Proctor & Gamble Inc.

Case Analysis
Problem Statement
In what ways can Gwen Hearst develop a strategy to ensure continued profitability of Scope, the
mouthwash brand of P&G, under the threat posed by the new competition in the Canadian market.
Introduction
P&G is one of the most successful consumer goods company in the world. In 1990, its Canadian
subsidiary was a major business unit and contributed $1.4 billion in the sales and $100 million in net
earnings. The case here discusses the scenario in 1990 when one of its key products, Scope, the
mouthwash brand was exposed to a competitive threat due to the unique market positioning by its
competitor brand Plax. Since its introduction in 1988, Plax had gained a 10% share in the category
and was a cause of concern to the management. The brand manager, Hearst, was responsible for
maximising the market share, volume and profitability of the brand and was expected to come up with
a strategy to ensure the same.
After analysing the situation of the market she had three alternatives in her mind.
1) Introducing a new line of product
2) Repositioning existing brand in lines with the competitors
3) Maintaining status-quo
Scope:
Scope was introduced in 1967 by P&G. Prior to Scope the market was dominated by Listerine, the
first mouthwash developed by Warner-Lambert which had a medicinal taste. P&G saw an opportunity
here and came up with the brand Scope that was positioned as a great-tasting mouth-refreshing brand
that provided bad breath protection. It was the first brand that offered better taste than other
mouthwashes in addition to the bad breath protection. Scope was a market leader with 32.3% with the
rest of the brands nowhere close to this number. The market was further divided into food stores and
drug store outlets wherein its market share in food store accounted for 42% and that in Drug Stores
accounted for a 27%. As mentioned in the case, Scope had not been targeting the drug store category
as the brand was positioned as more of a cosmetic product rather than a drug product. The spending
on the advertising and media plans were comparatively higher than the rest of the brands but had
resulted in lower GRPs indicating a revision in the plans. The retail indices also showed the product to
be pocket friendly.
The Entry of Plax:
Plax was introduced in 1988 by Pfizer Inc. with a different platform altogether. It was promoted as a
pre-brushing rinse formula that claimed to remove up to three times more plaque than brushing alone.
The company invested $4 million in extensive advertising and sales promotion campaign during the
launch which resulted in a 10% market share by 1990. There was a flawed advertisement mentioned
in the case that highlights the exaggeration made by the brand about the plaque protection. However
due to the brand new segmentation of the product and addressing to the fact that a major chunk of
Canadian population suffered from the plaque and gingivitis problems, Plax penetrated into the
market in no time. Plax was priced at a higher level in food store while at a premium in drug store
signifying its medicinal value.

Assessment of available alternatives:

1. Introducing new line of product
This involved several steps and heavy investment in the form of R&D and promotions. To compete
with Plax, the company has an option of launching a new product line in drug category instead of the
present cosmetic category in which Scope was selling. This would involve additional approval by
regulatory authority and also advertisement scrutiny henceforth.
Also it was estimated to cannibalise 2 to 9 percent of Scopes sales. In the discussion with various
departments various data were put forth. The product development department (PDD) were of the
opinion that a product test of $20,000 would be required which might not be justifiable as the product
they could offer was only equal to that of Plax if not higher with only different being that it would
provide a better taste.
Various costs including capital cost, marketing cost, delivery cost, inventory cost, ingredients cost and
other important costs which create concern and would also require effective strategic management.
There was also a concern on number of units sold as it might lead to additional listing fee by the
retailers. The market research conducted by P&G had shown no significant increase in market share
with the introduction of the new product.
Another problem that was anticipated was with respect to the name of the new product. They had to
decide whether the new product will be launched under the name of Scope or with a different name.
Introducing the product in the same name may lead to loyal customers getting confused because of the
new brand image and stopping to use Scope.

2. Re-positioning the present brand

The brand Scope already enjoyed a loyal customer base. If this was changed then the customer
currently buying the product to get rid of bad breath (40% of the total consumer) might switch to
some other product leading to a decrease in sales. To avoid this if there was an ad campaign done to
cater the product as serving both the purposes it would be difficult to be projected with equal
importance putting consumers in a fix.
Further, the product will change from the category of Cosmetics to Drug. This will lead to increase in
scrutiny of advertisement with guidelines that may be stringent but at the same time it will prevent the
current consumers from switching to other brands although it will not lead to an increase in the
product growth. Further, there would be significant cost involved in promoting the revised product
along with an increase in its ingredients costs and re-packaging costs.

3. Maintaining the Status-quo

A few departments were of the view that there was actually no real threat existing as Plax was
positioned very differently in comparison to Scope. However, the sales people had different view.
They had seen the inroads Plax had been making in the marketplace and were of the view that Scope
should respond quickly.

Our Recommendation

We recommend the company to go for re-positioning of its brand and not start a separate line
of extension or maintain a status quo. The various reasons supporting it are as follows:
a. The brand is being positioned as a cosmetic product which helps to fight bad breath
but as per Exhibit 3, only the consumers are able to find the product to perform above
average in that attribute whereas other users does not find the advertisements or
promotions that impactful in its positioning and even rated it below average in other
attributes. Thus, the brand needs a lot of improvement in its advertising and
promotion campaign to help it build its brand image better.
b. Since 65 percent of the sale of all mouthwash happens in drug store, the company
needs to ensure that it targets the drug store more than the food store. Another reason
for the same being that the 42 percent of the sale of Scope is already from food store
and therefore it does not need to anything in case of food store.
c. The case also points out that even if the company launches a new product, it is not
sure if it will be a success since the new product that is proposed to be launched
launch will be no different from that of Plax and will be not accepted well with the
retailers and can lead to extra costs to put the stock with them and also might lead to
loss to its own brand Scope due to lesser exposure.
d. Product Development Department of Scope is of the view that Scope reduces Plaque
as well. However, they do not have any clinical evidence to extend this claim. The
company, therefore, should try to get its claim tested by the respective agency and
extend the same. This will be an added advantage to them. It although may not
generate additional sales but it can definitely prevent current users from switching
over to other brand.
e. We find that the advertising agency is not very much in favour of making any new
claims for Scope as it may create a confusion among the customers. Moreover, it will
be difficult for them to send out two different ideas in the same commercial. However
this should not be a hindrance as there are several products in the market that perhaps
states multiple claims and still does well. It basically all depends on effective
advertising. Moreover the market research carried out had already stated that the
current consumer will not switch over to other brand if any additional claim is made.

---Prepared and Submitted by

Group AC2