Target Market's Needs and Wants - Pantene Shampoo in Australia - Case Study Example

Report on the Effectiveness of the Marketing Mix of Pantene Shampoo in Australia as a response to the target market's needs and wants Thesis Statement Companies are in an endless tussle to gain market share in their target markets and remain profitable (Kotler and Armstrong, 1993). Each brand and each product requires to be reviewed from time to time to ensure it continues to satisfy the consumer and hence hold its share. There are many forces acting on the Pantene brand in the Australian market and not least among these is competition from new entrant products, the ever increasing number of low-priced variants and the pressure from retail shops to reduce space availability to display the products. The other problem for Pantene shampoo is from within its own brand, as the product would be buried among hundreds of Pantene brand offerings thus complicating the buying decision by the consumer who is often spoiled for choice. Buying becomes an exercise in minute choice decisions from one product to another, confusing the consumer. Proctor and Gamble have since 1999 been responding to these customer concerns partly by repositioning the three billion per year Pantene brand to make it more accessible to the consumer, partly by specifying separate hair types such as medium hair, fine hair, curly hair and colour-treated hair and applying colour codes to identify these varieties for ease of customer recognition. Proctor and Gamble have been improving the chemical content of the product through innovative research and development into polymers and other chemicals. At the price level competition has always forced little room for price increases, and the Pantene brand has not changed drastically in spite of the costs of reorganizing and improving the brand. In order to cater to the diverse tastes of well informed consumers in various target market segments the marketing mix for that product must always evolve and improve to satisfy the customers needs and wants (Kotler and Armstrong, 1993; Farese and Woloszyk, 1991). Pantene shampoos in Australia have performed relatively well over the years partly because of the brand name and identity, as a trusted brand product from Proctor and Gamble. This report aims to put Pantene shampoo into the context of the various aspects that constitute Pantene's marketing mix in Australia by discussing the Pantene shampoo product, the pricing of Pantene shampoo, the positioning of Pantene in the target market segments and the place in which Pantene shampoo is being offered to the customer. Generic Strategy and Market Share Depending on the resources available to a company, its objectives and its markets the company's strategic document must clearly specify for each product line whether it will follow differentiation or cost leadership as a generic strategy. A choice of Cost Leadership as the generic strategy implies that the firm has decided to maximize profit by selling high volumes of the product at low prices, thus appealing to the very large penny pinching segment of bargain hunting consumers who care less about the product's market position (Porter, 1980). On the other hand, choosing differentiation as the generic strategy implies that the firm has selected a special segment of discerning consumers whose needs were not being specifically met to their satisfaction, and providing specially manufactured products for that niche market segment at very high cost of production but assured that the target consumer is willing to pay the premium price if the product is of sufficient quality and suitably positioned (Porter, 1980; Kotler and Armstrong, 1993). In that case the firm commits to do all that is necessary to research, commission and market at high cost a product so unique it caters for the needs of this small niche segment of consumers to whom money is not an object but whose tastes are very particular and expect the very best product offering, based on a promise of value that exactly suits their needs (Boone and Kurtz, 1992). In terms of market share by volume Proctor and Gamble control 41% of the shampoo market mostly catering to the segment of wealthy consumers, in a strategy clearly aimed at increased margins of profitability rather than expanding volumes to increase market share (Kotler and Armstrong, 1993). Pantene brand shampoos cater to the specific needs of women according to the type and styles of their hair. The percentage of women who colour their hair is estimated to be rising above 50% and special shampoos are available from among the Pantene brand to cater for the nuances in hair colour, hair volume and healthy hair grooming. With the great advances in technology and the savvy consumer demanding better products the competition is now based on whether the promise meets the delivery. According to Semenik and Bamossy (1995) those products that deliver what they promise are always gaining popularity and remaining profitable. In Australia as well as in the greater part of the developed world, and indeed in some emerging markets there is a definite upward growth in the availability of products specially manufactured for different hair types. Information Resources Inc. (1999) reported that Pantene ProV shampoo made sales of $237.3US million year ending July 1999 as compared to $139.4US million for Clairol Herbal Essences shampoo and Unilever's Thermasilk shampoo at $64.4US million over the same reporting period; this after Clairol had acquired Aussie Shampoo and Conditioner brand the year before. Pantene shampoos continue to face growing competition from these and other brands every year raising the need for continued innovation, repositioning and monitoring price movements and consumer demands within the target market segments. Market Segmentation To maintain market share and gain competitive advantage a firm must seek out the section of society with shared needs for a particular product, and then advertise the product to that segment of customers with a value promise to fulfill their specific needs. Segmentation of markets is predicated upon the needs of the customers in that segment. In hair care, a specific shampoo may be required for people with curly