Smokers Choice - Research Paper Example

Executive Summary Smokers Choice is a new toothpaste products by Oralcare Plc. This innovative product comprises both quality as toothpaste and smoking cessation tool. Besides giving the user a clean mouth and teeth, it helps smokers to quit smoking by creating unpleasant smell which suppress smoking desire. This product will be launch in the United Kingdom (UK) market in the middle of June 2007. The UK oral hygiene market worth abut £750 mil pound while the smoker’s market comprise £9 mil. Key players in this market are Colgate-Palmolive, GlaxoSmith Kline and Procter and Gamble. These companies have taken up about 80 % of the market share with Colgate-Palmolive as the leader with 53% market share. The rest is shared among own-labels or therapeutic type products. The environment is healthy as more people are seeking a mean of oral care in the retail outlets after the New Dental Contract was imposed in year 2006. The product is positioned as a premium-priced product. This is to attract the smokers aged 16 to 49 from medium to high income group. The premium status will be induced by clean packaging, method of display and indulgence in the stop smoking campaign. Meantime, the product will be distributed to the pharmacies, with Boots as the closest partners and dealers (which will distribute to multiple grocers). The largest opportunity comes from the product itself as there is no such product yet in the market. Meanwhile, the worst threat is from the competitors which would create a “Me Too” product in short period of time. The ways to prevent this is to have the product patented and create an awareness and impact among the public in the shortest time possible. This product is estimated to bring in £270 000 sales revenue in the first year. With that confidence Oralcare will then market it to other European countries like Germany and France in the following years. Table of Contents Section Page 1.0 Executive Summary 1 2.0 Current Marketing Situation Analysis 3 3.0 Company and Product/Service Overview 3.1 Environmental Review 3.2 Market Overview 3.3 Market Segmentation Review 3.4 Competition Analysis 3.5 Distribution Review 3.6 Competitive Advantage Review 3.7 Critical Success Factor Review 5 5 6 6 7 7 7 8 4.0 SWOT Analysis: 4.1 Strengths and Weaknesses 4.2 Opportunities and Threats 9 9 9 5.0 Objectives and Issues 9 6.0 Marketing Strategy 6.1 Chosen Target Market 6.2 Value Proposition 6.3 Positioning Strategy 6.4 Marketing Research 6.5 Marketing Mix Decisions: 6.5.1 Product 6.5.2 Price 6.5.3 Distribution Channels 6.5.4 Promotion 10 10 10 10 10 11 11 11 12 12 7.0Action, Budget, Control 7.1 Action Programme/Schedules 7.2 Money Need 7.3 Expected Sales Revenue 7.4 Expected Expenses 7.5 Controls 14 14 14 14 14 15 8.0 References 15 Appendix A – Product Design B - UK retail value sales of oral hygiene, by sector, 2002-07 C - UK retail sales of toothpaste, by type, 2005 and 2006 D - Manufacturers’ shares of smoking cessation aids market, by value, 2003 and 2005 E - UK retail sales of nicotine replacement products, by type and value, 2001-05 16 17 18 19 20 2.0 Current Marketing Situation Analysis Oralcare Plc is a newly set up company in the oral hygiene market. The main core of the business relies on an innovative toothpaste product, which is called Smokers Choice. In UK year 2006, the total revenue for the oral hygiene products (toothpaste, toothbrush, breathe freshing agents and others related products) was £730 mil. It is estimated to grow to £758mil in year 2007, achieving growth at about 24%. This market is growing fast as the public is looking for alternative dental option after the new dental contract was imposed on 2006. NHS dentists tend to reject patience when they reach full quota of the budget. Thus, the potential of retail dental products are increasing. Of the oral hygiene market, approximately 41.9% or £314 mil market sales value went to toothpaste (Appendix B). The market size is forecasted to expand to £320 mil in year 2007. The type of toothpaste products available in the market are “Totalcare”, “Regular”, “Whitening”, “Sensitive”, “Children’s”, “Smoker’s” and others (Appendic C). “Totalcare” took up the largest market share in 2006, gaining £100 mil followed by “Regular” at £66 mil and “Whitening” at £59 mil respectively. Cosmetic dentistry is a hot issue now as the people cares for how they look and whiter teeth definitely take off. Meantime, “Smokers” market share was about £9 mil. The main players for the products in the market would be Colgate Palmolive, Glaxosmith Kline and Procter and Gamble (P&G). Leader in the market will be the Colgate Palmolive, having 53% of market share. This is followed by GSK and P&G. Purchasing trend in this market is loyalty to brand. Consumers purchase because they have been using the product for very long and the image of the brand is positive. Smokers Choice will fill in the gap in the niche of smokers and whitening segment. Provide benefit as tooth paste and smoking cessation tools. Average 47% smokers aged under 34 tried to quit smoking in year 2005. The most common method is using nicotine patches (44%). Market size of smoking cessation aid is estimated to be £97 mil