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Nivea Oral - The Launch Plan
Nivea Oral - The Launch Plan
Nivea Oral - The Launch Plan
Table of Contents
Table of Contents
Marketing Analysis
The Oral Care Products Market Overview
- A Competitive Analysis
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
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Financial Projections
Launch Plan Budget
Penetrative Pricing Projections
The Break Even Point
The Future for Nivea Oral
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Marketing analysis
The Oral Care Products Market Overview A Competitive Analysis
The Malaysian oral care market has always been dominated by two main players
in the market, Colgate-Palmolive and Procter &Gamble. It is known that ColgatePalmolive is the market leader of toothpaste and also other oral care product such
as mouthwash, dental floss, and toothbrushes with global sales of US$10 billion
annuallyand a net income in the range of US$1.3-billion.
Procter & Gamble on the other hand enjoys sales revenue of US$51 billion yearly
with a net income
research and development for their products and this covers all its product range
including facial wash, skin care and other personal care products.
Increasing its dominance in the market, P&G acquired P&G acquired the Gillette
Company together with the range of personal care brands under its belt in
2005.This was the biggest ever acquisition by P&G and has added an additional
US$6 billion in revenue each year.
Within the toothpaste market, P&G owns Crest, which is considered the worldwide
market leader for the past three decades. Whilst still at the top rank, Crest is
suffering from loss of market share with competitors aggresively coming out with
products that directly compete with Crest.
The oral care market is segmented into six classes or segments, with toothpaste
being the largest segment. It is reported that 54 percent of oral care sales is
projected by toothpaste alone, followed by toothbrushes 22 percent, at-home
whitening 10 percent, mouthwash 7 percent, dental floss 2 percent and denture
products accounts for 5 percent. 1 The combined market share of both the leading
brands, Crest and Colgate is worth 60% of the total market share for toothpaste,
and this translates to US$1.8 billion worth of business worldwide as illustrated in
the chart below.
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SWOT Analysis
The initial analysis that we have carried out before even deciding on whether it is
feasible to intriduce Nivea Oral into the market is the analysis of our own strengths
and weaknesses as well as the opportunities and threats that are beyond our
control and currently present in the marketplace. This is true to the principles of
Sun Tzu in his Art of War scrolls that if you know your enemies and know
yourself,
you
can
win
hundred
battles
without
single
loss.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself. 2
Strengths
Nivea, already a household brand name when it comes to skin care products will
be the best strength we have in launching the Nivea Toothpaste. This is proven
with the increased total sales of Nivea products throughout the years, as
illustrated in the graph below.
Nivea has lalways been in the forefront when it comes to reinvesting its profits to
research and development. The brand has invested 149 million Euros in 2008 to
R&D and this evidently shows the commitment Nivea has on producing only
products of the highest quality and in turn this has earned Nivea bigger slices of
the total market pie it is competing in.
Niveas standard marketing launch platform has proven successful over the years.
A perfect example would be the launch of the Nivea Mens range of skin care
products. This success is attributed to the marketing plan that invokes the need
for men to feel the need to groom and care for skin. This has resulted Nivea to be
the leading worldwide brand in mens care products.
Ample financial resources and stability is also a determining factor for the
success of the Nivea brand as more advertising, R&D money can be spent to
bring forth better products and more brand recognition to cover more market
share. Evidence of this is the amount spent on R&D and also sponsorship of
football teams which brings the brand to a much higher level recall.
A good product that is not widely available in the shelves would defeat all purpose
of even selling the product. Therefore, Nivea has engaged ony the best
distribution channels concentrating mainly on hypermarkets, supermarkets and
pharmacies with eye-level product shelving to ensure highest visibility and
market coverage of Nivea products. The same goes for Nivea Oral as well.
Weaknesses
New products, when entering new markets will definitely have its disadvantages
against the known and trusted brands available in the market. The same goes for
Nivea as well.
One of the perceived weaknesses is that Nivea Oral will be a new comer in the
toothpaste market. And thus consumers may have the let others try first attitude
when adopting the product. Colgate and Crest, already trusted brands in the
toothpaste market will be hard competitors to beat as they are afterall household
brands when it comes to toothpaste. This will cause slower consumer adoption of
Nivea Oral. The table below shows the current growing market share of both the
top three brands as compared to other toothpaster manufacturers:
Brand
Colgate
34.2%
34.0%
Crest
31.7%
29.0%
Aquafresh
15.0%
16.0%
The high cost of launching a new brand must be considered as it entails product
research, packgaging, and more so on the marketing, advertising and promotion
of the product. Any changes that affect the rest of the Nivea product line may
hinder the launch of Nivea Oral toothpaste and have it put on hold.
