Procter flavors. Since 1987, the market growth has

Procter
& Gamble is one of the most successful consumer goods companies in the
world. (p. 240) The company markets its brands in more than 140 countries and had
net earnings of $1.6 billion in 1990, and was recognized as a leader in the Canadian
packaged-goods industry.  Between 1987
and 1990, worldwide sales of P&G had increased by $8 billion and net
earnings by $1.3 billion. The P&G executives attributed the company’s
success to their ability to develop superior products to meet consumer’s needs.
(p. 240)

 

P&G
introduced Scope into the mouthwash market in 1967, in which is became the
market leader in Canada. It is positioned as a mouthwash that effectively
prevents bad breath while having a good taste. In 1990, Scope had retained its
position as market leader with 32.2% market share. Between 1986 to 1990, the
Canadian mouthwash market increased in dollar sales and unit sales. Until 1987,
on a unit basis the mouthwash market had grown an average of 3% per year for
the previous 12 years. In 1987, the market grew 26% due to the introduction of
new flavors. Since 1987, the market growth has declined to an average of 5% by
1990. During the 1980’s, the market consisted of six leading brands: Scope,
Listerine, Listermint, Colgate Oral Rise, Cepacol, and Plax. Plax had the most
growth in market share in 1988 to 1990. In 1990, 75% of Canadian households
used a mouthwash and 65% of users purchased the product in drugstores, while
35% of users purchased the product at a food store. Scope was mostly purchased
in food stores at a rate of 42%, and at drugstores at a rate of 27%. A survey
conducted in the case shows most people use mouthwash as “part of basic oral
hygiene” and to “get rid of bad breath.”

 

After
two years of being in the market, by 1990, Plax held a 10% market share. Plax
was launched in Canada in 1988 with a unique positioning strategy as a “plaque
fighting pre-brush rinse” with product benefits not breath focused, but claimed
that rinsing with Plax before brushing removes up to three times more plaque
than brushing alone. Plax is priced significantly higher than Scope and other
leading brands. Plax now stands as a threat to Scope and Scope must decide what
actions to take.

 

PROBLEM:
By
keeping P’s goals of maintain and maximizing market share, volume, and
profitability, Gwen Hearst must decide whether to respond to the threat of Plax
by either launching a line extension, modify the current product, or maintain
status quo.

 

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