for year 2006. Pharmaceutical giants Pfizer, GSK and Novartis claim more than 90% of value sales of smoking cessation aids. Pfizer’s Nicorette is the dominant brand, with around 40% of the market, followed by GSK’s NiQuitin CQ, which accounts for around a quarter of sales and Novartis Nicotinell, with around a fifth (Appendix D). A 7-day course of nicotine patches costing around £15, the actual cost of quitting, although not cheap, is significantly less than the £35 that the average 20-a-day smoker will spend over the course of a week. All three offer patches, gums and lozenges supported by online smoking cessation programmes. Smoking cessation market was segmented into patches, gum, tablets/lozenge, inhalators and others (Appendix E). Smokers Choice as toothpaste creates a new segment to this market. Entering both the market as a new player post extreme challenge as Oralcare has no track records. The only way is to position the product correctly and create awareness with immediate effect to the sales performance. 3.0 Company and Product/Service Overview Oralcare Plc is a newly setup company. The core product in this manufacturing company is the Oralcare Smokers Choice. Smokers Choice is a toothpaste that is designed to help smokers desist from the habit of smoking. The product is non-invasive and combines the qualities of toothpaste with the efficacy of an anti-smoking drug. The toothpaste has a twin focus. One, like any other toothpaste, it cleans the teeth and protects the gums. Another advantage is that it has an active ingredient that reacts with cigarette smoke. Consumers who use the toothpaste will find their cigarette smoke highly offensive and will not be able to take more than 2-3 puffs. The cigarette smoke creates an offensive taste in the mouth which is unbearable and will encourage the smoker to quit his or her cigarette after a few puffs. The effect of the toothpaste lasts for 18 hours and so there is ample time for the effect of the toothpaste to linger if a person brushes his./ her teeth twice everyday. This product will be satisfying the niche market of the smokers and we planned to have it launch in mid-June, 2007. 3.1 Environmental Review E-nvironment – the environment is favourable due to imposition of the new dental contract on 2006. Public seek for retail oral hygiene products. P-olitic – Several multinational companies decided not to employed smokers as it affects their performance gave positive impact to the sales of smoking cessation products. This would help to boost sales. I-nformation – Not really influencing sales. S-ocial – increase image awareness encourage people to go for whiter teeth. Smokers tend to have yellower teeth. This product could be a solution to them. T-echnology – possible threat as some might be using similar technology to produce their products. “Me too” products will create intense competition. L-egal – restrictive tobacco legislation increase sales. People are not allowed to smoke in working areas and public places. This has started in Ireland since 2004. More people will stop smoking. E-conomics – Government imposing higher tax on tobacco products. Now UK has the highest tobacco price. This reduce number of smokers. 3.2 Market Overview The market for the product is highly competitive with respect to the fact that there are lot of companies that provide toothpaste. The toothpaste market is worth about £320 mil and it is estimated that personal hygiene products for smokers focus is worth £9 mil. However, companies that produce therapeutic dental care products are very rare. There are a lot of people who want to quit smoking for various reasons. While health issues may be important for many, others will be looking for a solution that will help them to quit smoking. Customers need an anti-smoking product that can be incorporated into their daily routine, is not invasive, is not habit-forming and is part of their daily life. There is currently a gap in the needs of smokers and the products that are available in the market that caters to those who wants to quit smoking. Anti-smoking creams and products are now available but they cannot be easily integrated into one’s life. For example, an anti-smoking cream has to be applied in the mouth and left undisturbed for five minutes. Another product can be chewed as a tablet. All these products are not part of the daily routine and customers feel that they are doing something extra to curb the habit of smoking. On the other hand Smoker’s Choice becomes part of one’s life and customers will not even know that they are using a product that is aimed at curbing their smoking habit. Besides, it promotes the personal image of the user by giving them whiter teeth. 