Situation Analysis and Current Marketing Mix of Palmolive - Essay Example

?Table of Contents 0 Situation Analysis/Current Marketing Mix 1 Current Product 2 Current Pricing 3 Current Distribution 4 Current Promotion 2.0 Segmentation Theory 2.1 Segmentation. 2.2 Benefits to the brand from using segmentation. 3.0 Target Market Identification 3.1 Geographic Segmentation 3.2 Demographic Segmentation 3.3 Psychographic Segmentation 3.4 Behavioral Segmentation 4.0 Target Market Collage 5.0 Discussion/Rationale of the Target Market Collage Images Chosen Table 6.0 Reference List 1.0 Situation Analysis/Current Marketing Mix 1.1 Current Product Palmolive is a shampoo and conditioner brand of Colgate-Palmolive Company, which is a manufacturer of oral care and personal care products (Colgate Palmolive 2011). The line of Palmolive shampoos and conditioners includes shampoos and conditioners of 5 types: Active Strong Shampoo for strengthening all types of hair; Extra Control Shampoo for fighting dandruff and preventing rebuild; Milk and Honey Shampoo for smoothing hair’s surface; Milk and Honey Conditioner for smoothing and making hair easy to comb; Brilliant Color Shampoo for making the hair’s color shiny; Brilliant Color Conditioner for smoothing and making hair easy to comb and shiny; Silky Shine Effect Shampoo for hydrating and making hair silky and shiny; Silky Shine Effect Conditioner for making hair stronger, smoother and easier to comb. All the shampoos and conditioners of the line are packed and labeled in a similar manner, but each type of the product has a different color of packaging (Palmolive Hair Care 2011). The bottles that are used for packaging all have a label that outlines the purpose of each separate product (for brilliant color or for smoothing hair, for instance), and stresses that the shampoo or conditioner includes natural ingredients. The life itself is called Palmolive Naturals. There are no extra services or products that the consumer gets when purchasing the product. Palmolive shampoos and conditioners are mass consumer goods (Kotler and Keller 2006). For this reason, their search cost is low – all similar products are located in one place, so a consumer can instantly compare them all and make a choice. Substitutes will be accepted as well. 1.2 Current Pricing The market of shampoos is rather competitive. Though it requires quite high entry costs, the number of current competitors of Colgate-Palmolive is quite significant, and includes such large companies as Procter & Gamble, Church & Dwight Co, L’Oreal and Unilever. The market is characterized by strong buying power of retailers, high threat of substitutes and high degree of rivalty (Morningstar, Inc. 2010). Currently the price of Palmolive Naturals shampoo ranges from $4.45 (Getprice.com.au 2011) to $5.13 (Thefind.com 2011). The price for the conditioner ranges from $3.55 to $4.60 (Getprice.com.au 2011). At the same time, Thefind.com (2011) reports that Procter & Gamble Pantene shampoo prices start at $4.99. The price in most cases is higher than that of Palmolive shampoos. The cheapest L’Oreal shampoo sells at $5.49. So, Palmolive products seem to be the cheapest famous brand goods in their niche. Though there are some competitors’ products, the price of which is rather close to Palmolive’s, the number of such shampoos is not great. At the same time, the number of highly priced products of the rivals is very significant. So price can be said to be one of the competitive advantages of Palmolive. Therefore, if Palmolive changes the price for its products, consumer demand for them may decrease since there will be more similarly priced substitutes. Since Palmolive is a mass-consumer shampoo, consumers do base their purchase decision on price: David Mercer outlines that individual consumers always tend to spend less (Mercer 1996). However, brand awareness is important as well. The price of the product is determined on the basis of business’s costs in the first place. Business’s costs determine the minimum price at which the product can be sold to cover the business’s costs. Only after this minimal price is determined the business chooses a specific pricing strategy, such as mark-up or vendor pricing (Waters 2011). 