The SWOT analysis of Head & Shoulders - Research Paper Example

Introduction This report is a product analysis of one of the most popular consumer product Head & Shoulders. Head & Shoulders is one of the most popular brand of anti-dandruff shampoos in the world. It is produced and marketed by Procter & Gamble. The shampoo was introduced first in the US after a decade long of research. Head & Shoulders is the first to introduce pyithione zinc in shampoo. “Head & shoulders is rich in Zinc Pyrithione (ZPTO) which is highly effective at fighting and helping preventing dandruff symptoms and itchy, flaky scalp.” (Head & Shoulders, 2011) This report will basically deal with the SWOT analysis of Head & Shoulders. While performing the SWOT analysis, the product will be compared to two major competitors of Head & Shoulders. The two competitor products identified for comparison are Garnier Fructis and Clear Shampoo. Garnier Fructis is the anti-dandruff shampoo produced and marketed by Garnier and Clear is the anti-dandruff shampoo brand of Unilever. The first part of the report will deal with the information of the manufacturer Procter & Gamble. It will deal basically with the size of the company, major products marketed by them, sales figures, etc. The next part of the report will make a detailed analysis of Head & Shoulders brand by performing a SWOT analysis. Along with the SWOT analysis, the product will also be compared with Garnier Fructis and Unilever Clear. This SWOT analysis will be the major tool for discussing the present situation of the brand. Next part of the report will make an analysis of the product in the light of marketing mix elements. This analysis is essential to arrive at the competitive position of the brand in the market. The later part of the report will discuss about the global activities of the brand in terms of sales and market share. Based on these analyses, a conclusion will be arrived at. Manufacturer The manufacturer of Head & Shoulders is Procter & Gamble, one of the world’s largest personal care products manufacturer. P&G has a brand portfolio of around 50 products which touches the day to day life of more than 85% of the people worldwide. The company claims that among the 50 products, 24 of them generate annual sales of more than one billion each. (P&G, 2011) It is the strong brand presence of these 50 products that help the company to sustain the market leader position in the industry. P&G generated total sales of $82.6 billion in 2011 compared to that of $78.9 billion in 2010. The sales have resulted in an operating cash flow of $13.2 billion in 2011. The product portfolio of P&G consists of beauty, grooming, health care, snacks and pet care, fabric care and homecare, and baby care and family care. Fabric and Home care is the largest contributor to the profit marking a 30% of the total net sales of the company. Beauty is the next contributor with 24% of the total net sales. It is followed by baby care and family care – 19%, health care – 14%, grooming – 9% and snacks and pet care – 4%. North America is the biggest market of P&G. 41% of the total sales is generated from North American markets. It is followed by Western Europe – 20%, Asia – 16%, Central & Eastern Europe, Middle East & Africa – 14% and Latin America – 9%. (P&G, 2012) P&G operates on the core principle of sustainability. The fact that the products of P&G are related to the everyday life of billions of people, the situation vests them with certain responsibility in terms of the quality of the products and process. Therefore, the company operates on the principle of sustainable development. Recently, the company is seemed be investing huge amount of resources in environmentally sustainable products and product development process. The company is using more of renewable and recyclable materials for the packaging of products. SWOT Analysis Strength The major strength of Head & Shoulders is the brand value. The company enjoys a brand value of both P&G as well as the Head & Shoulders brand. Over years, the company has developed itself a name which is name synonym to anti-dandruff shampoo. Head & Shoulders is the first of its kind in the product category. Unlike the other anti-dandruff shampoos, Head & Shoulders does not smell or looks like the common anti-dandruff shampoos in the market. Another main strength of Head & Shoulders is that the brand is the market leader in anti-dandruff shampoo category. Compared to Garnier Fructis and Unilever Clear, Head & Shoulders enjoy market leadership in most major markets. Weakness The main weakness of the brand is that it is losing market share in some of the largest markets. Some of the local brands in markets like China are outdoing the local sales of Head & Shoulders. Another weakness of the brand is that it is criticized for being a powerful concentrate compared to that of Garnier Fructis and Clear. Also, Head & Shoulders does not have a natural/herbal appeal to it compared to the Fructis of Garnier. Garnier has placed itself to be a natural/herbal product and therefore is being preferred more by health conscious customers. Head & Shoulders is losing market share on this category of customers. Clear is almost similarly placed to that of Head & Shoulders in this case. Opportunities The major opportunity for Head & Shoulders is the herbal shampoo demand. The demands for herbal products are ever increasing in the current market situation. This is one of the major reasons for losing market share for regional brands. Especially in the Asian countries, herbal products are of higher demand compared to the more chemical compositional products like Head & Shoulders. Another opportunity for the brand is to introduce diversified hair and scalp treatment products with the same brand. Currently, the company is oriented only on shampoo. P&G has a strong research base in hair and scalp treatment. This strength can be used for designing more products in the related specialized area. Some of the related products are hair care clinic, hair cream, hair spray, etc. P&G can market these products under Head & Shoulders brand. Threats Competition is the major threat for Head and Shoulders. Though Head and Shoulders is the market leader in anti-dandruff shampoo market, it faces stiff competition from regional herbal brands. Moreover, there is stiff competition from Unilever’s Clear. Clear