3.3 Market Segmentation Review Since consumers are becoming more interested in their health and image, they prefer products that can promote their health, Smokers Choice has a high chance to be accepted by the health conscious consumer. The market for the toothpaste will be made up of mostly consumers of middle age and above. Since young smokers have many other influences that will not allow them to quit smoking, it may be estimated that middle-aged people, made up of those who want to voluntarily quit smoking, or those who want to quit smoking for some other reasons will try the product.. One of the prime needs of customers is to have a product that does not interfere with their routine. Since the product comes as a toothpaste, it can integrate itself into the daily life of consumers. The market can be segmented into: Young smokers: People who have been introduced to smoking and want to quit it due to many positive reasons. Middle Aged smokers: Middle aged smokers are those who have the maximum chance to quit smoking. This is because middle aged people are mature and will want to quit smoking considering that it is deleterious to health. New consumers: New consumers will try the product for its novelty value. Since anti-smoking quality is not the only characteristic of the product, there is a chance that the product will be tried by non-niche users as well. 3.4 Competition Analysis 1. Colgate Position: market leader with a 53% share Strategy: extreme diversification into all product categories sustained by size and financial power. 2. Sensodyne Position: second in the market Strategy: dominating the sensitive segment, recommended by dentists. 3. Aquafresh Position: third on the market Strategy: provide 3-in-1 protection. Price promotion with free toothbrush. Indirect competition is represented by other smoking cessation products, from special chewing gums to nicotine patches. 3.5 Distribution Review The product will be distributed through a network of dealers and distributors. The company will appoint distributors who in turn will appoint dealers to market the product. Then it will be distributed to multiple grocers, pharmacies and drug store. Traditional methods of logistics and stocking may be used. 3.6 Competitive Advantage Review Unique product: customers may buy the product on its unique characters, but there is also a chance that the product may be considered as too specialised. Therapeutic effects: This may be used as the advantage of the product but customers may consider it more as a medicine than regular toothpaste. Niche market: So far there is no similar product in the toothpaste market. Smokers choice fill in the gap between oral hygiene and smoking cessation needs. 3.7 Critical Success Factor Review Strong positioning: This product is so unique that it provides the health benefits and a chance of new life to the smokers. It is a tool indeed which could reduce the desire to smoke. Besides that, giving them white and beautiful teeth. Promotion: Clear message of “Smile and Stop Smoking” to win the attraction of the youngsters and middle aged group. Anti–smoking Campaign: Large companies and government departments are working to stop hire smokers for inhibit smoke during work hours. This encourages more people to stop smoking due to their needs for job security. 4.0 SWOT Analysis: 4.1 Strengths and Weaknesses Strength: Patented formula which could be used by the smokers in their daily routine. No fuss. Weakness: Company is new thus there is financial constraint in advertising 4.2 Opportunities and Threats Opportunities: Innovative products – currently there is no such product in the market Awareness of personal image through good dental health and whiter teeth. Government campaign on anti-smoking to promote stop smoking activities. Threat: “Me Too” products by other brands. Negative feedback on the unpleasant smell after reaction with the smoke. Niche market size might be too small for sustention of business development. 5.0 Objectives and Issues Enhance market share by 3 percent for the first year How can we reach potential customers? Earn 15% ROI in the third year How can we sustain the product in view of potential competition and threats? Penetrate Germany (early year 2008) and France market (end of year 2008) after success launch in UK How can we develop and expand to new markets? 6.0 Marketing Strategy 6.1 Chosen Target Market Smokers Choice targets the young and middle-aged smoking group aged 20 to 45 which are making medium to high income. At the initial, the geographical target will be the urban area starting from London and Manchester. Then this will spread to the rest of the country. The starting points were chosen as people in the urban area tends to be more image and health aware. 6.2 Value Proposition Smokers Choice offers the customer a path to good health and positive image. It helps the smokers to overcome the challenge of attempt to quit smoking. It is not with nicotine replacement but directly suppress the desire to smoke by creating an unpleasant smell in the mouth once one starts to smoke. It is the promotion of healthy lifestyle in the youngsters and those middle aged group, especially campaign coupling with NHS stop smoking service, ASH, UK Cancer Research and British Heart Foundation. 6.3 Positioning Strategy Smokers Choice is position to fill in the niche gap between smoking cessation and teeth whitening. The position strategies play here are the functional and symbolic (Wikipedia, 2007). For functional, Smoker Choice keeps the quality as toothpaste, offering clean mouth and teeth in addition to overcome the challenge to quit smoking. As for the symbolic positions, users of Smokers Choice could esteem themselves as the health and image conscious group. 