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Arimount Deodorant Strategies
Please use the response from the previous guidance.
Guidance on Marketing Plan for Arimount Deodorants
1. Situational Analysis
To conduct a situation analysis, an organization has to do its internal environment analysis and external environment analysis and thereafter a SWOT Analysis is done to identify the strengths and weaknesses from internal factors and opportunities and threats existing in the external environment (Kotler & Keller, 2012). Along with this information of Market Demographics, Market Needs and Trends, Competitive Analysis, Product Offerings and Keys to success need to be analyzed (Kotler & Keller, 2012). This can be done as follows
External Environment Analysis
The target market for deodorants will include young Male and Female consumers, teenagers and adults. According to a report by Mintel based on research on deodorant users, 92% of the teenagers used deodorants, making them at par with the adults (Mintel, 2012: May 1). In United States of America, adults comprise the majority with age group of 25-54 years constituting 40.2% of the population and 15-24 years age group comprising majority of teens constituting 13.7% of the population (Index Mundi, 2013: n.d)
Market Growth Rate
The global deodorant industry is the fastest growing industry in the global beauty and personal care industry and is growing on an average annual rate of 7% at fixed U.S dollar prices for last five years with sales increasing by $1.5 billion in 2012 (Walker, 2013: Nov. 18). But in United States of America, the deodorants category has matured with a compounded annual growth rate of 2% (Euromonitor, 2013: n.d). Euromonitor predicts the retail value growth of deodorants industry by 8% in constant terms to reach $3.2 billion by 2017 (Euromonitor, 2013: n.d).
Market Needs and Trends
The deodorant market is characterized by following market needs and trends:
- In U.S, men are substituting deodorants as a low cost alternative to after-shave or fragrance (Walker, 2013: Nov. 18).
- The U.S deodorant market has reached the stage of maturity as the growth is low and only new innovations can help penetrate the market (Walker, 2013: Nov. 18).
- According to Mintel`s research, consumers are not brand loyal in deodorant`s market and like experimenting new varieties of deodorants (Yeomans, 2012: May 2).
- All-natural ingredients and organic ingredients do not matter in deodorant market as Mintel`s research suggests that only 10% of the buyers prefer deodorants having all-natural ingredient (Yeomans, 2012: May 2).
Arimount deodorants faces a tough competition in United States of America from Unilever and Proctor & Gamble with the two companies together command 65% market share while Unilever `s major brands such as Degree, Axe, Dove and Suave commanding 34% of retail value share in 2012 (Euromonitor, 2013: n.d). The concentration ratio of two leading players (total market share of 2 leading market players - Unilever and Proctor & Gamble) of 65% and poor brand loyalty towards single brand means that the two major players are competing on product differentiation and low price offerings. Although such a large market share is commanded by the leading players, none of their brand is commanding more than 6% market share wherein `Degree Men` brand of Unilever is the market leader is 5.9% and Concentration Ratio of four leading brands CR4 is only 19.2% (Statista, 2013: n.d). This means that to be competitive, Arimount needs to launch deodorants with different varieties and lower prices that will help it penetrate the American market.
PEST (Politico-legal, Economic, Socio-Cultural and Technological Environment) Analysis
U.S Food and Drug administration has specified regulations concerning use of chemicals in beauty and cosmetic products including deodorants but regulations are not very strictly followed and almost all chemicals are being used in such products by the companies through lobbying with government officials (States, 2012: 21 Mar.). This means that the government policies are favourable towards the industry.
GDP growth rate of United States of America have increased marginally by 1.8% in third quarter of 2013 above 1.6% in the previous year (Trading Economics, 2013: n.d). The deodorants industry seems to be maturing with only 2% growth of the market but is expected to grow at a steady rate (Euromonitor, 2013: n.d). According to a report by Bloomberg, household spending on services such as personal care increased marginally by 0.2% although overall consumer spending has cooled down and consumers are increasing their savings rather than doing expenditure (Chandra, 2013: Nov. 8).
A new study has linked the use of deodorants to increased risk of breast cancer among women as it is supposed to contain carcinogenic substances and one in eight of the 82,000 ingredients used in cosmetic and personal care products are toxic and hazardous industrial chemicals which have raised a concern among various advocacy groups (Walia, 2013: Sept. 14). United States of America comprises of diversity of its culture with Latinos, Hispanics, Native Hawaiians, Blacks, Whites etc. comprising the population (Index Mundi, 2013: n.d). The deodorant can be manufactured keeping into consideration the needs of these segments.
