Vaseline Petroleum Jelly Kurt Beloff Donald Chase Brendan O’Hare Matej Okorn Yejin Shim
Company Overview • Chesebrough-Ponds incorporated (CPI) was formed in 1955 through the merger of Chesebrough Manufacturing Company and Ponds Extract Company. • In 1976, the company had • Six divisions. • Net sales of $747 million. • After-tax profits of $54 million.
Product Overview • Five different jar sizes. • 1.75 oz. / 3.75 oz. / 7.50 oz. / 12.0 oz.15.0 oz. • Two different tube sizes. • 1.00 oz. / 3.75 oz. • Two forms. • Regular. • Medicated.
Market For Vaseline Petroleum Jelly (VPJ) Heavy users are women aged 45+ (multifunctional skin care) and mothers (baby care). Other specific uses are for chapped lips and sunburns. Direct competition is mainly from private label petroleum jellies which compete on price. Distribution of VPJ Distributed mainly through grocery, drug, and mass merchandise stores. Current distribution penetration is 92% for grocery stores and 96% for drug stores. The Market and Distribution
Marketing For VPJ • VPJ sold by 130 person sales force • Believe product is mature and requires price promotion to stimulate trade interest. • Focus is on the “headquarter accounts” rather than individual outlets. • Three principal areas of VPJ marketing • Advertising • Consumer promotion • Trade promotion
Marketing of VPJ (Cont.) • Advertising • Advertising has historically shown the versatility of VPJ as a skin care product for adults and children. • Consumer Promotion • VPJ brand management has spent relatively little money on consumer promotion. • Trade Promotion • Primary method of VPJ promotion. • In 1976, there were 223 days with a promotion and 70% of trade sales were on promotion.
Industry Analysis • Petroleum jelly is a household staple used by 90% of the population. • Vaseline is the industry leader with a 90% market share. • Product is known for its versatility. Uses include baby use, skin care, chapped lips, etc. • Remainder of market consists of private label manufacturers.
Company SWOT Analysis • Strengths • Success of company • Large market share (90%) • Strong brand recognition (97%) • High distribution penetration • 70% of homemakers view VPJ as economical • No significant direct competitive petroleum jelly products that effect VPJ market share • Versatility of product
Company SWOT (Cont.) • Weaknesses • Low brand visibility- 23% recall recent ads. • Terms and timing of trade promotion • Trades get discounted price without requiring advertising. • In 1976, 70% of factory shipments sold on promotion • Lack of sustained budget for advertising • 4th qtr. advertising often cut to meet profit targets. • 1977 plan to cut advertising budget by 50%. • Salespeople focused on “headquarter accounts” rather than individual retail outlets.
Company SWOT (Cont.) • Opportunity • Consumer advertising rather than trade promotion will lead to pull rather than push demand. • Capitalize on Vaseline brand name to reinvent VPJ and diversity the product line. • Eliminate multiple-brand promotions and dedicate advertising to VPJ exclusively. • Turn light users into heavy users. • Target VPJ to institutional users such as hospitals.
Company SWOT (Cont.) • Threats: • Uncontrollable economic conditions. • Specific-use products which compete against the versatility of VPJ (baby care, sunburn cream, etc.) • Shift in trade promotion philosophy can lead to a deterioration of relationship with trades. • Direct competition in petroleum jelly market from new brands of existing companies, such as Johnson & Johnson.
Challenge • Although market share is 90% in petroleum jelly market, we must compete against specific-use products. • New CPI product launches in 1978 are to be funded by stable brands such as VPJ, yet VPJ is expected to increase profits. • Develop effective marketing strategies with better allocation of budgetary resources to increase consumer sales and overall profits.
Options • Maintain status quo. • Reinforce and expand distribution of larger sizes in all trade channels. • Increase trade promotions. • Increase retail prices to capture additional profits. • Advertise to show additional VPJ uses (lubricant, shoe shining, etc.). • Produce VPJ to institutional users.
Options (Cont.) • Eliminate multi-brand promotions to focus marketing exclusively on VPJ. • Convert light users to heavy users. • Diversify VPJ product line into use-specific segments (e.g.: sun burn lotion, skin care, baby care, lip balm, etc.) • Retrain sales force by focusing more on individual accounts.
Recommendations • Effectively coordinate VPJ advertising and promotions to trade and consumers. • Extend VPJ product line through introduction of new specific-use products. • Retrain and refocus current VPJ sales force to capitalize on VPJ brand equity.
Coordinate VPJ Promotions • Decrease exclusive trade-only promotions. • Run trade and consumer promotions simultaneously to capitalize on synergy. • Require trades to market VPJ to consumers.
Extend VPJ Product Line • Introduce specific-use applications of VPJ • Reengineer VPJ with additional ingredients to target specific-uses • Skin care • Lip therapy • Baby care • Medicated
Retrain Sales Force • Change perception of VPJ from a mature product that requires trade promotion to an exciting product with a new strategy aimed at increasing consumer sales. • Change focus to include individual retail outlets and institutional buyers.
Recommendation Rationale • Coordination of consumer and trade promotions will lead to stronger consumer sales through a focused marketing initiative. • Our new product line will lead to new sales opportunities by capturing unprobed markets. • A reinvigorated sales force will help ensure the success of the new VPJ product lines while maintaining existing market share.
Conclusion • VPJ has been around for 100 years. • With a new: • Marketing focus; • Product segmentation; and • Refocused sales staff. • Vaseline will be around for the next 100 years.
THE END! Vaseline Petroleum JellyLeading Chesebrough-Pond For the Next 100 Years!