Opportunities
The oral care industry has been on the rise year-by-year and more people are
concerned and aware about the importance of oral care. This translates to an
expanding market for toothpaste as well. With the introduction of new flavours,
new variants and packaging by competitors and players in the market, it makes
the toothpaste industry even more exciting and vibrant. By engaging in the
toothpaste industry, Nivea can now participate in a new business field.
The increased emphasis given to oral care by the public in general is surely
reason for Nivea to be introducing Nivea Oral into the market. This will be due to
the fact that more and more people will be consuming and buying oral care
products and in turn expands the oral care market exponentially.
Current loyal customers of Nivea, who already uses our other range of products
such as skin care, Nivea Mens, etc will definitely want to try out the Nivea Oral
toothpaste as they are users of our trusted brand and brand loyalty has already
been formed with this group of consumers.
With the current tehnological advancements and also the effort Nivea puts into
R&D, we are certain that the Nivea Oral toothpaste will be a product that will be
well accepted by consumers loyal to Nivea and also other brand loyal consumers
to be buying and trying the toothpaste.
Threats
Strong competitors such as Colgate, Crest and Oral-B ,with vast experience in
the dental product would want to fend for their market share. Should they sense
that any new entrants in the market to threaten their position as market leaders,
they will formaulate their fight back plan to counter our launch.
Consumers may have biasness in new products quality. A perception may be
formed that new products will require more time to develop and be perfect for the
market. This would leave them waiting for second release of the product and let
the pioneer adopters do the testing as evidenced in Apples iPad launch compared
to the iPad 2. The iPad 2 sales during launch day was 3 times than that of the
iPad.
New technological advancements may affect the launch of Nivea Oral
toothpaste or even the toothpaste industry as a whole. This will be when a totally
better new way of cleaning teeth be found, it would cause the toothpaste market to
crash when consumers adopt the new technology. Not only Nivea Oral suffers
from this new technology, but the industry as a whole too will drastically die off. An
example from a different industry is the introduction of CDs into the market where
cassette tapes dominate. It has cause the downfall of the cassette tape which now
is considered ancient technology.
Other new market entrants are definitely a threat to Nivea Oral, as the market is
a free-market, other competitors may decide to venture into oral care and take
their slice of the pie.
Price
Being a new entry into the oral care market, we will have to adopt the penetrating
pricing strategy during the launch of the products to the market. This will help
boost the sales and gain consumer acceptance at a much faster rate. Currently,
the market rate for main toothpaste by the leading brands are as follows:
Toothpaste Brand / Variant
Shelf Price
Colgate Total
RM 9.80
Crest
RM 8.50
RM 12.50
As such, during the launch period, Nivea Oral will be penetratively priced at RM
7.50 to boost sales and attract the price sensitive customers to try and adopt the
toothpaste. Even though the profit margin is lower, but it is being made up by
quantity as we anticipate large volumes of sales during the launch period.
Thereafter, once the promotional and introductory period is over, we will then
switch to market-based pricing at a price point of RM 9.25. This is to match with
the current price level of toothpaste and also to increase the profit margin that is
being lowered during the product launch.
Promotion
Since Nivea Oral is a new toothpaste that we are introducing to the market, the
initial product launch promotions will be carried out in a big way to ensure that the
bang is felt when we roll Nivea Oral to the market. We have decided to exclude
radio commercials in the promotional activities as it defeats the purpose of
advertising if the consumer cannot visualise the product in mind.
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The tagline of Cleaner teeth from Nivea will be used throughout the promotional
activities. Activities included in the launch will include:
a. Advertisementswill be run on major newspapers.
Advertisements will be simple and emphasizes on the toothpaste.
Promotional details such as the discounts, contests being run and
promotion period will be included in the press advertisements.Cut out
coupons will be printed as well for the toothpaste sample exchange at our
roadshows. Target newspapers are The Star, Harian Metro and Sin Chew
Jit Poh. These advertisements and coupons publication will be at random
except Sundays as readership differs everyday and the type of readers also
differs from weekdays to Saturdays.
b. Prime time television commercial.
