Marketing Essentials For Kleenex - Essay Example

? MARKETING ESSENTIALS FOR KLEENEX School: Table of Contents Table of Contents 2 Executive Summary The Kimberly-Clark Corporation was founded in 1872 initially as a paper mill running business and has risen to become a top universal competitor in the market of paper goods. The company deals mainly with customer products which are paper based under a variety of brands such as Depend, Huggies, Scott, Kotex, Pull-Ups and Kleenex. The corporation has also extended into a worldwide Health and Hygiene market and provides a range of tissue and personal care products, and has also obtained a significantly profitable market share strongly attributed to their customer loyalty and strong trademark acknowledgment. In the year 2009, the corporation incurred a total of 19 billion dollars income. Furthermore, it is responsible for 3.3% of special paper products market only coming as a second in the world market. The mission of the company clearly states that it is focused on offering its customers with varieties of quality tissue and personal care products at affordable prices while also offering several career opportunities for workers and maintainable increase and profits to shareholders (Kimberly-Clark Reviews 2010). The company also recognizes the trip sized paper products sector as a good market which is deficient of distinct competitors. The Kleenex Germ Away is a product which market strategies will be analyzed accordingly in the paper and how to maximize the sales in the sector. Introduction Kimberly-Clark Company is a company which deals with the production of personal products. During the early days of its establishment, it manufactured a broad range of paper goods from wrapping paper, magazine grades, and books to newsprint. As the century progressed, the company had implemented conventional but dependable investment plans which had turned it into the biggest Midwestern paper company Current Company Situation The organization has been able to achieve a desirable but exceptional accomplishment in marketing through creating the trademarked brand identity names tantamount with the household goods in the minds of clients. Kleenex is one of the products which were made for consumers and the company uses catchy advertisements to target a large client base. Needing to blow or clean one’s nose, a customer could request for Kleenex tissues and safely anticipate to be given a disposable handkerchief. The company also produces other products apart from Kleenex such as Kotex and huggies (Heinrich & Batchelor 2004). Growth Outcomes The main challenge which was facing the company during its earlier yeas of founding was how to sustain a competitive advantage. The company devoted a total of $400 million in equipment, other programs and plants during this period. The company has managed to be the envy of other companies since the performance increased to that of a financially desirable business. Financial analysis K-C is a universal hygiene and health company providing special care and customer tissue products such as Scott, Kotex, Depend, Pull-ups, Huggies, Scott and Kleenex. In the financial year of 2010, it recorded income of $19,746 million which was a growth of 3.3% from the previous financial year 2009 (Lindsay, Perkins, & Karanjikar 2009). Income growth is credited to a boost in the volume of sales, improvement in product combination and net selling prices. In the financial year of 2010, the company’s operating profit was $2,773 which had decreased by 1.8% when matched up with 2009. However, in the same financial year, it had a net profit of $1,843 which, when matched up against the year 2009, was a 2.2% decline. Figure 1: Graph showing the recent performance of K-C (Dylan 2011) Mission Statement K-C has held fast to a set of uncomplicated yet insightful principles implemented by the founders- service, fair dealing and quality. These three are the regulations of achievement by which the employees and leadership are deliberated. In my opinion, these principles have aided to create Kimberly-Clark a foremost worldwide company that manufactures advanced health and hygiene merchandise used by professionals and families from all dimensions of life and societies around the world. Market Share Information The most performing industries are located in North America and U.S.A. in these industries, the whole paper products market comprises of 3 distinct sections. The first section involves the newsprint uncoated paper which is utilized principally for produces newspapers which are responsible for attaining a 7.2% market share. Next, is the writing and non-newsprint paper which consisting of paper for magazines and books and accounts for a market share of 29.9%. Finally there are paper products comprising of groups such as household and sanitary paper products as well as packaging and wrapping paper, which accounts for a market share of 62.9%.The Corporation takes a second place from the number one which is the International Paper Company, reported to possess a market share of 6.2% in the Financial Year 2009 while K-C held a market share of 3.3% after Svenska Cellosa Aktiebolaget a Swedish founded company with a market share of 4.8%, while Stora Enso Oyj a Finland founded company held market share of 3.7% in the same financial year (Lindsay, Perkins, & Karanjikar 2009). In