overview
Robert Chesebrough first discovered Vaseline Petroleum Jelly (VPJ) in 1880 at his oil fields in Pennsylvania. It was the first product sold by the Chesebrough Manufacturing Company, which marketed the product by giving away free samples - an untested marketing practice at that time.
By 1977, VPJ was considered a household staple used by over 90% of the population. The product accounted for $22.5 million in CPI sales in 1976, a healthy increase over the $17.8 million in sales realized in 1977. However, sales growth in 1977 was projected to be flat, budgeted at $22.9 million for the year.
VPJ was sold in two basic forms: regular and carbolated. Regular VPJ was distributed primarily through grocery, drug, and mass merchandise stores; these accounted for 85% of VPJ ounce volume. Carbolated VPJ was a specialized first aid product, containing an active ingredient. Carbolated VPJ accounted for a stable 7% of VPJ dollar sales to consumers, although it was sold primarily through drugstores, was rarely discounted, and never advertised separately.
Vaseline Petroleum Jelly was sold in two basic containers, jars and tubes. Jars sizes were: 1.75 oz., 3.75 oz., 7.50 oz., 12.0 oz., and 15.0 oz.. The tubes sizes were 1.0 oz. and 3.75 oz. VPJ sales were mainly concentrated in the 1.75 oz., 3.75 oz. and 7.50 oz jar sizes, which combined for 81% of VPJ factory shipments by size.
The Market for Vaseline Petroleum Jelly
Consumer studies indicated that heavy users were women aged 45 years old or older who viewed petroleum jelly as a multifunctional skin-care product and mothers who used petroleum jelly for baby care, but did not consider it appropriate for their own skins. Studies have found that heavy users on average purchase six times more VPJ than do light users. Other specific uses for VPJ were chapped lips and sunburns. VPJ also had other untapped uses such as lubrication and use as a shoe-shining aid.
VPJ enjoyed high market share with 90% of the petroleum jelly market. Direct competition is mainly from private label petroleum jellies that were sold through mass merchandisers such as K-Mart and competed only on price. VPJ also enjoyed high distribution penetration with 92% of grocery stores and 96% of drug stores carrying VPJ in at least one form or size. Marketing For VPJ
There were three principle areas of VPJ marketing: advertising, consumer promotion, and trade promotion. Advertising had historically shown the versatility of VPJ as a skin care product for adults and children through consumer ads concentrating on a theme of "In all seasons, for all reasons, do it with Vaseline Petroleum Jelly". Consumer promotion was hardly a high priority for VPJ, which focused more exclusively on trade promotion to promote brand equity. VPJ philosophy had traditionally been to stimulate push demand through trade discounts and promotion. The breakdown of the VPJ marketing budget is as follows:
CategoryBudget AmountPercent of Budget
VPJ was sold by a 130 person sales force who focused primarily on “headquarter accounts” rather than individual outlets. Many believed that the sales forces' perception of VPJ was that of a mature product that required price promotion to stimulate trade interest.
Vaseline Petroleum Jelly SWOT Analysis
Vaseline enjoys dominance in the petroleum jelly product category, a product well known for its versatility. The...