PAIRING CONSULTING
PAIRING
CONSULTING
Pantene Case Solution
Prepared for: Dr. Carlos Valdez, Chairman of the Board
Prepared by: Joshua Barber, John Brown, Elizabeth German, & Leanne Porter
August 22, 2014
Proposal number: 4804-00011
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TABLE OF CONTENTS
Problem Identification
3-4
Theoretical Marketing Strategy Concepts
5-6
Top Three Solutions
7-10
Solution #1
Solution #2
Solution #3
7-8
8-9
9-10
The Winning Solution
11-13
Financials
14-16
References/Appendix
17-21
Responsibilities:
Elizabeth German - Explanation of Case
Leanne Porter - Problem Identification
Joshua Barber - Theoretical Marketing Concept Identification
Joshua Barber - In-Class Activity
John Brown - Top Three Solutions and Winning Solution
Elizabeth German - Financials
Elizabeth German & Joshua Barber - References & Appendix
*Approved By All*
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PROBLEM IDENTIFICATION
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Pantene’s market share is in decline. In 2003, Pantene dropped 2.5 points while
the new competitor, Garnier, gained 5.1 percent within that year. Pantene is still the
market leader with 20 percent market share. The next biggest competitor, Sunsilk, has
about 10 percent. Pantene has set the high goal of responding to the decline with an
increase of 5% market share. Pantene is a respected brand with loyal customers, but will
have to make some changes to keep up with the marketing methods that are working for
the competition.
Pantene’s current image is that of high quality that leaves hair “soft and silky”
which are qualities both rated high on the level of importance to the consumer. The brand
personality is described as being confident, elegant, and professional. This correlates to
Pantene selling better to the consumers over the age of 21 and slightly not as well to
those younger. Another category that Pantene lacks in is the package attractiveness.
Garnier’s brand personality is described as being modern, trendsetting, young, and
attractive. Attractiveness is an area that Garnier stands out against the competition, which
may be part of the explanation to their recent growth and success. This led to their most
profitable age group, which is the 18-20 years old category.
This decline is alarming for Pantene because even though the brand equity is high, other
brands are doing a better job at convincing customers to switch to a new brand and try
something new. This phenomenon can be put into two categories of Omegas, habitual
shopping decisions, and Delta Moments, a disruption causing the consumer to rethink and
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change. For commodity goods such as shampoo, triggering these Delta Moments is the
most effective way to create lifetime customers and increase market share. Pairing
Consulting has spent time digging into the market research. This led Pairing Consulting
to the realization that Pantene has the lowest number of Delta Moments among its
competitors and the highest number of Omegas (Table 5). This means that Pantene does
an excellent job at keeping the customers they all ready have, but has room for
improvement when it comes to getting the attention of new consumers. This can be
attributed to the brand image, not the quality of the product. Most in store Delta Moments
happen when the consumer is checking prices and/or browsing through several packs.
This directs the problem toward price judgment, packaging, or promotions.
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THEORETICAL MARKETING CONCEPTS
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Marketing Research
This case study would not have been possible without the use of marketing research.
Market research encompasses many types of key measurements that can help to identify a
company’s problems. It shows the quantitative and qualitative ranges of many attributes
like brand equity. It is the running concept throughout this study and is the reason
Pantene became aware of a problem that they were facing. This problem was the loss of
market share. Researching the environment and competition led the company to realize
that they were loosing market share. Digging deeper also allowed Pairing Consulting to
determine another problem facing Pantene. As stated previously, they had lower Delta
Moments when compared to other company’s trigger moments. The company remained
strong in a plethora of areas including brand equity, perception, and emotive loyalty.
Marketing research, provided by Nielsen, also led Pairing Consulting to contribute
possible solutions to the company. The research showed that their lowest rating came in
the category of 18-20 year olds in the area of brand equity (Table 1). It also showed that
having the fewest amount of Delta Moments was something that needed attention.
Customer Acquisition and Retention
A major focus of this case study was on brand equity. Having a high brand equity
correlates positively with customer acquisition, retention, and development. Nielsen
determined that Pantene had a very high emotional affinity which helped in regards to
customer retention. The acquisition suffered a little because of the lack of trigger
moments. The emphasis should be placed on keeping a customer once attained as they are
worth more in the long run. Developing a long term relationship is key.
