Suave Analysis

7 years of experience – why $7.8M is

the proper advertising budget figure
 Suave’s business model summary
and history

• Offer a low priced good to the customer

• Maintain the same quality as competitors’
products
• Operate at a slim margin, with little ‘frill’ costs
• Market share is at 9% (2nd in market) and only
5.1% of advertising spending
• Sales have increased year after year, however
margins have slightly decreased in 1984 to
approx. 19%
 Current Market
conditions/concerns
• Sales in the industry have flat lined
• Grappling for market share becoming more
intense
• Other competitors to introduce low cost
products in the next year
• “Middle being squeezed” – i.e. products priced
in the mid-range
• Historically, Suave as had the highest rate of
loyal customers, however, in general, customers
are finicky with shampoo purchases
 Two brand manager’s ideas
• Background – in 1985, Suave will increase their
advertising budget, due to the uncertainty of
market share in future years

• Ellen Vallera, brand manager for 7 years,

promotes a $7.8M budget with $700K of that
dedicated to print advertising

• Tom Kuyendall, new to Helene Curtis, promotes

a budget of $10.2M all (except for $700K print
ads) dedicated to prime time TV advertising
 Shampoo and Suave user demographics –
who are our customers?

In reviewing the psychographic data of all shampoo users, it is clear that

the highest shampoo users overlap with Suave users in 4 out of 6 clusters
below (highlighted in blue).
Base: ------------ % Component ----------- Total Heavy Heavy
% of of Total of Heavy of of Heavy Shampoo Shampoo Suave Suave
Total Shampoo Shampoo Suave Suave Users Users Users Users
Psychographic Cluster Pop. Users Users Users Users Index Index Index Index
1 Agribusiness 4.80% 5.68% 4.36% 6.20% 8.54% 118.33 90.83 129.17 177.92
2 Back Country Folks
5.92% 5.45% 4.09% 9.09% 6.72% 92.06 69.09 153.55 113.51
5 Blue Chip Blues5.59% 5.96% 7.02% 7.94% 9.90% 106.62 125.58 142.04 177.10
19 Levittown, U.S.A.
5.51% 5.21% 5.01% 4.21% 5.33% 94.56 90.93 76.41 96.73
20 Middle America5.94% 5.93% 7.20% 4.08% 2.82% 99.83 121.21 68.69 47.47
40 Young Suburbia6.85% 6.92% 5.55% 6.61% 8.47% 101.02 81.02 96.50 123.65

Also, market research has concluded that the lower strata of income levels
correlates to high levels of Suave use (i.e. the majority of Suave users earn
less than $20K). The demographic data above overall correlates to those
lower income levels of overall shampoo use.
Characteristics of our customers

• Mothers
• Home Makers
• Large families with young children
• Price Sensitive
• Blue collar
• Rural, Suburban

• These characteristics are also reflected in the

demographic data previously presented
How many people need to be reached in order to
justify $7.8M in ad spending?

Break-Even Analyses: New vs. Current Users

NEW USERS:

Increase in Number of New Triers (in millions If increasing $7.8M in advertising:

of people) Necessary to Break Even for 18.2754
Total people million people need to be reached
using shampoo
$1 Million Increase in Advertising 2.343 165
million new triers needed

CURRENT USERS:
Suave Loyalty Index 37%

Increase in Loyalty Percentage Necessary to

people in
millions
Break Even for $1 Million 1.17 needed
Increase in Advertising If increasing $7.8M in advertising:
9.13
million people need to be reached
 How do we reach the people?
• To break even in reaching all new users, 18.27M
persons must become new users of Suave

• To break even in reaching current users, 9.13M

persons must use more Suave

• As defined by our demographic data, our

current users are households with homemakers
in the low to middle income range (generally),
therefore we will target women in this age range
 Using our target audience (W 18-49), what is the
cost of daytime vs. primetime commercials?

