Arctic Power Essay Example For Students

Arctic Power Essay The Canadian laundry detergent market is mature, very competitive and dominatedby three major consumer packaged goods companies, one of which isColgate-Palmolive Canada (CPC). Arctic Power is CPCs top-of-the-line offeringin its laundry detergent line. Arctic Power is specially formulated for washingin cold water. The detergent has risen in market share from 4% in 1981 to 6.5%in 1986, and the Senior Product Manager has established a goal of reaching 12%market share by 1996. Problem Definition Linda Barton and Gary Parsons face twoproblems. First, they must determine whether to continue developing the brand intheir already strong regional markets of Quebec, the Maritimes and BritishColombia, or go national with marketing efforts. Second, they must decidewhether to use a single positioning strategy (as was successfully implemented inQuebec) or continue to use a dual positioning strategy. The dual strategyconsisted of highlighting Arctic Power as a superior detergent in areas withstrong sales, and focusing on encouraging Canadians to use cold water washing inareas with relatively weak sales. Analysis When it comes to laundry detergents,Canadians primarily think of one name, Tide. Procter and Gambles Tide detergenthas captured over one-third of the market and is twenty percentage points aheadof its closest competitor in market share. While Tide and Arctic Power areequivalent brands in terms of cleaning power, Tide outsold Arctic Power by a 5to 1 ratio in 1986. The market share for Tide has remained level (atapproximately 34%) during the same time that Arctic Power has enjoyed a marketshare increase from 4% to 6.5%. Due to Tides dominance in the detergent market,it will play an important role in any major change in Arctic Powers strategy. Costs and profit structures for leading detergent brands were similar. Abreak-even analysis for the market (see Appendix A) indicates that a detergentmust capture approximately 8% 8.5% of the market in order to break evennationally. Detergents with small portions of market share have experienceddiminishing sales (see Appendix B). Of the twelve offerings (or group ofofferings) that held 10% or less of the market share, only two experienced salesgrowth from 1983 to 1986 Wisk and Arctic Power. To keep its market share, Wiskspent disproportionately high amounts of money on advertising (see Appendix B). In such a competitive market with a high break-even threshold and increasingprices for materials, it is reasonable to believe that the offerings with lowermarket shares will continue to decline. This decline will provide opportunityfor Arctic Power (although CPCs economy detergent offering, called ABC, hasconsumed much of the market share that was lost by the smaller competitors). Arctic Power holds a strong share of the market in three regions: Quebec(17.5%), Maritimes (6.3%) and British Columbia (5.5%). These three regionscomprise 44% of the total volume of detergent sales for the country. Otherregional market sizes are displayed in Appendix C. For Arctic Power to capture12% of market share, it must look beyond these three regions (see Appendix C). Thirty-nine percent of the Canadian market is held in Ontario. Arctic Powerspenetration into this large region is a meager 0.8%. For Arctic Power to reachits goal of 12% market share, Ontario must be considered a major part of thestrategy. Ontario has the highest return on media expenditure of any region (seeAppendix D). Ontario is also changing the way that it washes clothes. Theproportion of households in Ontario that use cold water washing has increasedfrom 14% in 1981 to 17% in 1986. Hence, a marketing strategy that will providefurther penetration into Ontario is quite desirable. Arctic Powers positioningstrategy has been twofold. First, Arctic Power has been positioned in easternCanada as a superior laundry detergent, especially formulated for cold waterwashing. In the western market, Arctic Power has attempted to develop the coldwater market. In either case, Arctic Powers position is connected to coldwater. The good news is that regular cold water washing has increased national lyfrom 20% in 1981 to 29% in 1986. Another 25% of consumers could be described asoccasional users of cold water for washing. Hence, 54% of Canadians wash in coldwater. When people were asked about the benefits of washing in cold water, theresults were astounding. The eight most common answers could be easily dividedinto two categories those that were money saving in nature (saves energy,cheaper, saves hot water, saves electricity) and those that related to thequality of