1.3 Current Distribution Though Palmolive products can be purchased online, the most popular way of their distribution is through retailers. In Australian market Palmolive products may be bought at many locations and in nearly all of the Australian supermarkets. These include, according to Getprice.com.au (2011), Chincotta Discount Chemist, Shop & Save, Pharmacy Direct, EMedical, as well as Coles, Woolworths, IGA, and a number of smaller stores. So, consumers can purchase Palmolive shampoo or conditioner even sitting in front of a computer at home. As for the supermarkets, just like the other products, Palmolive goods have to compete with many similar ones that lie next to them on the shelves. Furthermore, supermarkets themselves create rivals. Coles, for instance, manufacturers and sells shampoos of own label - .Coles Smart Buy Everyday Shampoo and Coles Smart Buy Everyday Conditioner (Coles.com.au 2011). At the same time, consumers cannot buy Palmolive shampoos and conditioners directly from the company. Thought the distribution network of the company covers over 200 countries, as Forbes.com (2010) reports, it is continuing to grow. Since mass marketing involves mass distribution (Kotler and Keller 2006), Palmolive uses intensive distribution strategy to place their goods in as many stores as possible via a conventional marketing channel. 1.4 Current Promotion The promotion of Palmolive shampoos and conditioners includes, first of all, video advertisements. Along with other types of advertisement, such as those on company’s web-site, the video ad creates brand awareness, first of all. The Palmolive Shampoo Ad posted on YouTube.com (Hairmodelfan 2010) outlines that using Palmolive shampoo will make hair silky and beautiful since the shampoo moisturizes hair. The video shows cars driving near two women that use Palmolive shampoo stop astonished by the women’s hair. The web-site presentation of the shampoos and conditioners consists of just pictures of bottles with short statements about the advantages of using each. The company does not use any specific or distinct images or messages on its web-site because it is international and, therefore, is not supposed to appeal to any particular group of prospect. The TV ads, on the contrary, can be targeted. Different ads can be developed to appeal to different types of consumers. The mentioned above video advertisement, for instance, is targeted at contemporary women who wish to become more attractive and get noticed by men. Another video advertisement, Palmolive Naturals Shampoo 2010 Ad (Australiaads 2010), is focused around the idea that Palmolive shampoo will make hair 78% softer and silkier in 7 days. The main character of the commercial is a liking teenage girl, whose hair looks shiny and smooth. So, it can be said that though the two ads discussed have different target audience (women of different ages), they both are sending the same message about the product. 2.0 Segmentation Theory 2.1 Segmentation The major goal of segmentation is making sure the company is offering its prospects exactly what they want or need (Kotler and Keller 2006). The segmentation itself, as TheTimes100.co.uk (2011) defines it, is “the process of dividing a market up into different groups of customers, in order to create different products to meet their specific needs”. Market segments are determined as a result of determining customers’ needs (Recklies 2001). Business Resource Software, Inc. (2011) also outlines that proper market segmentation will help to achieve “the highest return” for the company’s marketing expenditures. 2.2 Benefits to the brand from using segmentation. Market segmentation is the basis for designing and implementing marketing strategy. In the case of Palmolive it has served as a basis for creating different types of the same product, first of all. The company, for example, offers Palmolive Naturals Shampoo for different purposes and, thus, hair types: shampoos against dandruff, for smoothing, for making hair shiny, silky, strong, etc. The subcategories of the major product – Naturals Shampoo – are created to satisfy different needs and wants of the prospects. Secondly, segmentation has helped Palmolive to develop different advertisement strategies for women of different ages. The messages presented by different video advertisements are to appeal to different women. Some appeal to the desire to be noticed by men, while some – to a desire to have healthy hair. Thirdly, segmentation is what makes Palmolive sell their products at the particular price. The company is targeting specific audience and, thus, chooses the best pricing strategy to fit its target audience. 