Technologies are changing fast and even deodorant brands such as Degree men has launched a new deodorant range with Motion-sense technology that responds to the movement of the wearer to fend-off sweat and odor by releasing bursts of fragrances (Olson, 2012: 3 May).
1. Arimount is a well established brand name.
2. Arimount has strong credibility to raise finance from the market.
3. Dedicated R&D support with 30 labs across United States of America
4. Higher profit margins Weaknesses
1. Poor Distribution Network as compared to Unilever and Proctor & Gamble.
2. Low manufacturing capability
3. Poor HR policies and high attrition level
4. Poor Inventory Management
1. Teenage segment`s growing and comparable to adult segment
2. Young men using deodorant as after shave lotion.
3. Emerging International Markets such as China and India
4. Strong Women`s segment Threats
1. Threat of losing women customers due to increased risks of breast cancer.
2. Threat of recession and probability of reduced consumer spending
3. Threat of substitutes such as anti-perspiring soaps
4. Threat of new competitors
2. Marketing Strategy
Market Segments that Arimount will Target:
- Young Men
- Young Women
- Upper Class
Airmount deodorants will be positioned as the deodorant that keeps the consumers `safe, young and fresh.` For upper class Arilux will be positioned to keep `strong desire to be at the top.`
PRODUCT OFFERINGS AND BRANDING
- The product mix will initially comprise of Deodorants only with 10 different variants - small (150 ml), medium (300 ml) and large (450 ml) for men, women and teens along with AriLux for Upper Class in 300 ml.
- Arimount brand will be extended as an umbrella brand with sub brands such as Arifresh, Ariyouth and Aribeauty targeted at teens, young men and young women respectively
- Competitive pricing will be done with small deodorant priced at $5, medium at $10 and large at $20.
- Market Skimming will be done for AriLux launching it at a price of $400.
- Aggressive advertising will be done for the Arimount deodorants with television spending of $5 million and sales promotions worth $1 million
- Social Media Facebook and Twitter will be also used to connect with the consumers and a dedicated marketing and sales team will also be engaging consumers through online social media promotions along with involvement of each and every employee in promoting the brand on social media.
- Television, Print Media Advertising, Outdoor Advertising, Radio Advertising and Event Marketing will have a proportion of 50%, 30%, 10%, 5% and 5% respectively in total expenditure.
- Company will go for intensive distribution even in rural areas in America and capture all major retailers such as Walmart, JC Penney, Target, K-mart etc. to reach as many people as possible for its non-luxury brand. Retailers will be provided attractive margins of 25% in the first year. For its luxury brand the company will open 20 exclusive retail stores in the first year to sell the product. U.S market will be divided into 10 sales territories, each of which will have a Territory Sales Manager under each of whom 20 Sales Executives will be appointed in the next one year.
- Sales Forecast for 2013-2014: $10 million
- Cost of Production: $2 million
- Advertising Expenditure: $5 million
- Sales Promotion Expenditure: $1 million
- Other Selling and Distribution Expenses: $1 million
- Administrative Expenses: $1 million
- Break Even Point to be achieved in one year
- Net Profit Margin to be attained at 15% of sales in second year
The following control tools will beused
- Annual budgets to monitor and control expenditures.
- Monthly Sales and Expenditure Reports
- Use of Balanced Scorecard
Balanced Scorecard for Arimount
S.No. Measure Time or Target Initiative/Primary Responsibility
1 Sales Revenue Achieving Sales revenue of $10 million in one year Developing strong sales force of 200 people
2 Distribution Channels To develop 20 company owned stores within one year for luxury brand and reaching 40000 retail outlets for non-luxury brand by December 2014 Developing distribution infrastructure, Appointing Sales Managers and teams
3 Return on Investment To gain a return on investment of 15% by 2015. Improvement in inventory management and cost control
4 Improving Brand Awareness To increase the brand awareness levels among target audience from 50% at present to 80% among the teen segment by December 2014 Focus on Sponsorships, evens, advertising
5 Improving workforce productivity To improve workforce productivity by 25% by December 2014 To implement employee friendly HR policies, training and development programmes
Since the market is highly competitive and most of the consumers are brand switchers, it is essential to identify how brand loyalty can be increased and how customers can be retained. For this purpose, it is essential to identify the factors that influence brand loyalty towards deodorants. Research will be descriptive in nature finding out the reasons for consumers to stick to a brand and be involved with it. For this purpose different segments and their brand loyalty needs to be assessed. The following research questions can be addressed:
- Why does the consumer purchases a deodorant (for impressing someone/social status, stay fresh, habitual usage etc.)
