Essay on Dr. pepper snapple group, inc. case

1. Decision problem:
P&G’s mouthwash brand, Scope, is currently positioned around two major benefits: fresh breath and killing germs. In 1990, It held 32% of the mouthwash market. However, a new competitor, Plax, a prebrushing rinse, has entered the market positioned around a new benefit: “plaque fighting.” P&G would like to develop a strategy to ensure continued profitability of Scope. The strategic options need to be presented to each division of P&G, to obtain relevant feed back required to properly asses which route should be taken. A marketing plan for the next three years [1992, 1993, 1994] will need to be created on the final choices. This will allow P&G to compare the choices and make a final decision that will result in maximizing the market share, volume and profitability of the brand. In addition, a proforma income statement is required.
2. Strategic options:
Three options exist to P&G: 1) status quo, do nothing. 2) reposition Scope with a “plaque-fighting” benefit, 3) introduce a new product as either: a) a line extension with the Scope name, or b) implement a fighter strategy, with a new name.
3. Analysis of the options
Qualitative: If P&G decides to not do anything, they will remain the market leader and continue their operations of Scope in the mouthwash market. In doing so, P&G can maximize market share, volume, and profitability by focusing efforts that grow the Scope brand further. Options include: altering current advertising and promotion expenditures, prices, and distribution channels. The downside to the status quo is, because of new competition, Plax, a new segment has emerged. Therefore, the status quo poses a major threat to Scope because they may be left as the dominant player in a declining market.

The following are the results of each division’s opinion on the direction Scope should take:

Judging by the overall opinion of the divisions, a new product will be launched. The question that remains is if it will bear the Scope name, and serve as a line extension, or have an entirely new name unrelated to scope. Before P&G can claim Scopes “plaque-fighting” benefit, clinical studies would need to be implemented in order to get approval from the American Dental Association (ADA). Also, the new product packaging and advertising would need to be submitted to the CDA for approval. Further, the Health Protection Branch mandates all claims regarding bodily functions follow their many stringent guidelines. In product tests on Scope, PDD developed a new prebrushing rinse product that performed as well as Plax, but did not work any better than Plax against plaque reduction. The key benefit was that it did taste better than Plax. Product testing would cost $20,000 for either a line extension or fighter.
If a new product is introduced with the Scope name the company would save a lot of money in trying to obtain market share because Scope is already an established, reputable brand. It can easily launch a new product without the burden of an initial media and advertising cost.
However, there is a risk of cannibalization associated with this line extension, specifically a 2-9% rate of Scopes current sales. Further, according to sales, in order for a brand to be carried on store shelves, it must be seen as different enough (or unique) from the competition to build incremental purchases- otherwise retailers argued that category sales volume would simply be spread over more units. This could result in $50,000 per stock-keeping unit in carrying fees to add the new brand. Advertising the product as differentiated creates challenge because Scope would need to communicate two different benefits in one product. Lastly, according to the marketing research division, adding “reassurances” to a product- “Now Scope flights plaque” often takes time before the consumer accepts the idea and then acts on it. It might also “turn “ off loyal customers who saw Scope as a breath refreshment product, or possibly

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