Pantene Pro - V Shampoo & Conditioner Environmental and SWOT Analysis

Environmental Analysis Introduction: Pantene Pro-V, one of the world's leading hair care products, delivers over $1.7 billion a year to its parent company, Procter & Gamble. Procter & Gamble experiences annual sales of over $40 billion and is one of the world's largest advertisers - ahead of General Motors and Phillip Morris. Pantene Pro-V is targeted at women 18-49, and is positioned as the brand that makes hair so healthy it shines. Situational Analysis: Pantene Pro-V has the best selling shampoo in the world. Marketed in 72 countries, it is one of Procter & Gamble's truly global products. Although "Pantene" has been on the market for over 50 years, it was acquired by Procter & Gamble as part of their 1985 purchase of Richardson-Vicks. At the time, the shampoo's market share was less than one-half percent and it was priced at more than $6 for a 7 oz. Bottle. Procter & Gamble sent the shampoo to its research labs in Taiwan, which came out with a lower cost product, Pantene Pro-V, named for its vitamin formula, in 1990. Procter & Gamble began promoting it worldwide, turning it into the world's best seller within a few years. Global sales are at an all-time high. However, in the U.S. Pantene Pro-V Shampoo sales have been generally flat. Conditioner sales have dropped .3%. Situational Analysis (continued): In June 2001, Pantene Pro-V was relaunched with new packaging and product enhancements. While much money was invested in the relaunch, it has not yielded the expected results, and there is concern that we may be losing loyal customers. Additionally, there is concern that a downturn in the economy could cause customers to switch to a less expensive shampoo and conditioner. Chief competitors in the Shampoo arena include: Clairol Herbal Essences, Pert Plus, Head & Shoulders, and Suave. Conditioner competitors include: Clairol Herbal Essences, Thermasilk, Infusium 23 and Suave. The U.S. market is saturated. While it may be possible to achieve some market growth domestically, substantial growth is more likely in the international arena. SWOT Analysis Strengths: Global positioning - Pantene Pro-V is regarded as "the only truly global hair product". It is distributed in 72 countries, with market share of close to 30% across most of Europe and Asia. Pantene has a patented formula of Panthenol, Pantethine and vitamin B5. The unique formula penetrates and strengthens the hair shaft and bonds the molecular structure of damaged hair. All products are PH balanced. Strengths (continued): We benefit from the strength of Procter & Gamble. The company has received many awards for its dedication to quality, value, and its employees. P&G markets approximately 300 brands to nearly five billion consumers in over 140 countries. For the fiscal year ended June 30, 2000, P&G had worldwide sales of $40 billion.

Pantene is more economical than other "salon quality" hair care products. Its formula can compete with highly regarded salon products like Paul Mitchell, Redken and Nexxus but does so at a fraction of the price. Solutions based approach -- Pantene offers a simplified selection process customized to the consumer's styling needs instead of the traditional hair type. Pantene offers a complete product line. There are five Pantene collections based on styling needs: Volume Care, Smoothing Care, Color Care, Curl Care and Basic Care. The Pantene brand name is strong. Pantene has been on the market since World War II. Its brand recognition is strong. It is #1 in the marketplace. www.pantene.com offers free custom beauty profiles online. Profiles create a collection of products that cater specifically to the individuals hair needs. Pantene Girl and Pro Voice contests attract much attention worldwide. They are a big draw for the teenager and young adult audiences. Weaknesses: We test our products on animals. This has been a constant source of attack from consumers and competitors. Weaknesses (continued): Pantene is more expensive than supermarket brands. Products like Suave who are known for their low prices continue to eat away at our market share. The recent product launch was done poorly. It did not meet expectations. There may be confusion in the marketplace with past customers. Opportunities: Spending power of American 12-17 year olds has increased substantially in recent years. Recent studies show that today's teenager spends an average of $80 per week. Another study showed that 67.4% of teenagers influence the shampoo purchasing decision in their home. Good potential for expansion of the current target. Hispanic-American market is growing faster than the general population. Few brands concentrate on the Spanish language market. This is an excellent opportunity for Pantene, because according to a recent study this target audience is 30% loyal to a specific brand of shampoo. Good niche market potential. Only 58 % of shampoo users also use a conditioner. An education on the benefits of using both products could yield a spike in conditioner sales. 50% of Americans suffer from dandruff at some point. Pantene's new True Confidence antidandruff shampoo could tap into this market. Israel's shampoo market is estimated at $100 million, although Pantene has yet to be introduced in this country. Excellent expansion opportunity. Threats: Shampoos and conditioner markets have low levels of loyalty as people are constantly enticed into trying new formulations and brands. Economic downturn in U.S. is effecting consumer spending level. There is concern that loyal users will switch to a cheaper brand (likely Suave) to save money. The U.S. economic downturn causes a ripple effect throughout the world. This could affect worldwide sales. Competitors Clairol Herbal Essence and Infusium 23 have joined with online distributors to make buying products available over the internet. Thermasilk has followed our lead in introducing a "Solutions" based approach. While our launch did not yield the anticipated results, we have started the education process on the purchase of "solutions". Thermasilk could reap the benefits of that groundwork. Suave has run concentrated marketing efforts designed to lure the "price conscious" consumer. Their product currently sells for as little as 99 in retail stores. Political unrest in Pakistan could affect sales in that region.

