Unbounded Paper Towels

Unbounded is an Australian brand of paper towels that has reaped success in Australia for over
two decades. The brand was recently introduced into the United States (US) market and,
primarily due to distribution and retail promotions had an impressive first few years. For the next
stage of its growth cycle the brand wanted to produce a national advertising campaign to increase
its recognition and reputation within the US. As part of this process the brand had conducted
advertising tests in selected markets. You are tasked with addressing several issues around the
brands advertising measurement and empirics. The questions you have been given involve
factors from considering inputs to the ad budget, to evaluating the viability of advertising based
on test marketing, to providing general strategic recommendations for the brand moving forward.

You must answer each of the questions below. Your responses should leverage, whenever
possible, case data and class concepts to support your response.

It is fine if aspects of your analysis require assumptions. However, when you make an
assumption, you must a) state you are doing so, and b) acknowledge what additional data you
require to validate or falsify your assumption. Calculations for any analytics supplied should be
provided in an appendix.

Question 1: Compute Ad Budget. Compute a potential ad budget based on the advertising to

sales ratio. Specifically, provide an estimate based on a) the advertising to sales ratio for the
industry, b) the two closest competitors. Provide your logic for the competitors you selected.
Based on these analyses, as well as your summary of the brands overall situation, make an
argument for or against each of the following advertising spend levels: $1 million dollars, $5
million dollars, and $10 million.

Question 2: Test Market Conclusions. What conclusions can you draw from the advertising
test market? Discuss your conclusions about the campaign as a whole as well as the specific
conclusions you would draw from each media channel (i.e., television, print, and digital). Be
specific with respect to whether the test campaign, or aspects of the campaign, should be viewed
as effective/ineffective and why.

Question 3. Mix-up Implications. Consider the mix-up in control market B and the brand
managers decision to discard the data from consideration. Does this mix-up make control
market B an invalid control group for comparison purposes? Explain your answer.

Question 4: Objective-task Method. Assume the test market data is perfectly representative of
the populations response to advertising. Use the objective-task method to compute the expected
return on investment over the next year if the brand were to carry out its plans articulated for
market launch.

Question 5: Recommendation. Provide your recommendation for the brand moving forward.
Would you advise the brand to run the national campaign planned? Why or why not?
This is an individual assignment. The page limit for the discussion has been set to three single-spaced
page (font size 12, Times New Roman, and 1 margins).

Please See Syllabus for Due Date

 Unbounded1

The Unbounded paper towel brand originates from Australia. The product used a special mix of
microfibers and resin to make the towels strong when they become wet and thus prevents them
from tearing easily. Although other brands claimed strength, Unbounded has been shown to be
physically more durable when wet than all leading competitors. The unique mix of microfibers
and resin made the product a bit more costly to produce, which was reflected in the price of the
product, which hovered at about $1.00 more for a 6-pack than competitors. Despite this price
difference, the brand was successful in the Australian market with a strong presence in retail and
was among the top four brands.

The brand had developed an affinity with the Australian consumer through humorous and witty
advertising campaigns that spanned the course of two decades. For example, the current
execution featured the power of the brand performing, by paper towel standards, incredible
actions. For example, one television and print campaign, called scuba, featured a person scuba
diving and cleaning her goggles underwater by pulling out a piece of Unbounded paper towel.
Another execution, called sponge, featured a couple doing dishes with one of them remarking
that the last sponge had been thrown away. The couple looked at each other in confusion for a
moment before simultaneously reaching for the Unbounded paper towels to beginning scrubbing
away last nights dinner from a frying pan. Consumers loved and understood the hyperbole; they
realized the brand could not serve the same purpose of the sponge. Consumers understanding of
the hyperbole was important because the brand knew it could not effectively replace or compete
against sponges. The campaign kept the brand top of mind and continued to reinforce the equity
of the brand as a superior, and highly durable, cleaning agent.

Despite its success in Australia, the question was whether the brand could reach similar success
in the US.

The US Market

The Paper Towel Industry in the US Market is a multi-billion dollar industry. Leading brands,
beyond the broad private label market, include Bounty, Sparkle, Brawny, Viva, and Scott (see
Exhibit 1). These brands varied in a number of ways. Some, such as Brawny, positioned around
strength and had used advertising to build their message. Others, such as Viva did relatively little
advertising beyond store promotions (see Exhibit 2). Brands such as Sparkle focused more on
the value proposition with regard to price. In addition, big brands, like Bounty, offer a number of
different variants with their ad spend dispersed among them. Other brands, such as Unbounded,
focus on a single product.

