Pantene

A Case Study
Ryan Sutton
October 31, 2013

Problem: What marketing strategy should Pantene take to counter their decline in market share and meet their long-term growth target of five share points?

Situation Analysis Company (Pantene Shampoo) Pantene is market leader with 20% share Rated very high on soft and silky and quality characteristics of products Rated very low on attractive packaging, natural ingredients, and family product Pantene has the highest brand equity index of 3.5 Pantene competes strongest in the older +31 age category Brand equity is in proportion to its market share Pantene has strong emotive loyalty Not a promotional-driven company Pantene has 0% Brand Cardio, meaning no new skus in past 2 years Pantene is priced as a premium product, a bit higher than the willingness to pay price index Pantene has the strongest advertising and brand recall Collaborators Nielsen Market Research o Customized research solely for Pantene Customers Highly involved with shampoos, purchasing multiple brands in experimentation Associations such as Healthy/Shiny/Fragrance, Quality, Technology, Attractiveness, and meets whole family needs were the most important characteristics to the consumer, then followed by product/brand awareness Of the Associations Health and Shine were the most important with 21% decision power o Characteristics include: smooth/soft hair, body/vitality, shine, range of products that work well together, gentle, care for color hair, fragrance, and attractive pack Customers perceive Pantene as high quality and effective for soft & silky Customers said that Garnier had the most attractive packaging Pantene has highest equity in 31-40 year olds (3.7), followed by 40+ year old (3.5), 2130 year old (3.4) and 18-20 year old (2.7) Pantenes personality is seen as confident, elegant, and professional. Customers tend to not spend much time purchasing o Usually shop for this product in auto-pilot with rules o Occasionally the auto-pilot and rules are disrupted, this disruption was most triggered by browsing through several packs, promotions, new brand variants, and advertising. *Advertising being the only pre-store disruption Shoppers can also be segmented into hair types o For ritual/auto-pilot shoppers ! 60% have Colored, 39% have Wavy, 39% have Thick, 40% have Straight

For disrupted & changing shoppers ! 46% have Colored, 42% have Straight, 36% have Wavy, and 34% have Thick Pantene has the most loyal customers, with the least likely chances for switching Competitors Customers chose Garnier due to: checking prices, browsing through several products, reading packages, advertising, and attractive packaging Garnier is associated with making one feel attractive Palmolive is associate with suitable for whole family Garnier was rated the highest for attractive packaging Competitors have moderate to weak brand equity Most competitors have brand equity among the younger demographics Garnier and Dove scored the highest as being the largest threat to Pantene Many competitors have purchase triggers through promotion, lower prices, attractive packaging and advertising. Sunsilk and V05 have the highest brand cardio, or new product introduction Context Market penetration of 98% and annual growth rate of 2.8% Associations is the most important driver of brand equity, however is less powerful compared to normal consumer packaged goods Awareness is strong driver for the shampoo industry Healthy/Shine/Fragrance (21%) associations are the strongest driver for shampoo purchases, followed by Premium Quality (13%), and Emotive/Attractive (5%) Emotional affinity often led to consumer recommendation of the product The strongest triggers for purchasing brands were: checking prices, auto-pilot, and browsing through several products. Linear relationship between brand equity and market share o

Alternatives Alternative One - Advertising Pantene has high brand equity among the older demographic segments of the shampoo industry, however they are lacking in the younger segments. Garnier, which is seen as Pantenes most threatening competitor has been seeing great success in the younger demographics, actually where Garnier has the highest brand equity. In order to take back market share and grow long term, Pantene should target the younger generation through an advertising campaign. This will help Pantene appeal to the more modern and hip market, and utilize the highest pre-store switch trigger of advertising, along with their high advertising recall among consumers.

Pros High advertising recall for Pantene Address our lack of brand equity in younger markets Make Pantene appear as a more attractive Advertising is the highest pre-store trigger

Cons Costly use of resources to potentially increase market share Lack of focus on older demographic we currently serve Higher competition in the younger market Many purchases are made last minute in the store without much thought

I did not choose this alternative because for the large amount of money required to initiate an advertising campaign like this, it does not target the most effect triggers in changing brand equity and in turn market share. I also do not want to cause mass confusion for our current older segments by regarding Pantene as a young hip product. This could cause a switch in our current segments that could be larger than the gain in the younger segment. Finally, the actual behaviors of shoppers tend to be last minute, without regard to advertising, so this strategy may not be successful in actually producing sales.