PRIME TIME - NETWORK DAYTIME - NETWORK

Cost of Cost of
Average Average
30-Second Women 30-Second Women
Commerc'l 25-54 Commerc'l 25-54
$77,975 4.9 * $13,350 2.1 *

CPM: $ 15.91 CPM: $ 6.36

(Cost Per (Cost Per
Thousand) Thousand)

*Estimated Audience Delivery in millions

Using our target audience (W 18-49), what is
the cost of publications?

Circulation Black & <- Women 18-49 ->

Rate 4-Color White Audience Black &
Base Page Page Reached 4-Color White
Publications (000s) Cost Cost (000's)

Fortune 690 $ 36,020 $ 23,700 660 $ 55 $ 36

National Enquirer 5,075 $ 32,780 $ 26,000 7,724 $ 4 $ 3
The New Yorker 480 $ 18,700 $ 11,750 811 $ 23 $ 14
People 2,600 $ 49,200 $ 38,175 10,931 $ 5 $ 3
Time 4,600 $ 101,825 $ 65,275 6,500 $ 16 $ 10
TV Guide 17,000 $ 85,000 $ 72,000 15,227 $ 6 $ 5

FEMALE ORIENTATION
Cosmopolitan 2,500 $ 36,575 $ 27,180 7,068 $ 5 $ 4
Family Circle 7,250 $ 68,150 $ 57,275 10,443 $ 7 $ 5
Glamour 1,900 $ 31,200 $ 22,100 5,145 $ 6 $ 4
McCall's 6,200 $ 64,620 $ 52,560 9,124 $ 7 $ 6
Redbook 3,800 $ 46,940 $ 35,495 5,631 $ 8 $ 6
Working Mother 500 $ 11,750 $ 8,850 793 $ 15 $ 11

*CPM
Proposed Budget - assumptions
• 4.9M and 2.1M women will be reached with each commercial airing

• Publication ad readings can be calculated by taking an average of

circulations and women reached for all those publications that
women would read

• Prior year reached consumers can be calculated by taking current

year’s and subtracting the budget increase percentage

• As ad awareness is 29%, and those who try Suave based on ads is

45% (per data analysis), therefore 13% of all people exposed to
Suave ads will try Suave

• NOTE – the totals are times the ad is viewed in total. The same
women may view a particular ad twice, which skews the numbers
upward.
 Proposed budget – how many total target
audience members will be reached?
Advertising budget proposed
Prime network $3,391,500
Daytime network $3,702,900
Print ads $705,600
TOTAL $7,800,000

How many people will be reached with this budget?

Women
reached per
commercial Total
# Prime network commercials 43.49 4.9M 213.12
# Daytime network commericals 277.37 2.1M 582.48

# of print ads 13.68 *

Avg. circulation 4383 *
Total print ads 59,950 6.7M *

*Avg. of publication data given

Total amount of target audience reached: 802.30 M reached

Prior year (calculated by taking 1-18% of M reached in the CY) 657.89
Difference 144.41 M more reached with 1985 budget

Translation into increased persons who will buy Suave: 18.77 M

 Results of budget analysis
With the proposed increase in budget, 18.77
will try Suave, which will result in approx.
$29M in sales (assuming $1.50 per bottle)

This is well over the break even points for

new or existing consumers to try Suave for
every advertising dollar spent
 Other factors to consider
• Print ads – these will reach far more than just our target
audience. Women of all types read these publications
and will boost awareness. This is a way to reach upper
strata income levels (which is an area for growth)
without spending additional money to reach them.

• Based on our demographic data, increasing into the

prime time market is not necessary, since we are
targeting homemakers.

• Both daytime and primetime ads will reach more people

than our target audience as well, resulting in increased
awareness.
 Awareness and Sales

• The idea behind this

campaign is not to raise total
awareness, but to urge
consumers who are aware of
Suave to try it.
 Summary
• The data presented above proves that an
advertising budget of $7.8M is more than
enough for an increase in Suave awareness and
market share.

• Any larger increase would result in higher prices

to the customers, which would cause us to lose
our most loyal customers as the increase in
expenditures would be reflected in bottom line
price.