This is a Case Study. The 3 questions can be found on the second page at the end of the text.

32. Lever, Ltd. Sung Wu is product manager for Guard Deodorant Soap. Sung was somewhat surprised at the significant re He was just transferred to Lever, Lad., a Canadian subsid- gional differences in the bar soap market iary of Lever Group, Inc., from world headquarters in New York. Sung is anxious to make a good impression be 1. The underdevelopment of the deodorant bar seg- cause he is hoping to transfer to Lever's London office. ment in Quebec, with a corresponding overdevelop He is working on developing and securing management ment of the beauty bar segment. But some past approval of next year's marketing plan for Guard. His first research suggested that this is due to cultural job is submitting a draft marketing plan to Sierra King, his factors-English-speaking people have been more recently appointed group product manager, who is re- interested than others in cleaning, deodorizing, and sponsible for several such plans from product managers disinfecting. A similar pattern is seen in most like Sung. European countries, where the adoption of deodor Sung's marketing plan is the single most important ant soaps has been slower than in North America document he will produce on this assignment. This an For similar reasons, the perfumed soap share is nual marketing plan does three main things: highest in French-speaking Quebec. 2. The overdevelopment of synthetic bars (Zest, Dial) in the 1. It reviews the brand's performance in the past year, as Prairies (Manitoba/Saskatchewan and Alberta). These sesses the competitive situation, and highlights prob bars, primarily in the deodorant segment, lather better in lems and opportunities for the brand the hard water of the Prairies. Nonsynthetic bars lather 2. It spells out marketing strategies and the plan for the very poorly in hardwater areas and leave a soap film. coming year. 3. The overdevelopment of the all other segment in 3. Finally, and most importantly, the marketing plan sets Quebec. This segment, consisting of smaller brands, fares out the brand's sales objectives and advertising/pro- better in Quebec, where 43 percent of the grocery trade motion budget requirements. is done by independent stores. Conversely large chain grocery stores dominate in Ontario and the Prairies In preparing this marketing plan, Sung gathered the information in Table 1 Sung's brand, Guard, is a highly perfumed deodorant bar. His business is relatively weak in the key Ontario *Adapted from a case prepared by Daniel Aronchick, whom the market. To confirm this share data, Sung calculated con time of its preparation was marketing manager at Thomas J. Lipton,sumption of Guard per thousand people in each region (see Table 2). Limited Table 1 Past 12-Month Share of Bar Soap Market (percent) Mardin Quebec Ontario ManitobaSvikateke Alberta British Columbia Deodorant segment Dial 10.4 162 Lifebuoy Guard Beauty bar segment Carray 123 70 4.0 50 Lux 50 6.9 SO Dove 55 8.0 66 63 6.2 Lower priced bais 82 All others including stores own brands) 26.9 30.B 18.6 Total bar soap market 100 1000W NOW Table 2 Standard Cases of 3-Ounce Bars Consumed per 1000 people in 12 Months Manitobal Maritimes Quebec Ontario Alberta British Columbia Guard Sales index 175 131 100 131 These differences are especially interesting since per capita sales of all bar soap products are roughly equal in all provinces A consumer attitude and usage research study was conducted approximately a year ago. This study revealed that consumer "top of mind awareness of the Guard brand differed greatly across Canada. This was true de spite the even--by population-expenditure of advertis ing funds in past years. Also, trial of Guard was low in the Maritimes, Ontario, and British Columbia (see Table 3). The attitude portion of the research revealed that con sumers who had heard of Guard were aware that its deodor ant protection came mainly from a high fragrance level. This was the main selling point in the copy, and it was well communicated by Guard's advertising. The other important finding was that consumers who had tried Guard were satis fied with the product. About 70 percent of those trying Guard had repurchased the product at least twice. Sung has also discovered that bar soap competition is es pecially intense in Ontario. It is Canada's largest market, and many competitors want a share of it. The chain stores are also quite aggressive in promotion and pricing-offering specials, in-store coupons, and so on. They want to move goods. And because of this, two key Ontario chains have put Guard on their pending delisting sheets. These chains, which control about half the grocery volume in Ontario, are dissatisfied with how slowly Guard is moving off the shelves Now Sung feels he is ready to set a key part of the brand's marketing plan for next year: how to allocate the advertising/sales promotion budget by region. Guard's present advertising/sales promotion budget is 20 percent of sales. With forecast sales of $1 million, this would amount to an $800,000 expenditure. Traditionally such funds have been allocated in proportion to popula tion (see Table 1). Sung feels he should spend more heavily in Ontario where the grocery chain delisting problem exists. Last year, 36 percent of Guard's budget was allocated to Ontario, which accounted for only 12 percent of Guard's sales. Sung wants to increase Ontario spending to 18 percent of the total budget by taking funds evenly from all other areas. Sung expects this will increase business in the key Ontario market, which has over a third of Canada's population, because it is a big increase and will help Guard "outhout the many other competitors who are promoting heavily Sung presented this idea to King, his newly appointed group product manager. King strongly disagrees. She has also been reviewing Guard's business and feels that promo tion funds have historically been misallocated. It is her strong belief that, to use her words, "A brand should spend where its business is." King believes that the first priority in allocating funds regionally is to support the arcas of strength. She suggested to Sung that there may be more business to be had in the brand's strong areas, Quebec and the Prairies, than in chasing sales in Ontario. The needs and attitudes toward Guard, as well as competitive pressures, may vary a lot among the provinces. Therefore, King suggested that spend ing for Guard in the coming year be proportional to the brand's sales by region rather than to regional population. Sung is convinced this is wrong. particularly in light of the Ontario situation. He asked King how the Ontario market should be handled. She said that the conservative way to build business in Ontario is to invest incremental promotion funds. However, before these incremental funds are in vested, a test of this Ontario investment proposition should be conducted. King recommended that some of the Ontario money should be used to conduct an investmentspending market test in a small area or town in Ontario for 12 months. This will enable Sung to see if the incremental spending re sults in higher sales and profits-profits large enough to jus tify higher spending. In other words, an investment payout should be assured before spending any extra money in Ontario. Similarly, King would do the same kind of test in Quebec- to see if more money should go there. After several e-mails back and forth, Sung feels this ap proach would be a waste of time and unduly cautious, given the importance of the Ontario market and the likely delistings in two key chains Evaluate the present strategy for Guard and Sung) and King's proposed strategies. How should the promotion money to Auswe allocated? Should investmensspending market tests be run first? Why? Explain. 13 Question Table 3 Usage Results (in percent) Manitoba/ Maritime Quebec Ontario Saskatchewan Alberta British Columbia Respondents aware of Guard Respondents ever trying Guard 50% 32 Table 4 Allocation of Advertising/Sales Promotion Budget, by Population Manitoba/ British Maritimes Quebec Ontario Saskatchewan Alberta Columbia Canada 10% 27 30 8 8% 100% Percent of population Possible allocation of budget based on population (in 00s) Percent of Guard business at present $80 $216 $288 $64 $64 $88 1800 5 12 8% 100%