the personal care products, Kleenex and Scott tissue held a total market share of 43.8% while the Kimberly-Clark & Ballard Medical Disposable products held an 8.6% market share. Furthermore, Kotex & Depend feminine care products held a 20.5% market share while Huggies & pull-ups baby care products were at a 27.1% market share. The company faces a stiff competition from companies such as P&G, Unilever, Colgate and Palmolive. However, it is expected that the company can maintain the market position driven by promotional campaigns, product innovation and partnerships with superstores. Market Analysis During the Financial year of 2009, the entire category of paper products went through a considerable decline giving rise to a market reduction of 17.1% (Heinrich & Batchelor 2004). Even though this decline might have been a considerable punch to the market, the customers keep on searching for the products which are well designed for their personal needs in a busy and hectic lifestyle. With income reaching a total of $285.7 billion dollars in the Financial Year of 2009, market achievement is anticipated to speed up in the following 5 years resulting to a promising $427.1 billion dollars through the end of 2014. Figure 2: Bar Graph representing the performance of K-C in the last 6 year period (Jayson 2012) Macro-environment Demographically while the population of several countries keeps on growing, the female population is being targeted by the company since most of the countries have moved from the traditional setting to a developing one which means that there is continued use of modern products. Moreover, economically, many countries keep on investing which promotes the growth of the economy at a rapid pace attracting more foreign investors (Heinrich & Batchelor 2004). In the technological society, there is high growth of the corporation which is targeted to the production of more products to improve peoples’ living standards. PESTEL Analysis Political conditions: the company is a subject to political and economic instability in the developing countries where it has launched business. In addition, there is challenging political environments in all the continents which may result in slowdown of the growth and potential earnings. Political stability has a lot of contribution to the success of the company. Economic conditions: K-C has got both favourable and unfavourable economic conditions which may either affect the company positively or negatively. The company has got a large customer base with distinct preference for the products which has improved the revenue per year (Lindsay, Perkins, & Karanjikar 2009). However, there are some unfavourable economic conditions globally which consist slow economic growth, effect of recessions, credit market volatility, pricing and economic instability which may keep on influencing the company’s financial results. Social conditions: in the year 2010, the company decided to maintain and strengthen the reputation of the company as well as that of all the brands which would make a strong bond between the suppliers, consumers and customers and others. The company went through a period of incapability to address negative publicity which had developed with entailed quality, product safety, efficacy matters which were either perceived or real. This could spoil the relationships that the company had created. Technological innovations: The ability of the company to carry out its functions effectively influenced by their ability to acquire new technological innovations which means that in every financial year, there is a certain amount of money kept aside to fund these equipments. This is able to maintain the essential trademark and patent protection. The company incurs considerable marketing and development costs in establishing improved and new technologies to make more quality products. Some of the company’s competitors have got up to date technologies which means that the company has to level up in order to provide a more aggressive approach to the manufacture and advertising of the products (Heinrich & Batchelor 2004). Legal conditions: one of the negative aspects about the company is that it is a subject to various claims and lawsuits pertaining problems such as product liability, employee matters, advertising, trademarks and patents and contract disputes. Even though these claims and litigations cannot be forecasted with conviction, the ultimate disposition may not have positive effects on the company financial condition and business. Environmental conditions: there has been increase in the necessary raw materials, and the transport cost which means that this has affected the company negatively. In addition the change in the global climate patterns is a huge concern since the raw materials which are need to manufacture the products comes from the environment. The company may experience disruptions due to labour strikes, power outages, natural disasters and government regulatory requirements. SWOT Analysis The K-C Corporation has some positive strength that will aid in building income and enhance their trademark. The corporation possesses a very well branched out business portfolio straddling across a variety of markets which permits for development of the brand as well as the revenue growth. Even though the company is doing well, it has got some weaknesses that need