- How regularly does the consumer purchases a deodorant?
- Which brand of deodorant does he/she regularly uses?
- What is special about the brand?
- What factors are considered while purchasing the brand?
- Rate the factors from 1 to 7 where one means Least Important and 7 means most important (Factors can include price, fragrance of deodorant, special offers, discounts, freshness of deodorant, long lasting, easy accessibility etc.)
- Will the consumer switch to any other brand? If no then why and if yes, what factors will be considered for switching to another brand?
6. Describe how your company will examine customer satisfaction, and what will you do to create customer loyalty?
In following ways, customer satisfaction can be measured:
- Customer Satisfaction surveys will be conducted on a quarterly basis to assess the customer satisfaction. An external research team such as AC Nielsen ORG Marg can be hired for the purpose.
- Mystery Shopping Audit can be done who is paid some money to buy products on a regular basis and give the feedback on satisfaction level.
- Customer Satisfaction Forms can be made available at the retail stores where consumers need to fill the form while leaving the retail store.
To create customer loyalty, it is essential that there is an aspirational appeal of the brand by communicating through different media such as social networking sites and interactive advertising to generate word-of-mouth communication, quality of deodorants is maintained through stricter quality control and customer loyalty programmes can be provided wherein the customers purchasing the deodorant again are given price-offs, rebates and coupons.
Chandra, S. (2013, Nov. 8), Consumer spending cools in U.S as households boost savings, Retrieved from: http://www.bloomberg.com/news/2013-11-08/consumer-spending-cools-in-u-s-as-households-boost-savings.html
Euromonitor (2013), Deodorants in the U.S., Retrieved on December 14, 2013 from: http://www.euromonitor.com/deodorants-in-the-us/report
Hoovers (2012) PureBeauty Inc. - Company Description, Retrieved from: http://www.hoovers.com/company/PureBeauty_Inc_/ryscjhi-1.html
Index Mundi (2013), United States Demographic Profile 2013, Retrieved on December 14, 2013 from: http://www.indexmundi.com/united_states/demographics_profile.html
Kotler, P., & Keller, K. L. (2012). Marketing management (14th ed.). Upper Saddle River, NJ: Prentice Hall.
Mintel (2012, May 1), No sweat for marketers as deodorant industry sees continued growth, Retrieved from: http://www.mintel.com/press-centre/beauty-and-personal-care/no-sweat-for-marketers-as-deodorant-industry-sees-continued-growth
Olson E. (2012, May 3), Mixing marketing with social games and extreme sports, Retrieved from: http://www.nytimes.com/2012/05/04/business/media/degree-men-deodorant-turns-to-video-marketing.html
States S. (2012, Mar. 21), States lead the fight against toxic chemicals lurking in cosmetics, Retrieved from: http://www.saferstates.com/2012/03/cosmetics.html
Statista (2013), Sales share of the leading deodorant brands in United States 2012, Retrieved on Dec. 14, 2013 from: http://www.statista.com/statistics/194811/share-of-us-deodorant-sales-in-2010-and-2011-by-brand/
Trading Economics (2013), United States GDP growth rate, Retrieved on Dec. 15, 2013 from: http://www.tradingeconomics.com/united-states/gdp-growth-annual
Walia, A. (2013, Sept. 14), Attention Deodorant Users: New studies link aluminium to breast cancer, Retrieved from: http://www.collective-evolution.com/2013/09/14/attention-deodorant-users-new-studies-link-aluminum-to-breast-cancer/
Walker (2013, Nov. 18), A rockier road ahead for booming deodorants industry, Retrieved from: http://www.gcimagazine.com/marketstrends/segments/bathbody/A-Rockier-Road-Ahead-for-Booming-Deodorants-Category-232391821.html
Yeomans, M. (2012, May 2), Sweet smell of success for deodorants market as growth continues, Retrieved from: http://www.cosmeticsdesign.com/Market-Trends/Sweet-smell-of-success-for-deodorant-market-as-growth-continues