This method, the costliest of all the advertising and promotional activities
will have to really be targeted and used sparingly to avoid going over the
budget allocation. Prime time commercials will be aired during the 8.00pm
to 9.00pm slots of the major stations TV3, ntv7, 8TV,Astro Prima and Wah
Lai Toi. Television commercials will be scattered throughout the month
mainly primetime weekdays as those are the times with the highest
viewership.
c. Roadshows with contests, product coupon exchanges and lucky
draws to be organized and participation requires only the purchase of
Nivea Oral. Suggested to target the Klang Valley at Tesco Shah Alam,
Carrefour Sri Petaling and Giant Sri Gombak for the roadshows.
Roadshows will be held only during the weekends to ensure maximum
coverage during peak shopping hours.
The planned launch of the product will be during the month of December 2011
right up to the first week of January 2012. The schedule for the promotional
activity will be in Appendix 1 of this proposal.
Place
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Once Nivea Oral is launched, we will have to ensure that our main channels of
distribution will have all our products in their shelves. As we are doing a
positioning Nivea Oral as a product of high quality and reliable, we will only be
offering this Nivea Oral range in hypermarkets, supermarkets and pharmacies
nationwide. This is to ensure that control of the brand and product shelf life can be
monitored closely as we are dealing only with the headquarters of each
distribution point.
The actual toothpaste stocks must be on the shelves by the final week of
November 2011 just before the launch activities are being carried out. After much
negotiation, we will be given the best shelf space available in every store within
the oral care range of products and brands. This will be the shelflocated 4 floor
from the ground which is eye level and will be the first thing spotted by the
shopper within the aisle. Aisle-side banners and product-stands will be
strategically located near check-out counters together with the brochures and
coupons.
All these four elements of the Marketing Mix, if done in a timely and proper
manner with integration to the Segmentation, Targeting and Positioning Analysis
done earlier, should be a fail proof recipe for Nivea to introduce the Nivea Oral
toothpaste to the market.
Financial Projections
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Activity
Rate
Frequency
Total
5 insertions
RM125,000
5 insertions
RM150,000
5 insertions
RM60,000
RM8,000 / 30sec
3 airs * 2 days * 3
channels
RM144,000
RM12,000 / 30sec
3 airs * 2 days * 2
channels
RM144,000
Tesco Booth
RM400 / day
9 days
RM3,600
Carrefour Booth
RM450 / day
15 days
RM6,750
Giant Booth
RM350 / day
9 days
RM3,150
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Grand Total
RM636,500
Amount to breakeven
Earnings
Balance to breakeven
RM 636,500
RM 200,000
RM 436,500
RM 436,500
RM 200,000
RM 236,500
RM 236,500
RM 200,000
RM 36,500
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RM 36,500
RM 200,000
- RM163,500
RM 200,000
- RM 363,500
RM 200,000
- RM 563,500
Even while still at the penetrative pricing for the first 6 months, the breakeven
point can be achieved by the 4th month of launching the product to the market.
With the planned conversion of the penetrative pricing to the market based pricing
after the 6th month, Nivea Oral would have already achieved its golas to penetrate
the market and still make nett profits of RM 563,500.
Month
Earnings
Nett Profits
RM 563,500
RM 172,500
RM 736,500
RM 736,500
RM 172,500
RM 908,500
RM 908,500
RM 172,500
RM 1,081,000
10
RM 1,081,000
RM 172,500
RM 1,253,500
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RM 1,253,500
RM 172,500
RM 1,426,000
12
RM 1,426,000
RM 172,500
RM 1,598,500
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Table 4: Projected nett profits for Nivea Oral for the first year
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From the product itself, to the packaging, pricing and places it is available right up
to the timeliness of the promotional campaigns, everything must be in harmony in
order for the launch to be a success.
Evaluation This is the post-mortem phase for Nivea Oral. Evaluation will be
carried out and areas where there are slacks will be identified and ironed out in
order for avoid the same mistakes in the future.
- The End -
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Wouldnt YOU?
Thank You!
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Appendix 1:
Advertising & Promotions Schedule
for Nivea Oral
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