3.0 Target Market Identification 3.1 Geographic Segmentation The peculiarity of Australian geographic segmentation is geographical concentration of Australian citizens in larger cities. This means that most sales of Palmolive are being made in big cities’ stores. According to Australian Bureau of Statistics (2007), 15.1 million or Australian people live in urban areas. So three quarters of the Australians represent the greatest geographic market segment for Palmolive because those people are great in number and have constant access to the stores that sell Palmolive products. The highest population density is observed in large coastal cities and in Canberra, according to 2010 report of Australian Bureau of Statistics. Therefore, these areas should be the primary focus of Palmolive. 3.2 Demographic Segmentation The Cental Intelligence Agency of the US (2011) reports that 18.3% of Australian population are below 14 years old. 67.7% are 15-64 years old, and 14% are 65 years old and over. So, the greatest group among these three is the one that includes people from 15 to 64 years old. Out of them 7,266,143 are females and, thus, are very likely to use Palmolive products. That is exactly the group Palmolive is targeting. 99% of Australian population is literate and 92% belong to white ethnic group. Middle income households dominate in Australia (Australian Bureau of Statistics 2008). This means Palmolive does not have to apply some great diversification on the basis of ethnic origin or education. However, since middle income population is in majority, it should be the primary focus of the company. 3.3 Psychographic Segmentation Since Palmolive shampoos and conditioners are not expensive, they can be bought by people of nearly all socioeconomic statuses. The products will be the most appealing to women who lead active lives, socialize frequently and take care of their bodies. Furthermore, the target population is likely to have the ‘Look At Me’, as Roy Morgan calls it, behavior pattern (Roy Morgan Research 2011). These women are likely to be of Innovators and Strivers VALS types, since they will be using Palmolive for improving the hair condition and, thus, raising self-esteem, as well as achieving positive opinions and approval from others (Strategic Business Insights 2011). Though the target population is not likely to be extremely fashion or health savvy, these people are attentive enough to how they look and want to take good, but not expensive, care of their hair. 3.4 Behavioral Segmentation The majority of consumers will use Palmolive shampoos and conditioners for maintaining the state of their hair in good condition. Furthermore, some buy Palmolive with the purpose of improving their overall look with the help of better looking hair. In addition, some will be buying these shampoos to fight dandruff or recover damaged hair. So, in most situations, Palmolive will be bought either for maintaining or improving the state of hair. Generation F, who seek products that are easy to find and buy, some part of True Blues who want to buy branded products, and Price Shoppers who will go for lower price are the representatives of benefit segments that will use Palmolive. Other segments to use Palmolive products are first-time and regular users, medium and heavy product users (it depends on how often the product will be used), hard-core loyal or switchers who will be buying Palmolive due to its quality and features. 4.0 Target Market Collage 5.0 Discussion/Rationale of the Target Market Collage Images Chosen Table Characteristics of Target Market given in Section 3.0 of report (abbreviate to fit the space provided) Image used in collage to illustrate characteristic (Give image number) Describe how the image chosen illustrates the characteristics of your brand’s 1 primary target market. Geographic City 1 Being a a geographic trait, city size if one of the factors influencing sales. Geographical concentration of people is the benefit that simplifies distribution. Density 2 The density and nature of population helps to determine the best distribution channels. Areas 4 The company has to know where