is an anti-dandruff shampoo focused on the same market category as that of Head and Shoulders. Also, Head & Shoulders have very less differentiating features compared to the Clear or any other popular anti-dandruff shampoo. Head and Shoulders also face stiff competition from clinically preferred anti-dandruff shampoos that are flooded in the market. Marketing Mix Product: The main characteristic of Head & Shoulders is that it is an anti-dandruff shampoo that does not smell and look like the normal anti-dandruff shampoos in the market. It is this core feature that helped the brand to be the most successful anti dandruff shampoos. Ever since it was introduced, Head & Shoulders has undergone changes in the product mix. It got better over years. The packaging was done in a blue and white textured bottle. The blue and white texture itself gives an appeal of freshness and cleanliness. The shampoo too is colored in a green blue combination. Unlike any other shampoos, Head and Shoulders use Zinc Pyrithione which is an effective component in fighting and preventing dandruff. Now the company has also introduced conditioners in the same brand. These conditioners are said to be used after shampooing the hair so that the hair is kept moistened. The company has also recently changed the packaging to attractively shaped containers. Price: P&G has placed Head & Shoulders at the upper end of the segment. The pricing is higher than P&G’s own Pantene shampoo. P&G has resorted to price cuts for the product depending upon the market requirement and competition. For instance, In India, where P&G is the second largest player in the segment, it has resorted to indirect price revisions for the Head & Shoulders shampoo. In India, Head & Shoulders has indirectly cut the prices of Shampoo sachets by around 17% by giving extra quantity at the same price. “It later cut prices on shampoo bottles of both the brands, again to the extent of 11-16%.” (Sharma, 2011) In general it can be said that P&G has adopted a premium pricing strategy with Head & Shoulders. Place: Head and Shoulders is sold globally in most developed and developing nations. As mentioned in the beginning of the report, North America is the largest market for the company. P&G is said to have an effective distribution system in almost all the markets. In the initial years, the product was manufactured in US and exported to other major markets. This distribution strategy has affected the company’s pricing strategy. The import duties in other markets have forced the company to maintain the price at a higher end. Later on, in the popular and high growth market segments of Asia, the company began local production. This helped the company to maintain a good margin. It also helped the price slashing exercise in major markets. Promotion: Head & Shoulders mostly use celebrity endorsement to give a visibility to the product. The popular celebrities of concerned markets are used to endorse the brand in the particular market segment. The promotional activity of the product was highly effective. Though it is basically an anti-dandruff shampoo, it was not marketed only in that genre. All the promotional activities of the shampoo also focused on health and beauty of the shampoo along with the anti-dandruff properties. This helped the success of the brand to a great extent. Global Activity After North America, Asia and Western Europe are the largest markets of P&G. In the Asian market, India is one of the highest growing market segments for the company. The company has resorted to localization of the products in order to make better appeal in such markets. For instance, the company has launched Head and Shoulders Aloe Vera in India. Aloe Vera is a plant that is traditionally used by Indians for developing healthy long hair. Recently, the company has appointed Kareena Kapoor, the leading actress of Bollywood as the brand ambassador for Head & Shoulders. Another major market for the company is China which is one of the fastest growing economies in the world. The company was only having Unilever as its main competitor in the initial years of entry into China. “The anti-dandruff shampoo accounts for nearly one-fifth of the Chinese shampoo market and it has been the top seller in the country for more than a decade.” (Woke, 2011) But later on many other local brands started emerging in the market and ate up into the market share of Head and Shoulders though the company is still the market leader. Moreover, the company is adopting a strategy of expanding into the smaller towns of the country which are mostly the untapped markets. This activity is part of its global market expansion exercise. P&G has used celebrity singer Thalia for promotion of the brand in Latin and South America markets. The company has undergone localization in the marketing activities for Latin America. The product composition is more of less similar to the usual products sold in the North American markets. Conclusion The report has helped to identify that Head and Shoulders is still a leading brand in the anti-dandruff shampoo segment. It is of the most successful brands that undertake localization while maintaining a common standardized product composition. The most successful marketing mix decision of the company is the product itself. The smell and ingredients of the shampoo are its USP. Going forward, the most successful strategy for the company will be its extreme localization. The localization should not only be used as a tool to take advantage of the low cost production but also of the needs and wants of the customers. Works Cited Head & Shoulders, (2011). Our Formula. Retrieved February 13, 2012. From: http://www.headandshoulders.co.in/en-IN/anti-dandruff-formula.jspx P&G, (2011). Leadership Brands. Retrieved February 13, 2012. From: http://annualreport.pg.com/annualreport2011/leadership-brands/ P&G, (2011). Financial Highlights. Retrieved February 14, 2012. From: http://annualreport.pg.com/annualreport2011/financials/ Sharma, S (2011). P&G cuts shampoo prices, offers clutch of freebies online. Retrieved February 14, 2012. From: http://www.dnaindia.com/money/report_p-and-g-cuts-shampoo-prices-offers-clutch-of-freebies-online_1527918 Woke, L (2011). P&G to target smaller cities to boost growth. Retrieved February 14, 2012. From: http://usa.chinadaily.com.cn/epaper/2011-06/07/content_12649504.htm Read More