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Brand Strategy
Brand strategy is an ongoing process that should be updated regularly. Developing a
mission and a vision for each brand is an important step in the process. Having a clear,
concise, and SMART strategy allows for the development of a successful brand. It also
allows for the proper controls and evaluations of a particular brand. A company must be
able to see where they have came from and where they are headed. Marketing research
really helps a company to see a clear picture of their current situation.
Segmentation, Targeting, and Positioning
This marketing concept isn’t new, but it has become a lot easier over the years with the
amount of technology available. Segmenting a market into different categories can help a
company by making the best use of limited resources. No company has infinite resources
and has to know how to spend their money wisely. It can be segmented in ways such as
geographical locations, age, gender, and income level. Pantene has many strong
performance indicators, but they perform the worse in the 18-20 year old category. This
knowledge allows a company to turn to targeting and positioning. If they realize that this
is a beneficial segment that could help achieve their long term goals, they could decide to
target that segment. Positioning the brand is a coordinated effort that should take a lot of
time to develop. There are many aspects that crosses many departments in an
organization to decide how to position a certain brand. Aligning a company’s vision with
the positioning of their brands is something that Pantene excels at. A lot of their key
indicators are positive for the company and according to the marketing research suffers in
only a few areas.
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THE SOLUTIONS
Solutions #1
Change the product packaging. Pantene should consider colorful packaging and a
redesign of the bottle to present a more trendy color scheme. According to the perceptual
map of packaging, Pantene uses opaque packaging along with a flat top so that the user
can place the bottle upside down (Figure 12). If they redesigned the brand to move closer
to the “trend setter” line on the brand personality graph, they would be more associated
with three personality types (Young, Fashionable, and Modern), instead of confident and
elegant only. They should keep the flat top to not only provide ease of use, but also
because only one other company, Head and Shoulders, uses the same user friendly
design. Moreover, according to the brand-wise associations, Head and Shoulders is not a
significant threat to Pantene because Head and Shoulders ranks much lower in soft/silky
fragrance and overall quality (both companies are owned by P&G).
According to the perceptual map of packaging, Garnier has taken some of Pantene’s
market share by using brighter colors on the pack label, an attractive shape, and a durable
lid that does not break off. This kind of package change could result in higher sales from
the younger, trendy segments. However, Pantene would risk its healthy/shiny fragrance,
and premium quality scores according to the brand-wise brand associations. The
transition to a modern and trendy color scheme could pay off in the short term, but may
erode the high brand equity of Pantene. If Pantene creates a modern, trendy bottle, the
differentiation between Pantene and Garnier would be less. The cost to redesign the color
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scheme would be extremely high, and most likely would force Pantene to run an
expensive advertising campaign to promote the redesign.
Solution #2
Adjust the offer with a free bonus bottle of conditioner, combined with modern and
colorful vertical aisle displays in order to trigger more Delta moments. According to the
price appropriateness chart, Pantene’s price is a little above the amount the average
person is willing to pay for shampoo (Figure 15). Pantene needs to provide the consumer
with either a discount or free item to closer match the price value of Head and Shoulders
and Garnier while maintaining the premium brand image. According to the impact of
promotional activity graph (Figure 16), Pantene, Sunsilk, Cairol, and Garnier do not have
strong promotion led purchase triggers. Therefore, customers may not respond well to
large TV advertisements that promote a lower price. According to the switch trigger data,
people switched shampoo the most when browsing through several packs, and through
promotion (Table 4).
Pantene has the advantage of premium brand pricing, and should use an in-store bonus
item in order to stimulate sales. This method could result in Pantene being able to
maintain the premium product quality with a free giveaway product that makes the
shopper feel like they are getting a much higher perceived value. This could raise the
average consumer’s willing to pay price to match Pantene’s current pricing matrix.
Pantene can target Garnier and Head and Shoulders customers with this method because
these customers are price sensitive according to the purchase triggers for brands data.
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Also, according to the activation index data (Table 7), Pantene is able to rely on its
stronger ad recall and brand recall once a competitor’s customer switches to Pantene.