to be observed and rectified. First and foremost, the customer and geographic concentration poses a business threat (Datamonitor: Kimberly-Clark Corporation 2011). It has placed much reliance on distinct customers which decreases its negotiating power. The company also is deficient of a scale to contend with other more established players in the same industry. K-C has also got some opportunities that when fully exploited, can help it to attain a major competitive advantage. New alliances and acquisitions will maintain the company’s worldwide business strategy. There is growing preference for natural and organic personal care products especially in the United Kingdom which means that this type of popularity can be used to increase the variety of organic products in the markets creating a large customer base before other companies decide to do the same (Company spotlight: Kimberly-Clark 2010). Threats that are most likely to be encountered by the company consist of the prevailing financial conditions in Europe and United States which may possibly impinge on the company’s business. The global market is on its way to recovery from a great recession making it risky for businesses. The company is also experiencing immense competition which may have negative consequences on its economic status (Company spotlight: Kimberly-Clark 2010). The SWOT analysis can be summarized as follows: Strengths Consumer loyalty which has not changed for a long time Diversified business portfolio Strong trademark recognition The company has got a strong multiple markets across the globe There is a possibility that if the above mentioned points are well employed, a great profit margin may be attained. Weaknesses Customer/geographic concentration Deficiency of scale against existing competitors K-C has not yet started a recyclable program for their tissue products. Some of their products are seen as high priced compared to some companies. Some customers are not too enthusiastic about the cut down of forests in manufacturing of tissue products. Opportunities New alliances and acquisitions will help to maintain the company’s universal business strategy Growing preference for natural and organic personal care products Launching of new products helps to create a large competitive advantage. Once they engage in a recycling program, it can help to create more products and a larger customer base. Threats Intense competition may have harmful effects on the company’s performance Unsatisfactory third-party achievements could affect the corporation. New Product/Services The three year marketing plan focuses on increasing the growth of sales from three to five percent. A new product is being introduced to the already existing brand of Kleenex called Kleenex Germ Away which is targeted to create an increase in sales in the existing markets. It is also anticipated to create an opening for new markets hence boosting the brand’s aptitude and income. Specifications of these implementations are analysed below: New Products: The sector of the travel sized tissues is highly unexploited by other competitors and this makes it a highly growth area. The company focuses on the production of travel sized tissues, and they have been successful in the sales especially in the supercentres and convenient stores. The new brand, (Kleenex Germ Away) will embrace the necessity to travelling as well as dynamic customer lifestyles, by incorporating a two in one sanitization product in the subsequent productions. Current Markets: Existing markets will receive some changes to develop them further by working side by side with the chief retailers to assist to build on product promotion and placement to develop a larger customer base and expediency purchases. New Markets: The new product will infiltrate the markets based at the gas stations to aim at the travelling clients who are necessity of a cleaning product which is travel sized convenient. The primary supply of the new product will comprise of gas stations which are situated along major highways as well as interstates Target Markets Women aged 25 to 55 years are the universal target market for the new product (Olegario 2005). The initial market for the product will first be dynamic woman who are aged eighteen to forty five years. The income expected to be generated from this group of women is approximately $60,000. Majority of the target population of women are those that have part or full time jobs and to top it all up, are experiencing lives on the go. The product will also be deliberated for those women who are raising young children and not forgetting the ones who regularly need to clean the face or remove makeup using wipes. Even though most of the target population involves women, the new product will also target travelling people, be it women or men who are aged eighteen to thirty five years who might be travelling either alone or with someone else since the product will be a reliable cleaning product. Marketing Program The objectives for this marketing program are: To increase the growth of sales from three to five percent. To keep on increasing expenditure at a high rate than that of net sales by the year 2015. To acquire earnings per share development of the average to high distinct digits. The strategies which will be used for marketing the product are: Product strategy: Germ Away is the fresh product