MARKETING MANAGEMENT

PROCTER & GAMBLE, INC.

SCOPE
An Analysis

PGP-1
Section 6
AE1

Mayukh Bhattacharya-15S626
Ridhima Modi- 15S635
Srinath Srinivasan-15S647
Tejas B N-15S649
Parinita Vijay Kumar- 15805

OVERVIEW
SCOPE, a traditional mouthwash product of Procter & Gamble had a major chunk in the
Canadian Market in 1990, with the product concentrating on its USPs of good breadth and
taste. But with the changing times, a lot of new products were introduced by other
competitors in the mouthwash industry. Plax, a new product, introduced in 1987 was
positioned in a different emerging market segment of health related benefits from the
traditional mouth washing products which concentrated on good breadth alone. In a small
span of 3 years, they captured a market share of 10% and was able to cross the profit margin
of 65%. This was a premier product which captured the market segment and was posing a
direct threat to P&Gs SCOPE by restricting its growth. Gwen Hearst, the Brand Manager of
Scope had to make a decision on her next course of action for the coming 3 years, which
should benefit the company in the long run.

ANALYSIS
Consumer Behaviour Analysis:
The consumers were not satisfied with Scope as is evidenced in Exhibit 3 of the given case.
Scope performed average or below average in all of the attributes related to consumer
perspective in the market research. For the consumers base to increase with respect to
competitors products and consumers response to them, P&G would need to recreate the
internal market stimuli in terms of altering the products and services. The distributor channels
would have to increase, especially in the drug stores which account for 65% of the total retail
sales. But for Scope, only 54.5% is supplied by drug stores. P&G needs to improve its
distribution network by increasing its supply to the drug stores.
Scope spends the most amongst its competitors in advertisement and communication, but its
impact in GRS is not satisfactory. To launch a new product line, P&G would have to incur
high costs in advertisement initially, but, this increase in cost is justified in its mission
statement We will continuously stay ahead of competition while aggressively defending our
established profitable businesses against major competitive challenges despite short-term
profit consequences.
By launching the new product P&G would motivate its consumers by the Herzbergs theory
which implies that the absence of dissatisfactory stimulus (in this case, bad taste) will not be
enough. There has to be added satisfactory stimulus. By motivating the customer in more
ways than the competitors and creating a lasting memory using strong communication
channels to affect the accessible memory in the consumers mind.

FINANCIAL ANALYSIS:
Assumptions:
1
2
3
4
5
6
7
8
9

It has been assumed that the new product, which is being produced in USA has been
approved by the Canadian Dental Association.
The figures being shown are as of 1992 as it helps us in taking into account the 6.5%
market share of the new product line.
Cost of New Product is priced as 60$.
Market Growth rate of the Mouthwash market and Scope both are taken as 5% for
1991and 1992.
Scopes new product is assumed to capture a 6% market share of Scopes existing
product market.
Listing fees of 50000$ is not included as it is dependent on failure of the product at
launch.
The total delivery price includes an extra 1$ shipping cost and 0.30$ Packaging cost
due to import of Scope Pre brushing rinse from US.
Costs are calculated for 2 variations of ingredient cost at +50% and -50% of the 2.55$
increase in the said cost.
Since the new product is being launched in 1991 and the financials are being shown
as on 1992, the 20,000$ test cost for product line extension has been omitted from
calculations as it has been accounted for in the previous year.
Particulars
Net Sales
Ingredients
Packaging
Manufacturing
Delivery
Miscellaneous
COGS
Profit Before Tax
Gross Margin
Tax
Profit After Tax
Net Margin

Ingredients +50%
Ingredients -50%
$ / Unit
Total Sales
$ / Unit
Total Sales
60
5839200
60
5839200
11.9
1158108
9.4
914808
5.4
525528
5.4
525528
7
681240
7
681240
4.12
400958.4
4.12
400958.4
2.55
248166
2.55
248166
30.97
3014000.4
28.47
2770700.4
29.03
2825199.6
31.53
3068499.6
48.38333333
52.55
1130079.84
1227399.8
1695119.76
1841099.8
29.03
31.53

Scope

Particulars
Market Share
Before Pre
Brushing
Rinse
1.1 Launch
After Pre
Brushing
Rinse
1.2 Launch

Mouthwash

Pre Brushing Rinse

32.40%

Nil

30.46%

6.50%

Total

36.96%

Inference:
Going by the calculations made in the two tables shown above, it can be seen that launching a
new product line actually helps Scope in increasing its overall market share to approximately
37% by the year 1992. The new product is priced at $60, which is less than that of Plax.
After financial and consumer behaviour analysis, we recommend Line extension positioned
against Plax, along with intense communication channels to increase P&Gs market share in
the Canadian market and ensure its entry into the market segment of premier mouthwash
products.
The cannibalization of Scope is evident from Table 2. The market share of Scope Mouthwash
reduced from 32.40 % to 30.46% post launch of Pre Brushing Rinse