Pantene should also use colorful, modern vertical aisle displays in order to appeal to the
younger demographic. According to the brand personality data, the “young” brand
personality was close to the modern, attractive, fashionable, and feminine brand
personalities (Figure 10). These displays are likely grab attention of the younger crowd to
trigger delta moments and justify the higher perceived willingness to pay price premium.
The combination of an attention grabbing display along with a free bonus item raises the
chance of triggering delta moments in younger consumers.
Solution #3
Create a whole new shampoo product. The brand equity by age data reveals that Pantene
has a higher equity among higher age groups and mainstream people (Table 1).
Moreover, most of the competition has high brand equity with 18-20 year olds for their
respective company. For example, Sunsilk, Head and Shoulders, Palmolive, and Garnier
all have a higher brand equity score with 18-20 year olds than any other group in their
respective company. First, Pantene can start to target 18-20 years olds by creating a new
cheaper product that fills their needs. Head and Shoulders and Garnier are priced below
the willingness to pay price premium according to the price appropriateness data; Pantene
is above the average willingness to pay price. Also, by utilizing lower pricing strategies
between 2004 and 2005, Head and Shoulders took an extra 1.9% market share, and
Garnier took nearly 5% market share. These were the only two competitors that grew in
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market share between 2004 and 2005. However, if Pantene created a new product, the
costs could far outweigh the benefits.
Pantene might need to focus more on their strongest segments such as older and
mainstream customers, and less on weaker segments such as 18-20 year olds. Pairing
Consulting also felt that introducing a new variant would only add to their strengths.
They are good at introducing new product lines. Pairing consulting wanted to focus on
turning a current weakness into strength. This is far more valuable and would add less
expense. Furthermore, adding a new variant could further exasperate the perceived lack
of distribution intensity.
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WINNING SOLUTION #2
Adjust the offer with a free bonus bottle of conditioner combined with modern and
colorful vertical aisle displays in order to trigger more Delta moments while the customer
is in the store. These vertical aisle displays would be protruding curved cardboard pieces
that reached from the bottom of the shelves to the top. It would separate the whole
Pantene product line from other shampoos. The curved design would fit into their current
elegant personality trait. Pairing Consulting recommends adding colorful, modern, and
sleek vertical dividers with the promotion of the free bonus bottle explained on it. This
would allow Pantene to improve their brand equity with the younger crowd and catch
people’s eye just looking through packs. Furthermore, it would save the company from
having to completely redesign all of their bottles at a very high expense.
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According to the price appropriateness chart, Pantene’s price is above the amount the
average person is willing to pay for shampoo. Pantene needs to provide the consumer
with either a discount or free item to closer match the price value of Head and Shoulders
and Garnier while maintaining the premium brand image. According to the impact of
promotional activity graph, Pantene, Sunsilk, Cairol, and Garnier do not have strong
promotion led purchase triggers. Therefore, customers may not respond well to large TV
advertisements outside of the store that promote a lower price. According to the switch
trigger data, people switched shampoo the most when browsing through several packs,
and through promotion.
Pantene has the advantage of premium brand pricing, and should use an in-store bonus
item in order to stimulate sales. This method could result in Pantene being able to
maintain the premium product quality with a free giveaway product that makes the
shopper feel like they are getting much more value for the price. Pantene can target
Garnier and Head and Shoulders customers with this method because these customers are
price sensitive according to the purchase triggers for brands data. Also according to the
activation index data, Pantene is able to rely on its stronger ad recall and brand recall
once a competitor’s customer switches to Pantene. A negative to this proposal is the
usage of more shelf space because of the packaged promotion.This is expensive, but
Pairing Consulting views this as a manageable risk.
Pantene should also use colorful, modern vertical aisle displays in order to appeal to the
younger demographic. According to the brand personality data, the “young” brand
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personality was close to the modern, attractive, fashionable, and feminine brand
personalities. These displays are likely grab attention of the younger crowd to trigger
delta moments and justify the higher perceived willingness to pay price premium. The
combination of an attention grabbing display along with a free bonus item raises the
chance of triggering delta moments in younger consumers. This solution could also meet
the long term goal of regaining the lost 5% market share while keeping costs much lower
than package redesign or new product creation. This solution intends to capture delta
moments more frequently while customers browse in store items.
