After reading, answer the following. 1) Evaluate the present strategy for Guard and Sung's and King's proposed strategies. 2) How should the promotion money be allocated? 3) Should investment-spending market tests be run first? Why? explain.

PS 32. Lever, Ltd. 104** Sung Wu is product manager for Guard Deodorant Soap. He was just transferred to Lever, Ltd., a Canadian subsid- iary of Lever Group, Inc., from world headquarters in New York. Sung is anxious to make a good impression be cause he is hoping to transfer to Lever's London office. He is working on developing and securing management approval of next year's marketing plan for Guard. His first job is submitting a draft marketing plan to Sierra King, his recently appointed group product manager, who is re- sponsible for several such plans from product managers like Sung Sung's marketing plan is the single most important document he will produce on this assignment. This an- nual marketing plan does three main things: 1. It reviews the brand's performance in the past year, as- sesses the competitive situation, and highlights prob- lems and opportunities for the brand. 2. It spells out marketing strategies and the plan for the coming year. 3. Finally, and most importantly, the marketing plan sets out the brand's sales objectives and advertising/pro- motion budget requirements. In preparing this marketing plan, Sung gathered the information in Table 1. Sung was somewhat surprised at the significant re- gional differences in the bar soap market: 1. The underdevelopment of the deodorant bar seg- ment in Quebec, with a corresponding overdevelop ment of the beauty bar segment. But some past research suggested that this is due to cultural factors--English-speaking people have been more interested than others in cleaning, deodorizing, and disinfecting. A similar pattern is seen in most European countries, where the adoption of deodor- ant soaps has been slower than in North America. For similar reasons, the perfumed soap share is highest in French-speaking Quebec. 2. The overdevelopment of synthetic bars (Zest, Dial) in the Prairies (Manitoba/Saskatchewan and Alberta). These bars, primarily in the deodorant segment, lather better in the hard water of the Prairies. Nonsynthetic bars lather very poorly in hard-water areas and leave a soap film. 3. The overdevelopment of the "all-other" segment in Quebec. This segment, consisting of smaller brands, fares better in Quebec, where 43 percent of the grocery trade is done by independent stores. Conversely, large chain grocery stores dominate in Ontario and the Prairies. Sung's brand, Guard, is a highly perfumed deodorant bar. His business is relatively weak in the key Ontario market. To confirm this share data, Sung calculated con- sumption of Guard per thousand people in each region (see Table 2). *Adapted from a case prepared by Daniel Aronchick, who at the time of its preparation was marketing manager at Thomas J. Lipton, Limited Table 1 Past 12-Month Share of Bar Soap Market (percent) 24 PM Dial 161 Maritimes i Quebec Ontario Manitoba/ katchewan Alberta British Columbia) Deodorant segment ). A HASS 4. Tolag Mhes Zestreza 2-3% 14.2% 24.5% 31.2%. 30.4%25 25.5% 10.4 5.30 12.8 to 1.2 917.23 143 Lifebuoy 1.2 6.4 5.8 Guard 5:60 Beauty bar segment El Camay 6.2 51 Lux 6.9 4.2 3.1 4.2 2.1 12.3 7.0 4.1 4.0 11.2 5.0 5.0 Dove 8.0 6.6 6.3 6.2 4.2 sto y 03 ana 11.2 6.5 12-4 5.3 52 9.0 Sell 6.1 10.3.2 ho Bet 8.21 Lower-priced baisan Ivory Sunlight All others (including stores own brands) 4.1 80 26.9 30.8 18.6 17.2 16.0 22.6 Total bar soap market 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Table 2 Standard Cases of 3-Ounce Bars Consumed per 1,000 people in 12 Months Manitoba/ Saskatchewan Maritimes Quebec Ontario Alberta British Columbia Guard 10.9 4.1 1.9 6.2 8.1 4.1 Sales index 66 100 175 31 131 131 1 These differences are especially interesting since per expects this will increase business in the key Ontario market, capita sales of all bar soap products are roughly equal in which has over a third of Canada's population, because it is a all provinces. big increase and will help Guard "outshout" the many other A consumer attitude and usage research study was competitors who are promoting heavily. conducted approximately a year ago. This study revealed Sung presented this idea to King, his newly appointed that consumer "top-of-mind" awareness of the Guard group product manager. King strongly disagrees. She has brand differed greatly across Canada. This was true de- also been reviewing Guard's business and feels that promo- spite the even-by population-expenditure of advertis- tion funds have historically been misallocated. It is her ing funds in past years. Also, trial of Guard was low in the strong belief that, to use her words, "A brand should spend Maritimes, Ontario, and British Columbia (see Table 3). where its business is." King believes that the first priority in The attitude portion of the research revealed that con- allocating funds regionally is to support the areas of strength. sumers who had heard of Guard were aware that its deodor- She suggested to Sung that there may be more business to ant protection came mainly from a high fragrance level. be had in the brand's strong areas, Quebec and the Prairies, This was the main selling point in the copy, and it was well than in chasing sales in Ontario. The needs and attitudes communicated by Guard's advertising. The other important toward Guard, as well as competitive pressures, may vary a lot finding was that consumers who had tried Guard were satis- among the provinces. Therefore, King suggested that spend- fied with the product. About 70 percent of those trying ing for Guard in the coming year be proportional to the Guard had repurchased the product at least twice. brand's sales by region rather than to regional population. Sung has also discovered that bar soap competition is es- Sung is convinced this is wrong, particularly in light of the pecially intense in Ontario. It is Canada's largest market, and Ontario situation. He asked King how the Ontario market many competitors want a share of it. The chain stores are should be handled. She said that the conservative way to also quite aggressive in promotion and pricing-offering build business in Ontario is to invest incremental promotion specials, in-store coupons, and so on. They want to move funds. However, before these incremental funds are in- goods. And because of this, two key Ontario chains have put vested, a test of this Ontario investment proposition should Guard on their pending delisting sheets. These chains, be conducted. King recommended that some of the Ontario which control about half the grocery volume in Ontario, are money should be used to conduct an investment-spending dissatisfied with how slowly Guard is moving off the shelves. market test in a small area or town in Ontario for 12 months. Now Sung feels he is ready to set a key part of the This will enable Sung to see if the incremental spending re- brand's marketing plan for next year: how to allocate the sults in higher sales and profits-profits large enough to jus- advertising/sales promotion budget by region. tify higher spending. In other words, an investment payout Guard's present advertising/sales promotion budget is should be assured before spending any extra money in 20 percent of sales. With forecast sales of $4 million, this Ontario. Similarly, King would do the same kind of test in would amount to an $800,000 expenditure. Traditionally Quebec-to see if more money should go there. such funds have been allocated in proportion to popula- After several e-mails back and forth, Sung feels this ap- tion (see Table 4). proach would be a waste of time and unduly cautious, Sung feels he should spend more heavily in Ontario given the importance of the Ontario market and the likely where the grocery chain delisting problem exists. Last year, delistings in two key chains. 36 percent of Guard's budget was allocated to Ontario, Evaluate the present strategy for Guard and Sung's and which accounted for only 12 percent of Guard's sales. Sung King's proposed strategies. How should the promotion money be wants to increase Ontario spending to 48 percent of the total allocated? Should investment-spending market tests be run first? budget by taking funds evenly from all other areas. Sung Why? Explain. 13 Question to Answe