Consumer Private Limited

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It may be noted that both White and Spark were marketed by the same company and that, after the promotion, this company’s total market share rose from 10% in September 1996 to 25% in December, 1996.

The introduction of Spark with a gift offer took the other manufacturers by surprise, especially that of Dazzle. Initially the marketing management of Dazzle felt that Spark in carton packs would not be able to do well as Spark had a technically inferior formulation and the consumer offer given involved a very heavy purchase in Spark stock by the consumer – a purchase which would easily last the consumer for 4 months in terms of washing powder.

Looking at the market share figures over the 4 months, the marketing management was in a quandary. The need to act was urgent.

Some of the conversations that took place between the management at Household Products are given below :

Marketing Well, having looked at the market share up to December and the various

Director reports of the success of Spark from our sales management, what do

you propose we do ?

Marketing I have thought over this problem; despite our initial feeling that Spark

Controller would be a failure; we now see it doing very well. If they carry on at this

rate they will certainly be a major threat to our market share.

They can afford such heavy promotions due to their cheaper formulation.

Personally feel that we should, as soon as possible, introduce a second brand which would have an inferior formulation as good as Spark. This new product should be heavily consumer promoted at about the same level of expenditure as Spark. This brand would be able to afford that kind of expenditure on promotions due to the high margin we will make if sold at a price equal to Dazzle and Spark. Alternatively, the product can be sold at a lower price than Spark.

Marketing Well, that is certainly an alternative which we must consider. I suggest

Director that we start work on this straightaway and meanwhile we would have a

full-scale meeting of our entire marketing team and try to decide the course of action that we must take to bring back our market share to its original level.

* * * * * * * *

:: 4 ::

Mar 147/IIMA

General Well, Pradeep, what is the situation of washing powders in your area ?

Sales Manager

Sales Manager Spark is making heavy inroads into our sales with their new pack. In the

past, with the bulk pack this brand represented an insignificant part of the market. The main reason for their success is the very popular consumer offer they have run which is very generous to the consumer. At this rate we will have to come down on our sales estimates, as I am sure I will not be able to meet my target.

General Well, you see, at the higher margin, due to their inferior formulation, they

Sales Manager can afford to spend more than us on consumer promotions, but our product is infinitely superior and we should be able to win back our market share.

Sales Manager Consumer promotions are a very effective sales medium to the retail stores as well as to the consumers. I am afraid that if they continue at this rate, we will find it very difficult to keep pressure on our sales and achieve our estimates. We must counter immediately with a promotion as heavy as theirs or else we will lose out.

General Well, your recommendation then seems to be that we should also enter

Sales Manager the rat race and promote Dazzle heavily to the consumer. Are you sure that we cannot get away with offering less due to our better product, giving promotions like the ones we have in the past ?

Sales Manager I am convinced that unless we step up our expenditure per tonne to the level that Spark is spending, we will not be able to sell our product.

* * * * * * * *

Promotions John, I have come to discuss the results of the consumer promotion that

Manager Spark has run for the last 4 months. Their promotion has certainly been an outstanding success as one can well see from the market share figures as well as the reports we have received from our sales management throughout the country. I would like to get an additional budget for promotions immediately and promote Dazzle at about the same level as Spark to win back our market share. Being better organized, we should be able to mount more effective promotions than theirs, but ultimately the gift should be as attractive to the consumer as the gift Spark is giving away, and this will mean about the same level of expenditure. For this, I feel that you should cut down on your theme advertising for Dazzle and divert some of this money to promotions straightaway.

:: 5 ::

Mar 147/IIMA

Product Dilip, I don’t agree with you here. I feel that we should not indulge in

Manager such heavy promotional expenditure as Spark has done because this will get us into a vicious circle. We have been selling our product Dazzle on the basis of its superior formulation and performance. This fact should be highlighted now more strongly and sharply through heavier theme advertising. We should put as much of our money as we can into theme advertising to convince the consumer that when she buys Spark with gifts of such high value she does so by settling for an inferior product. For this, I would like to place all my money in press, cinema and point-of-sales material.

Promotions John, the reach of media in this country is very limited, as you well know.

Manager Apart from point-of-sales material which can be put up in all places, you can cover only a very small fraction of your total target through press and cinema. If, for instance, we had TV as widely as one does abroad, your point would make sense as the target consumers could then be reached through theme media.