its major consumers live (in which areas and in what climate) in order to adjust the marketing message accordingly. Demographic Gender 4 Gender is an important factor to consider since Palmolive products are made for women. Income 5 Since Palmolive shampoo and conditioner are not expensive and, in most cases, cheaper than those of the largest rivals, it is important to clearly understand people with what income will be using them. Most likely these will be middle size incomes, which make the majority of Australian households. Age 6 Though people of nearly all ages can use Palmolive, children and people over 65 are, in most cases, not purchase decision-makers. Therefore, the target population is between 15 and 65 years old. Psychographic Behavior pattern 7 “Look at me!” – says the picture. It is one of the behavior patterns of Palmolive consumers – they are women who want to become more beautiful and be noticed by the surrounding people. Lifestyle 8 Active life position is part of Palmolive’s target audience’s lifestyle. These women take their time to improve their look and self-esteem. Socioeconomic status 9 Behavioural Reasons 10 Why do Palmolive’s consumers buy their products? Understanding this behavioral characteristic of the market will help to increase sales. Palmolive’s clients are, in many cases, price shoppers. Frequency 11 Knowing how often and how much the products is used will help to forecast future sales. The goal is to acquire a greater number of regular users, as well as medium and heavy product users. Usage 12 How do consumers use the product? – Answer to this question will help to improve the product’s characteristics so that it suits the needs of different consumer groups and satisfies all their desires related to shampoo. 6.0 Reference List Australiaads. 2010. Palmolive Naturals Shampoo 2010 Ad. YouTube.com. http://www.youtube.com/watch?v=Lx80MyK3VBo Australian Bureau of Statistics. 2007. URBAN AND NON-URBAN POPULATION. A.C.T.: ABS. Australian Bureau of Statistics. 2008. Household Income and Income Distribution, Australia, 2007-08. Cat. no. 6523.0 Canberra, A.C.T.: ABS. Australian Bureau of Statistics. 2010. Australia's Environment: Issues and Trends, Jan 2010.  Cat. no. 4613.0 Canberra, A.C.T.: ABS. Business Resource Software, Inc. 2011. Market Segmentation. http://www.businessplans.org/segment.html Cental Intelligence Agency of the US. 2011. The World Factbook. https://www.cia.gov/library/publications/the-world-factbook/geos/as.html Coles. 2011. Material Safety Data Sheets. http://www.coles.com.au/Products/Material-Safety-Data-Sheets/search.aspx?src=/MSDS/infant-personal/infant-toiletries/coles-shampoo-and-conditioner-200ml-1251.49711.aspx Colgate Palmolive. 2010. Colgate.co.uk. http://www.colgate.co.uk/app/Colgate/UK/PC/Products/HairCare.cvsp Forbes.com. 2010. COLGATE PALMOLIVE CO (NYSE: CL). http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CL Getprice.com.au. 2011. Palmolive Naturals Conditioner Vibrant Colour 375mL. Prices. http://www.getprice.com.au/Palmolive-Naturals-Conditioner-Vibrant-Colour-375mL-Gpnc_329--51657417.htm Hairmodelfan. 2010 The Palmolive Shampoo Ad. YouTube.com. http://www.youtube.com/watch?v=OTXIHr9JzaM&feature=player_embedded Kotler, Philip and Keller, Kevin L. 2006. Marketing Management. Pearson Prentice Hall. Mercer, David. 1996. Marketing. Wiley-Blackwell. Morningstar, Inc. 2010. A Five Forces Example: Consumer Products. http://news.morningstar.com/classroom2/course.asp?docId=145087&page=3&CN=COM Palmolive Hair Care. 2011. Colgate.co.uk. http://www.colgate.co.uk/app/Colgate/UK/PC/Products/Shampoo.cvsp?Mood=Default&Ingredient=Default Recklies, Dagmar. 2001. Why Segmentation? TheManager.org. http://www.themanager.org/marketing/segmentation.htm Roy Morgan Research. 2011. Values Segments. http://www.roymorgan.com/products/values-segments/values-segments.cfm Segmentation. 2011. The Times Newspapers Ltd and MBA Publishing Ltd 1995-2011. http://www.thetimes100.co.uk/theory/theory--segmentation--246.php Strategic Business Insights. 2011. U.S. Framework and VALS™ Types. http://www.strategicbusinessinsights.com/vals/ustypes.shtml Thefind.com. 2011. http://www.thefind.com/search?query=palmolive+naturals+conditioner Waters, Shari. 2011. Retail Pricing Strategies. http://retail.about.com/od/marketingsalespromotion/a/product_pricing.htm Read More