hair, and that becomes a market segment to which an advertisement for a unique shampoo can be directed promising the best results from use of that special curly-hair shampoo. Similarly different shampoos can be manufactured specifically for blondes, or for people with a dry scalp, or for people living in very humid coastal areas, or for those with a dandruff problem and for a myriad other segmentation variables based upon which the market is divided. Effectively directing the efforts of advertising and promotion towards a target segment helps to send a clear and unambiguous message to the customer that the product is specifically made with them in mind, leading to the customers in that segment making the critical decision of buying that new product. Then the company immediately tackles the issue of distributing the product to the target segment. Segmenting the market along the lines of affluence means that an expensively manufactured shampoo can be aimed at the very wealthy women who will pay for that product because it meets their special requirements and money is not an issue in making the buying decision. An alternative brand can be made for the ordinary needs of those who just want some shampoo with which to wash their hair, and the simple ingredients and ease of manufacture also translates into a low affordable price that the customer is willing to pay. Many firms conduct studies to understand the needs and attitudes of consumers and how they perceive a particular product (Brantlinger, 2005). The questions asked are put on a Lickert scale of responses from scale 1 to 5 measuring the consumer's opinion about survey statements posited on the questionnaire. Some questions may be in the form of an essay or statement by the consumer to express openly their opinion of product quality or their degree of satisfaction with delivery and distribution logistics of the product. Yet others may require the consumer to pick out one statement from a choice of several; or ask them to rank a series of statements according to their opinion of which one best describes the product (Hall, 1972; Brantlinger, 2005) The analysis of these responses requires much knowledge of statistical analysis including but not limited to rank correlation tests, analysis of variance, regression analysis t-tests and goodness of tests. After all the data have been analyzed the interpretation of the data s used as information for decision making. Decisions about positioning, pricing, distribution, location are then made based on what the consumers need and according to the perceptions expressed by the market. Product Pantene shampoo is a tangible consumer product, and as such as three distinguishable components applicable to all tangible products" the core product, the actual product and the augmented component. To give the specific example of Pantene Pro-V shampoo, the core product is the benefit of enjoying the value promise to cater for your specific hair colour whether blonde, brunette, red or artificially coloured any variety of hair dye on the market; or whether the texture of your hair is dry, oily or normal; and whether the style of your hair is straight, curly, coir, or afro; as well as the shampoo's ability to effectively remove dandruff and give your hair a healthy look. This core message is what is contained in the advertisements and marketing campaigns, and it is what concerns the public relations teams who work tirelessly to maintain good relations with all their stakeholders and an unsullied public image of excellence. The actual product comprises the perception created by using a Pantene brand shampoo, a recognizable brand from a trusted company, Proctor and Gamble, and its proven ability to consistently deliver on its promises, the recognizable packaging of Pantene Pro-V with all the design elements and style that make the packages stand out; and the component chemicals that were used to create the shampoo. This is the work of the research and development division as well as the manufacturing division. The ingredients of Pantene Pro-V read like a glossary page of an organic chemistry textbook, and these many chemical components go towards making the shampoo a superior product compared to competitors products. To illustrate the differentiation advantage of Pantene Pro-V shampoo over its competitors the components of the actual product speak for themselves. An ordinary shampoo from a competitor may contain three herbal extracts and three other chemicals mixed together as the actual chemical composition. Not so with Pantene Pro-V, the ingredients of which include "aqua, ammonium laureth sulfate, ammonium lauryl sulfate, sodium chloride, glycol distearate, ammonium xylenesulfonate, parfum, dimethicone, citric acid, sodium citrate, cocamideMEA, sodium benzoate, guar hydroxypropyltrimonium, chloride, disodium EDTA, hydrogenated polydecone, DMDM hydrantoin, hexyl cinnamal, tetrasodium EDTA panthenol, panthenyl ethyl ether, benzyl salicyclate, butylphenyl methylpropanol, trimethylopropane, tricaprylate/tricaprate, linalool, cetyl alcohol, limonene, citronello, geranol, hydroxyisohexyl-3-cyclohexene, carboxaldehyde, parrafilium liquidum, methylchloroisothiazolinone, methylisothiozolinone, tocopherol." All this listed on the container as a signal to the market that a lot went into the manufacture of this special product and all the chemicals were carefully mixed to take care of the customer's hair and leave it looking attractive, healthy and dandruff free. The augmented component of Pantene shampoo is the additional quality assurance and brand support associated with Pantene products. They include an e-mail address and actual telephone numbers for customer service, whereas some competitor products hardly identify who the product belongs to, let alone contact details for after sales service. To make the shampoo attractive to the target customer Pantene shampoo is advertised in terms of its attributes such as packaging, smell, colour, health benefits an brand recognition to distinguish Pantene shampoos from competitor products such as L' Oreal, Clairol, Unilever and others. Price The main determinant of setting a price for any product is to get the maximum profit. The table below shows the ideal price