Alternative Two Variety The shampoo market caters to various types of hairstyles and needs, for this reason it is important to offer various products to meet those. Pantene currently has not introduced a new variant in the past 2 years, this can have affect on their image as a modern and hip brand. The importance of product variety is most seen through the affect it has on switch triggers. New brand/variant is the fourth strongest switching trigger, meaning that creating new products increases the chance for consumers to switch from competitor products to Pantene. Therefore, I think Pantene should allocate more of a budget to research and development of new product variants, more specifically in they healthy to mediocre hair types in color care, wavy, thick, and straight. These hair types are the most likely among all of the hair types to be persuaded by triggers. Pros Expand product offering to existing and new markets These hair types are the most likely to switch brands and become regular buyers We currently have zero brand cardio, or product introduction One of the highest rating for new brand/variant as being a switch trigger Cons Very costly for the R&D to develop new products, also increases in costs of packaging Many of these customers are already auto-pilot shoppers This characteristic is a low percentage of the reasons consumers gave for purchasing a specific brand We already offer product variety in the largest areas

I did not choose this alternative because despite the importance of brand variants in the shopping process, these customers are not the omega or habitual auto-pilot consumers. This meaning that they will continue to hop around to the newest brand or variant, no matter the company. This may create some short-term sales, but it will not create the long-term growth Pantene seeks or result in continuously increasing costs of research and development to maintain interest among these shoppers. The main hair-types that demand the most product variants, we already have brand equity built and offer products to meet these needs, so the market we would be appealing to is a minority in the big picture.

Recommendation - Packaging The primary competitive advantage our strongest competitor, Garnier, has is their ability to appeal to the young, modern, trendsetter segment in the market. Through the research we can identify the areas in which Garnier appeals to these demographics. Although Garnier has a higher level of brand introduction, Pantene still competes in the many product variants as Garnier. The key area in which Garnier succeeds and where Pantene lacks is the attractiveness of the product and brand. Although many factors could play into this, one major difference is apparent, the attractive packaging. Garnier ranks as 21 in terms of attractive packaging, whereas Pantene only ranks at 2. This large gap can explain the lack of attractiveness and appeal among the younger demographic for Pantene. In order to gain back some of the lost market share to Garnier and other competitors, I believe Pantenes best option would be to invest more into the product design and packaging departments for their products. This will help Pantene to gain eye-share on the store shelves, and disrupt some of the shoppers that usually prefer the other companies. Attractive packaging and browsing through products account for 30 switch triggers, making it the highest switch trigger option among the alternatives. Having a product and package that stands out on the shelves will help consumers who are quickly browsing over products to direct attention to Pantene. The data also supports this recommendation further by pointing out that associations are the highest driver to brand equity, and among associations the health/shine/fragrance category is the most influential, in which attractive packaging is a component to this category.

Pros Expand product offering to existing and new markets Address our lack of brand equity in younger markets Make Pantene rank higher in attractiveness

Cons Loss of time in manufacturing and design capabilities Costly expenditures to redesign and material cost Entering a competitive market segment

Applies customer insights on shopping behaviors Regains market share from our top competitor Garnier Improves the largest driver in the associations categories Directs focus on the root of market share, growing brand equity

Potential loss of current customers to new branding/image Fail to offer new variants of products, just focusing on improving current products.

Implementation Plan Through some outside research, I found that a typical redesign project for 10 products costs around $15,000 USD. This price is minimal considering the costs of running an advertising campaign, which can be a large initial startup cost along with continuous costs for media placement. The timeframe for this type of work can also be much shorter than other branding alternatives, although it may take multiple revision stages, redesigning the products and packaging could be accomplished in just a few months. With the strict management of this process, the time could be cut down to launch the new product designs, but could also lead to a small increase in design costs. To manage this I believe management should free up duties of the head designers at Pantene, and hire an outside consultant to receive a new perspective on design. This will help to get a fresh new image for our products and make resources available to implement the new designs. Along with the design fees, Pantene will need to change some processes in manufacturing and materials, which could account for another $15,000 to $20,000 due to lost time and material change. The benefits, however, will recuperate the costs with an increase in market share of the younger demographics and possibly the older demographics. The quick shopping choices consumers make, often with a lack of brand loyalty resulting from switching triggers will help to gain market share and grow sales nearly immediately. This strategy also assists with the long-term growth plan of Pantene, by developing a product that is optimized to the shopping behaviors of our current and future customers, and focuses some of our efforts on growing our weaker markets without disregarding our current customers.