6.4 Marketing Research 1. The demographic details exhibited that 48.5% of the London’s population comprised of group age 16 to 44 representing 13.6% of this age group of 50.4 mil population in this country (National Statistic, 2007). This information is important for the choice of beginning spot of the product launch. 2. Besides, urban areas such as London hosted the highest income group 3. Boots is most likely to be the best partner for this business as it has a wide coverage of 2500 branches (Wikipedia, 2007)across the whole country. This would allow Oralcare to have a wide contact to the consumers. 6.5 Marketing Mix Decisions: 6.5.1 Product The perception of the products would be revolving around Health Smile Stop smoking The strategy helps us to relate stop smoking by using Smokers Choice toothpaste. Besides that, the strategy statement “Smile and quit smoking” would post a positive feeling from the customers towards the product. This statement will be stated again and again in the advertisement and promotions to promote the needs to beauty of having clean teeth and good health projected from not smoking. As in the Mintel (2007) report, the toothpaste market is largely image-based. The consumers are buying due to their trust for certain brands. That is the reason why the main players in the market are playing the customer loyalty game most of the time. Thus, to project a positive image for the product is vital at the very beginning of the launch. Naming Naming is equally important to the brandname. We choose Smokers Choice as the product name. This give direct impact to the target customer – Yes, it is you!! Packagaing An attractive packaging which could bring out the inner message of the product will receive positive response from the market. Smokers choice toothpaste is packed in a transparent tube. The colour of the labelling will be of white and light blue with the a large print of the brand name “Smokers choice”. In addition to that, there will be description “a really cool effect” and finally the product name “Oralcare” (Appendix A). The colour choice aimed to give the consumer a soothing and clean feeling. This will let customer feel comfortable purchasing the products. For easy handling during transportation, each toothpaste tubes will be packed into a box with white background and similar printing on the tube. Meantime, twelve tubes of toothpaste will be bundled with straps material. Twelve bundle will make a carton box of toothpaste. 6.5.2 Price The retail price of the toothpaste will be £8.00 for 100g pack and £16.50 for 250g pack. The price is significantly lower than a nicotinell patch for 7 days treatment which cost about £15. A 250g pack Smokers Choice can be used for 30 days. Meantme, the price structure is different for dealers which will distribute the product to multiple grocers. They receive a 40% discount from the toothpaste retail price. Meantime for Boots and other chemist store, they receive a 35% discount. If the purchased was over £25000 in a single purchase order or paying within 7 days after deliveries, an additional 2% discount will be granted. This is to encourage fast payment and bulk order. Justification: The retail price is considered a premium price it is about 40% higher than usual whitening toothpaste. 6.5.3 Distribution Channels: The dealer will be the distributor to multiple grocers. Meantime, Oralcare will deal directly with drugs store like Boots and Star Drugs. These companies have wide coverage through their branches all over the country. Besides, their image is quite in line with therapeutic products like Smokers Choice. Thus, it might draw the attention of the people who want to quit smoking. The tactic is to use the end of the shopping rack to display the product. It should be placed in a special transparent plastic container to protect from dust. Justification: This could draw more attention of the customers that passes by. Besides, by placing the products in the plastic showcase could help promote the premium status. 6.5.4 Promotion The aim of a promotion research is to identify the perception of the customers towards the products. Besides, it could allow the company know what the current needs are. In addition to that, the promotion will help to create a sense of awareness to the customers group as well as some public relationship. Stop Smoking Campaign In conjunction to the launch of the products, Oralcare could choose to have a joint campaign with NHS stop smoking service, AGH, UK Cancer Research and British Heart Foundation. Test samples of Smokers choice could be distributed during such events. This could help to create awareness among people who wanted to stop smoking. Besides, being part of such event could induce positive image to the company and product. Advertising Due to the financial constraint, Oralcare tries to keep the advertising expenses low. The channel of advertising will be the TV / Radio – will try to hook up to talking show to exhibit positive result. User successful stop smoking will be invited to talk about their experience with the product. This might help to boost the sales as people have seen real positive result. Magazines – When the TV and Radio have broadcasted such cases, the journalist will definitely flop to interview the user and this in fact save Oralcare a lot of money from printed advertisement. Web – will use the Google ad-aware to promote the product. When the search machine user keys in “stop smoking” or “quit smoking”, Smokers Choice advertisement will pop up in the search result windows. This provided information could help them to make a better choice on the method to smoking cessation. POSM – Some printed point of sales materials are still necessary, this is such as the rack standee, wall posters and the ceiling posters. This is for distribution with the products through dealers and also to the pharmacies. 