Target Audience: Pantene Pro-V is targeted at women 18-49, and is positioned as the brand that makes hair so healthy it shines. The pricing increases the socio economic class to a high level. Which is Middle Lower Class to Upper Upper Class. However the lowest volume (Sachet) is utilized by the general public.

Behavior Sequence Model: A customers buying behaviour is also influenced by social factors, such as the groups to which the customer belongs and social status. In a group, several individuals may interact to influence the purchase decision. The typical roles in such a group decision can be summarised as follows: Initiator A consumer considers Pantene Pro V when he/she needs a hairwash. Excess dandruff or hairwash can be one of the reasons. Also if the current shampoo is not fulfilling the needs. Influencer Clarity, costly commercials, famous faces ad ambassadors and mostly word of mouth for influencing the loyalty. Pantene has also tried rebranding. Decider Even though the shampoo is a high range product, people utilize it for the smoothness and shine of the hair. Sometimes the shampoo is well suited to a consumers hair than the other competitors. Brand loyalists are also the deciders. Market price. Buyer After the urge to purchase an high end product and also the financial ability to purchase the buyer are mostly women purchasing the product for sister, daughters, family. Etc. User Women with longer hair, consumers which need less tangles and need to take more care of the hair.

PRICE: The 200 ml bottle was available for Rs 98 and 100 ml for Rs 51.But very recently Pantene had reduced the prices and now the same 200 ml bottles are available for Rs 89 and 100 ML FOR Rs 41. P&G has basically adopted Geographical pricing strategy for Pantene.They have set different prices for Pantene in different countries.This is a very good strategic method as it captures the local conditions as well as purchasing power of the local population. When Pantene launched Lively Clean,it adopted Promotional Pricing for it and launched it at an introductory price of R78 for 200 ml bottle It has also introduced Bundle Pricing where it has clubbed two or more products and sold them at a reduced price.But this strategy has not been very successful as it eroded the premium image of the Shampoo and gave the impression of desperation of the company. Around 2 years back in 2006 P&G reduced the rates of Pantene by 16%. By this way what P&G did was cutting its bottle's premium over sachets. At the same time P&G is reducing the price gaps between its own brands. While Pantene and Head & Shoulders were sold at nearly similar price points, bringing down Pantene prices placed it between Rejoice (Rs 39 for 100 ml) and Head & Shoulders (Rs 64 for 100 ml) and thereby segment P&G's shampoo brands at different price points. This strategy is known as Product Line Pricing. Very recently Pantene has changed its pricing approach and experimented with Value Pricing Strategy. In this Procter & Gamble made dramatic and long-term changes in its pricing and promotion strategy during which it boosted advertising while simultaneously curbing its distribution channel deals (instore displays, trade deals), and significantly reducing its coupon promotions. It is interesting to note that P&G's value pricing strategy regarding Pantene is quite a misnomer. During this period many stores were switching to EDLP (every day low pricing) policies, which meant that consumers would save on their overall purchase without having to deal shop. In contrast, P&G strategy essentially was a disguised price increase; coupons were cut by 50%, which contributed to an increase in the customer's price paid by 20%. It is possible that P&G lowered their wholesale price, but the retailer only enjoyed higher margins and did not pass the savings on to the customer. Another possibility is that retailers lowered retail prices consistently, following P&G's decrease in wholesale price, but once promotional trade deals are factored in those everyday lower wholesale prices did not result in a lower total price paid. For example, if P&G's old price was Rs20, but gave deals of Rs15, at which price 90% of purchases were made, the wholesale price equaled Rs15.7 (.90*15 + .10*20). If P&G set a "Value Price" point of Rs18, but 100% of purchases we were made at that price, the retailer enjoyed no cost savings-only a cost increase. If P&G had truly offered price cuts their results may have been much different.