The brands first battle in the US was not one of marketing, but one of obtaining space at retail.
The original pitch had been a challenge because of the brands price point. Although the price of
the product varied by market, on average, a 6-pack for the product cost $7.99, which was a $1.00
more than other major competitors (e.g., Brawny $6.98, Sparkle, $4.97, Viva $5.98). Retailers
1
This case is based off elements of a challenge and approach by a real brand. However, facts and specific pieces of
information have been modified for purposes of confidentially and/or pedagogy.
had wondered whether a need existed to carry a more expensive product. However, the brand
had leveraged its equity and success in Australia to get sufficient distribution at retail. This had
led to successful, albeit limited, rollout over the course of the first year. Year one offered the
evidence that people did purchase the product at the brands price point. With proven numbers in
year one, the brand was able to increase its presence in the second year. And, by the end of the
brands third year, Unbounded paper towels reached $63 million dollars in sales. At an average
retail price of $7.99, the brand pulled in a profit of $1.25 per 6-pack, which the brand viewed as
financially successful.

Unboundeds initial US success was accomplished with no advertising and promotion beyond
the retail space, Sunday paper inserts, coupons, and a small amount of social media. The brand
was still considered a smaller player in the US Market, but it believed it now had the foothold
required to grow. Moving forward, the brand wanted to launch an advertising campaign over the
course of the next year to increase its awareness with the ultimate goal of consumer acquisition
and retention. Part of this would involve calculating an advertising budget. The brand felt it was
important for the US market to stand on its own. Thus, rather than merely extrapolating from its
advertising spend in Australia, the brand wanted a growth strategy focused on the judicious use
of their budget in the US. One option was for the brand to rely on the advertising-to-sales ratio in
the industry, which hovered around 7% in the US. The brand knew this was simply one data
point, and it also looked at competitors as well as its objectives for growth. However, at the end
of the day, the brand needed to come up with a budget and it needed to be able to defend that
budget to the parent company in Australia.

Test Marketing

The most recent campaign in Australia had proven so successful that the brand considered a
direct import of the executions. Although the Australian accents of the actors were detectable,
the brand felt this could be a benefit as it might leverage and build the brands equity in the US.
At the same time, the brand knew that its first big media push was a pivotal moment for its stake
in the US market. Given what was at risk, the brand decided to perform a test of the executions
currently airing in television, print, and digital.

To test the campaign, the brand selected four small geographical locations in the US matched on
various consumer demographics and psychographics. Two of these markets were selected as test
markets to receive advertising and two of these markets were selected as control markets that
would receive no advertising. The selection of small cities allowed the brand to reduce media
costs by purchasing only local TV spots (e.g., the local NBC affiliate station) and constraining
digital spend to the same geographical locations. In addition, the cost per thousand (CPM) was
similar in these markets, which made them good test and control matches. The test budget was
based on achieving the reach and frequency desired if the brand were to expand to a national
campaign. The test period occurred over a 3-month period and results with regard to awareness
and purchase metrics are reported in Exhibit 3.

To measure the effectiveness in these tests markets the brand enlisted a third party that had
dedicated panels in the cities. These panels consisted of consumers who participated in surveys
and tracking studies to assess their awareness of different products, brand preferences, and
purchase behavior. The third party provided panel data for 500 households in each market for a
total of 2000 households. The third party also provided a subset of open-ended surveys with
respect to the two television commercials. Specifically, consumers were asked what they thought
about the commercial and the brand based on the advertising presented (see Exhibit 4).

The television executions were a pair of ads that featured the two spots currently airing on
television channels in Australia (i.e., Scuba and Sponge). The buzz around the television
executions had been extremely positive. The print and digital executions were viewed as less
creative. The print ads were primarily direct mail efforts with coupons and the digital were
display ads featured on websites. In truth, less time had been devoted to the storytelling; these
were static executions, not dynamic ones involved in the television spots. Still, the work served
to reinforce the brands equities. The campaign featured half a dozen distinct executions that
paired the brand with a tough cleaning situation and a 1-2 sentence statement. For example, one
digital execution was a simple banner advertisement stated, Tired of having your paper towel
fall apart? You need Aussie tough, you need Unbounded. Each had the logo of the brand used
in the US, which was a kangaroo crossing sign. While not as attention getting as the television
commercials, the brand saw these as reinforcing both the Australian heritage and the products
durability.