7.0 Action, Budget, Control 7.1 Action Programme/Schedules 1. Launching of products in the whole UK starting from the middle of June. This is supported by the promotions plan. At the initial stage, collaborate with the charity and healthcare bodies to hold a stop smoking campaign in the main city. This is followed by the TV and radio broadcast of success cases. 2. From the operational side, the public response (in term of sales) and also the efficacies of the distribution channel are monitored from time to time. It has to be parallel with the promotions organized. 3. By end of 2006, a market research to Germany has to be constructed as Oralcare intend to march to Germany in year 2008. 7.2 Money Needed – NOT APPLICABLE 7.3 Expected Sales Revenue The expected sales revenue for first year will be around £270 000 ( 3% of the smokers market size). Meantime the next year, Oralcare is expected to achieve a growth of 20% of previous year making it £320 000. 7.4 Expected Expenses For the first year, the most important expenses will be (not including production): Media (Broadcast on TV/ Radio) – £50 000 Sponsorship - £20 000 Advertising - £20 000 For the second year, the highest of expenses will go to Media (Broadcast on TV /Radio) - £50 000 Market research and sponsorship in Germany £40 000 Advertising £20 000 Expenses from sponsorship reduce as the necessary awareness was created in UK. 7.5 Controls 1. Goal: To trace the sales performance Test: To measure and obtain the sales figures from distributors always. Besides, the stock level in the dealers’ warehouse should always be monitored. 2. Goal: To measure the effect of promotions and sample distribution to the sales performance Test: To measure the sales before and after the promotion, keep a trend record of which promotion is the most effective one. 3. Goal: To measure campaign effectiveness Test: To measure the number of gifts given out. Users who return to purchase the product after sample trial would receive a small gift, this helps to measure the efficiency of the sample distribution. 8.0 References Mintel (2006) Cigarettes and Smoking Cessation Aids - UK - April 2006. Mintel International Group Limited. Mintel (2007) Oral Hygiene and Toothbrush UK (April 2007). Mintel International Group Limited. National Statistic (2007) Population Trend 127 - Spring 2007. Information retrieved on 18th May 2007 from http://www.statistics.gov.uk/downloads/theme_population/PopulationTrends127.pdf Wikipedia (2007) Boots group. Information retrieved on 18th May 2007 from http://en.wikipedia.org/wiki/Boots_Group Wikipedia (2007) Positioning – Marketing. Information retrieved on 18th May 2007 from http://en.wikipedia.org/wiki/Positioning_(marketing) Appendix A Product Design 1. Tube Design 2. Box Design 3. Strapped bundle 4. Carton Box 12 x --- 1 carton box Appendix B: UK retail value sales of oral hygiene, by sector, 2002-07 Toothbrush Toothpaste Fresh breath* Other** £m Index £m Index £m Index £m Index 2002 176 100 295 100 76 100 62 100 2003 175 99 294 100 79 104 68 110 2004 187 106 293 99 82 108 70 113 2005 203 115 305 103 86 113 79 127 2006 214 122 314 106 103 136 93 150 2007(est) 223 127 320 108 118 155 97 156 * Includes dental chewing gum, tongue scraper, mouthwash/rinse, fresh breath strips, other breath freshener ** Includes toothpicks, floss, tape, denture products, gum/ulcer/teething gel, whitening kits Source: Mintel Appendix C: UK retail sales of toothpaste, by type, 2005 and 2006 2005 2006 2005-06 £m % £m % % change Total care 100 33 98 31 -2.0 Regular 66 22 66 21 nc Whitening 59 19 64 20 +8.5 Sensitive 54 18 60 19 +11.1 Children’s 12 4 12 4 nc Smokers’ 9 3 8 3 -11.1 Others* 5 1 6 2 +20.0 Total 305 100 314 100 * includes baking soda, tartar control, gum protection Source: Mintel Appendix D: Manufacturers’ shares of smoking cessation aids market, by value, 2003 and 2005 2003 2005 % change Brand Manufacturer £m % £m % 2003-05 Nicorette Pfizer 34.4 43 40.9 44 +18.9 NiQuitin CQ GSK 20.8 26 24.2 26 +16.3 Nicotinell Novartis 16.8 21 19.5 21 +16.1 Boots Boots 7.2 9 7.4 8 +2.8 Nicobrevin Cedar Health 0.8 1 0.9 1 +12.5 Total 80.0 100 93.0 100 +16.3 Data may not equal totals due to rounding Source: Mintel Appendix E: UK retail sales of nicotine replacement products, by type and value, 2001-05 2001 2003 2005 % change £m % £m % £m % 2001-05 Patches 28.5 44 35.2 44 40.9 44 +43.5 Gum 27.3 42 32.8 41 40.0 43 +46.5 Tablets/lozenges 5.2 8 8.0 10 8.4 9 +61.5 Inhalators 4.0 6 4.0 5 3.7 4 -7.5 Total 65.0 100 80.0 100 93.0 100 +43 Source: Mintel Read More