coming from Kleenex and which provides intangible as well as tangible attributes. In terms of tangible attributes, the product is an item which has got two uses incorporated in one product such as anti-bacterial wipes and the others such as facial tissues. The pack is made up of fifteen wipes and fifteen tissues and the only difference in size is that it is just slightly bigger than the usual pocket tissues pack but it is portable and convenient as the same time. On the other hand, the intangible attributes allows it to offer a better, cleaner and healthier living as well as a more proficient lifestyle (Hartley, Kerin, & Rudelius 2009). Packaging: The new product, features quality and functional packaging. With re-sealable openings in both sides and simple access, the product has got a distinctive packaging which means that, it can be utilized a number of times and over a long period of time and maintain its quality and freshness of the product. The benefits attained from the product are those that are consumer related since the product helps them to lead a healthier lifestyle. Brand name: the brand name of the product is effective in that, it proposes the benefits of the product; memorable, positive, distinctive; simple; and clicks with the business and products image (Harley et al. 2009). Price Strategy: the new product which is a 2 in 1 antibacterial wipes and facial tissues will be obtainable at a buying price of $2.99. The cost up to date and similar goods in the market, helped to determine this price. The benefit of the product is that it incorporates the pocket tissues as antibacterial wipes in one pack and therefore when considering the pricing, the cost of two items in separating packaging was considered. Moreover, this price can easily be considered for impulse buying by the customers. Promotion Strategy: The efforts for advertising the product will be competitive, pioneering as well as focused on ensuring that the customers are made aware of the distinct benefits attained from acquiring this product; the fact the product is as a result of incorporation of antibacterial wipes as well as tissue wipes, and that the pack is easy to carry and is more sanitary. The distribution of the product will be broadened quickly through the use of advertising efforts to aid in ensuring maximization of sales for the reason that competitors are most likely to imitate the product. Even the logo of the product will be designed to make sure that there is a maximum effect on the customers. The budget on advertising will be focused mainly on getting the target market by means of magazine and commercial ads. For the Television advertisements, they will be aired when the family shows are being televised while the magazines will target the women’s family as well as the lifestyle and home magazines. Three Year Forecast It is good to be optimistic about the performance of the new product, but also to know that some environmental conditions may not assure that the product will in the first year, meet the anticipated sales in fresh markets. Competitive responses, technology changes and the consumer preferences are also some of the factors which may not guarantee the expected sales. However, the company recognizes that by strategic planning of advertising activities and universal customer awareness, income from the sales of the new product should surpass the modern expectations. The expected rollout plan for distributing the products in foreign and US markets are shown below: Year Continent(s) Number of Countries Distributions Year 1(2013) North America 45 Public facilities, wholesales, supermarkets, drugstores, supermarkets, office buildings, food service, Residential. Year 2(2014) Europe 41 Public facilities, wholesales, supermarkets, drugstores, office buildings, food service, Residential, mass merchandisers, retail stores. Year 3(2015) Asia and South America 49 Residential, convenient stores supermarkets, food service, mass merchandisers, public facilities, retail stores. By the year 2015, the product is anticipated to have reached six continents and purposefully in more than 154 countries. When establishing the advertising activities in the overseas markets, and therefore, issues like symbols, customs and cultural values will be considered during the advertisement. The three year financial protrusion is based on the total number of sales in 2009. The brand is anticipated to be responsible for 90% of sales which is an approximate of 1.9 billion units worldwide.   Year 1 Year 2 Year3 2013 2014 2015 % of sales in consumer tissue segment 50% 70% 90% Units Sold 1,070 1,501 1,930 Net Sales 3,200 4,490 5,770 Gross Profit 1,060 1,485 1,910 Operating Profit (loss) 466 650 840 Conclusion In conclusion, the paper was focusing on the Kimberly Clark Corporation which is responsible for the manufacture of personal care products both for men and women. These products include Huggies, Kotex, Kleenex, and Scott. The introduction of the new product which incorporates pocket tissues and antibacterial wipes is an idea which can help the company to attain a large customer base which may help to increase its competitive advantage in the US as well as the foreign markets. By the year 2015, the new products are expected to have increased the income got from the Kleenex products. 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