Although the advertising in the test markets was completed successfully, a miscommunication
occurred in one of the control markets. Due to a miscommunication, one of the two control
markets, Control B, received a digital media buy. Thus, households in this market were exposed
to the digital copy but none of the television or print. The brand viewed this as an unfortunate
mistake, which likely invalidated the use of the market as control group. However, they felt they
could safely discard the data from this market and focus on Control A for comparison purposes.

Market Launch

If the brand were to take the product to market an initial proposal was to push for a media spend
of $10 million dollars. This would cover all creative and media costs in television, digital, and
print. Media planning estimated that this would provide an effective reach of 30 million
households over the course of the year. The brand further estimated that the media plan would
have sufficient frequency to encourage the initial amount of trial observed in the test market.
Finally, the brand had preliminary information on repeat purchase based on tracking studies and
market behavior. Specifically, the brand felt confident that those who engaged in repeat purchase
would purchase the product, on average, a total of 2 additional times (i.e., repeat twice after trial)
for the course of the year without additional advertising.

Looking at the test data the brand wondered whether a national campaign based on their
estimates would be profitable and whether it would be a sound strategic decision. The brand was
not locked into either their creative or media strategy and they could make changes to either or
both. The question is, if the brand were to change either the creative or media strategy, what
would those changes be?
 Exhibit 1: Sales of The Leading 10 Paper towels

Million U.S. dollars

0 200 400 600 800 1000 1200 1400

Private label 1,326

Bounty Select A Size 1,182.8

Bounty 616.1

Sparkle 253.1

Sparkle Pick A Size 234.9

Brand

Brawny Pick A Size 171.7

Bounty Basic 165.8

Scott Choose A Size 160.1

Kleenex Viva Choose A Size 124.5

Bounty Basic Select A Size 111.4

Citation. Grocery Headquarters. Sales of the leading 10 paper towel brands of the United States
in 2015 (in million U.S. dollars)*. http://www.statista.com/statistics/188691/top-paper-towel-
brands-in-the-united-states/ (accessed December 15, 2015).

Exhibit 2: Approximated Industry Spending (in millions)

Brand Reported Advertising Spend

Bounty (all variants) 58.19

Brawny 19.8

Scott 2.20

Viva 1.6
 Exhibit 3: Test Market Results

Control A Control B Test Market A Test Market B

Total Sample 500 500 500 500

Aware of 125 300 411 390

Unbounded

Purchased 50 125 228 210

Unbounded

Repurchased 40 100 70 82
Unbounded
 Exhibit 4: Sample Open-Ended Responses

Commercial What did you think of What did you remember Would you consider
the commercial? about the brand? using the brand?

Sponge Very interesting It was for Outback paper Yes, Id consider using
towels. this brand.

Sponge Funny and entertaining! The brand was Unbounded Yes, having something
paper towels; it featured a so strong to replace my
Kangaroo. sponge would be great.

Scuba Was unexpected; I did Remember it was for a Yes.

not think it would be for paper towel.
a paper towel.

Sponge It was fine. It was for a paper towel. Probably not, I like my
Bounty.

Scuba Pretty funny commercial! Its for Unbounded paper Yup, I already do, they
towels; I use them, theyre are very durableI had
great. not thought of using
them to clean dishes.

Scuba I didnt pay a lot of Nothing. Not sure.

attention.

Sponge I liked the Aussie It was for Unbounded paper I think so. Id seen the
accents! towels. ads online before, and I
had thought about it.

Sponge I enjoyed it. I didnt Unbounded paper towels Id buy it, especially if it
think it was going to be from Australia. can take the place of my
for paper towels. sponge.

Sponge I dont like It was for paper towels, I The durability of the
advertisements, but this think the brand was towels seems unreal. Id
one was actually fun to Unbounded. probably try them just to
watch. see their limit.

Scuba Hilarious! Unbounded paper towels. Id try it just to see how

strong it is.