Before analyzing the prices first lets have a look at the prices of players in the market:

Product/size Pantene Sunsilk Fiamma di wills Dabur Vatika Chik

100 ml Rs 47 N.A Rs.50 Rs. 46 Rs 46

125 ml N.A Rs.50 N.A N.A N.A

200 ml Rs.89 N.A Rs 112 Rs.100 Rs 86

250 ml N.A Rs 98 N.A N.A

400 ml Rs.155 Rs 150 Rs158 Rs.142 Rs 144

As we can see that the ,main competitor of Pantene in terms of prices are Sunsilk,Fiamma Di Wils,Chik ,Dabur Vatika etc. The competitors who sell for a cheaper price include Vatika for 100 ml,Chik for all 100 ml,200 ml and 400 ml,Sunsilk for 400 ml. We can see that though P&G has adopted value pricing strategy for Pantene,its prices are still a notch higher then that of its competitors. Its main competition is from Sunsilk which belongs to same premium segment and we can observe that Sunsilk is placed at better prices as compared to Pantene. We can see that 100 ml of Pantene is available in Rs 47 whereas at almost same price we get 25 ml more of sunsilk(125 ml for Rs. 50) In the 400 ml category,Pantene is the second most expensive shampoo after Fiamm Di Wills wich is launched only 6-7 months back. Comparison of various shampoos on the basis of product attributes

Product attributes

Volume Boost yes

Conditionin g

Smoothin g care

Curl care

Anti Hair Fall

Color care

Basic Care

Pantene

yes

yes

yes

Recentl

yes

yes

y launche d Sunsilk Fiamma Di Wills Dabur Vatika Chik Shampoo yes yes yes no yes yes yes yes no yes yes yes no no no no yes no no yes no no no no yes yes yes yes

COMPETITIVE ADVANTAGE

Under the marketing concept, companies gain competitive advantage by designing offers that satisfy target-consumer needs better than competitors offers. They might deliver more customer value by offering consumers lower prices than competitors for similar products and services, or by providing more benefits that justify higher prices. Marketing strategies must consider the strategies of competitors as well as the needs of target consumers. Some of the main points that constitute the competitive advantage of P&G in general and Pantene in specific are: P&G is one of the largest FMCG companies in the world. Its main competition is with Unilever which has almost equal presence in the world. Procter and Gambles sales as of November 21st, 2003 reached $44,776 million. Below are some of the companys key statistics for the year 2007

. Source:P&G annual report,2007

Pantene is known worldwide. It was the best selling hair care line in 1995. Pantene is known to create healthy, shiny hair. It has Panthenol or Pro-Vitamin B5 which has the qualities to make hair shiny and strong. It has a very strong distribution network. Wal Mart. K-mart,Spencers,Reliance Fresh,More etc are among its retailers.Apart from these it hasnt neglected the small stores or Mom and Pop stores. They are equally important component of its supply chain and distribution network. It is cheaper than other elite brands(Estee Lauder,Loreal,Revlon,Salons) but always counted among the good brands in the market.