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FINANCIALS
Creating a promotion that includes a bonus item attached to the Pantene shampoo bottle
is expected to greatly increase revenue. Pantene’s highest brand equity is with
Mainstream adapters and a close second being Trendsetters. These two groups are
expected to be drawn to the free trial size bottle of Pantene conditioner, increasing
purchases quickly. The free attached gift and associated shelf displays will also reduce
Pantene customers from becoming transients triggered by a deal or flashy new package
on a competitor’s brand. This plan is intended to pull from a portion of Sunsilk’s
customer base including the “Trialists” and “Considerers” as they sample Pantene’s
quality product.
Overall, a wide range and large number of customers will be influenced by this
promotion and therefore increase sales, without reducing the retail price or spending large
fixed costs on package redesign or new product implementation. This action, paired with
optimistic results of the economy’s future according to CMO.org, will undoubtedly
improve Pantene’s sales. CMO.org presents an annual survey analyzing market and
economy projections. In the latest survey, 11.1% growth is expected when a company
targets existing products to new markets. While the program presented to Pantene will
retain current customers, the trial offer and shelf display will also entice new markets
including younger demographics and modern, fashionable individuals. These two
markets are typically customers of competing brand Garnier.
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Source: 2014 CMO Survey Report: Highlights and Insights Report
Due to a 5 percent increased Market Share that will be a result of this bonus offer in the
long run and shelf display; sale revenue is also expected to rise 8 percent for a result of
$80 million dollars. Approximately 20,000,000 additional bottles of shampoo and
conditioner, at an average retail price of $3.99, are expected to be sold in the following 12
months of implementing this promotion. The sales revenue increase will help to cover the
costs associated with this trial program and shelf display.
The free trial size bottle of conditioner and corresponding shelf display advertisements,
have minimal fixed costs due to the main resources already being implemented in
Pantene’s manufacturing such as assembly lines and factories to create the shampoo and
conditioner solutions. The additional fixed costs that will be created follow:
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Templates/Molds for Creating Trial Size Bottles, Caps & Labels, $3,000.00
Design Fee for Bottles & Shelf Display Promotion, $10,000.00
100 Cardboard Displays for 100 Stores with floor displays ($20.00 Each),
$2,000.00
In addition to the current Variable Cost of $0.75 for making one full-size bottle of
Pantene shampoo, the following costs will be created to implement the bonus item offer:
Bottle, Cap, Conditioner & Label for Trial Size Bottle, $0.35/bottle
Wrap to Attach/Advertise Free Trial Offer, $0.10/bottle
Strips for Shelf Ends (Near Price Label), 1 Strip per Box of 12 Bottles, $0.10/
bottle
Partitions for Shelving, 2 Folded Partitions per Box of 12 Bottles, $0.20/bottle
The total additional Fixed Costs planned would be $15,000.00 plus Variable Costs of
$0.75 per bottle. The total Variable Costs for making one full-size bottle of Pantene
Shampoo with the bonus offer will then be $1.50. If selling the Pantene Shampoo bottles
for a Retail Price of $3.99, this results in a Contribution Margin of 62.4% and a Unit
Contribution of $2.49. It is expected that 20,000,000 additional bottles of Pantene
shampoo and conditioner will be sold as a result of this program. Note, the Variable Cost
of the full-size conditioner will equal the $0.75 per bottle cost similar to the shampoo
prior to the promotion, resulting in a higher Unit Contribution per sale for each bottle of
conditioner sold.
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REFERENCES
YadGupta, Seema. 2013, June 1. Nielsen: Market Research for Pantene. Indian Institute of
Management Bangalore. Retrieved 8/19/2014: http://coursepacks.xanedu.com/perl/
dview?
DIN=27287438&PACKID=470660&HLVL=15193&TYPE=CoursePack&ID=0.1363094
35414976
2014 CMO Survey Report: Highlights and Insights Report. Retrieved 8/19/2014: https://
faculty.fuqua.duke.edu/cmosurveyresults/The_CMO_Survey-Highlights_and_InsightsFeb-2014.pdf
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APPENDIX
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