versus revenue parabolic curve if there was a direct and simple relationship between the price and the volume of product sold. Revenue being the amount of money that can be raised from selling the product at a particular price. The best price in this ideal relationship would be the one at which most of the customers are willing to pay for the product (Boone and Kurtz, 1992). (source http://www.ericsink.com/bos/Product_Pricing.html) The positioning of the product must always be determined before prices are established because customers make a buying decision based on perception of the product position rather than just based on the price tag. It is well known that customers sometimes decide to buy a higher priced item identical to a lower priced one because of the difference of positioning between the products. The firm's choice of generic strategy between cost leadership or differentiation affects the firm's positioning decision and hence the pricing structure for its products (Porter, 1980). Proctor and Gamble adopted a differentiation strategy as opposed to a cost leadership strategy for the Pantene brand, and as part of the pricing objective determined that the price at which Australian consumers are willing to pay for Pantene shampoo is at a premium for a 200ml bottle is AUS$4.00. They used a price-scheming approach rather than a market-penetrating pricing strategy, with the advantage that they were putting emphasis on profit maximization in a niche market of affluent clientele prepared to pay high premium in exchange for a quality promise of value, while also facing the competitors through non-price aspects such as location and quality perception within the same niche segments. The pricing model for Pantene shampoos emphasizes the profitability and prestige objectives to suit an affluent niche market segment, as opposed to the volume objectives pursued by low cost brands or the competition meeting objectives pursued by firms using cost leadership strategies (Kotler and Armstrong, 1993). Positioning The market share enjoyed by Pantene shampoo and other Pantene brand offerings such as conditioners shows that Pantene is well positioned within its niche segment to evoke the best response from consumers of hair care products especially Pantene shampoo. The positioning of Pantene shampoos within the Australian target markets is a deliberate and well orchestrated marketing strategy by Proctor and Gamble. Very clear signals to the market are sent by first identifying Pantene as a world-class brand within a leading company Proctor and Gamble. Next they encode their marketing spiel, using symbols to represent the encoded message. An approach to the mass media, both print and electronic, is made using all available media channels that reach the target audience for the promotional messages. Wherefrom the target audience decodes the advertisement message from Proctor and Gamble, captivated by the promise of value contained in the advertisement, thus resulting in a buying decision by the customer as initial feedback that their promotional effort worked. Like any other major company, to promote Pantene shampoo, Proctor and Gamble employ all four basic promotion tools, placing persuasive advertisements in state of the art magazines and other print media, and on television during prime time viewing, so that existing and potential consumers can purchase Pantene shampoo. Primary demand for Pantene shampoo was built up during the early pioneer years of the Pantene brand being introduced in the market, followed by competitive advertising aimed at promoting Pantene shampoo specifically in Australia to the affluent target segment (Wills et al., 1991). They also used sales promotion in the introductory phases of the new products, directed not only at consumers but also at trade and business clients. Consumers are offered premium incentive rewards for loyalty, price packs of bundled products and samples to test the new products. Wholesale and retail clients are approached with preference prices and good terms of transaction per consignment. Pantene shampoos and related hair care products are also featured at trade fairs. Proctor and Gamble employ a strong public relations drive with their customers and distributors and the public at large in order to maintain their image of quality and provable value. They communicate directly with influential consumer organizations, powerful media channels and trade partners around the world to develop and maintain good standing for the corporate and brand identity (Yamin and Altunisik, 2003; Golder, 2000). They also use personal selling, a process that has also brought huge profits to such competitors as Revlon. The Pantene brand managers and their assistants provide face to face interaction with the potential customer, and sometimes this leads to an immediate buying decision by the customer. The advantage being that at close personal contact with the consumer, observing the behaviour and personality traits of the customer, the salesperson can model her message to fit the needs and expectations of the customer. A combination approach is employed by tying in various elements of the promotional mix (Churchill and Peter, 1995; Johnson and Aruthenes, 1995). Pantene shampoos are mostly sold using a pull strategy in the promotional mix, by establishing demand through advertisements and promotional activities. Place Many interconnected retailers and distributors are employed by Proctor and Gamble in the channel of distribution of Pantene shampoos in Australia to ensure that the consumers who constitute the target market can find the product easily and conveniently (possession utility), and timeously (time utility) in a suitable location of their choice(place utility), thus satisfying the needs of the customer (Boone and Kurtz, 1992). Proctor and Gamble and their distributors and retail partners employ a vertical marketing channel system whereby they ensure congruence of operations, timing of deliveries, and warehousing in order to avoid conflicts (Kacker,1976). References Boone, Louise E., and Kurtz, David L. (1992). Contemporary Marketing, 7th ed. New York, NY: Dryen/Harcourt Brace Brantlinger, E. et al. (2005). 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