Arctic Power Essay Research Paper The Canadian

North-polar Power Essay, Research Paper

The Canadian laundry detergent market is mature, really competitory and dominated

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by three major consumer packaged goods companies, one of which is

Colgate-Palmolive Canada ( CPC ) . North-polar Power is CPC & # 8217 ; s top-of-the-line offering

in its laundry detergent line. North-polar Power is specially formulated for rinsing

in cold H2O. The detergent has risen in market portion from 4 % in 1981 to 6.5 %

in 1986, and the Senior Product Manager has established a end of making 12 %

market portion by 1996. Problem Definition Linda Barton and Gary Parsons face two

jobs. First, they must find whether to go on developing the trade name in

their already strong regional markets of Quebec, the Maritimes and British

Colombia, or travel national with selling attempts. Second, they must make up one’s mind

whether to utilize a individual placement scheme ( as was successfully implemented in

Quebec ) or go on to utilize a double placement scheme. The double scheme

consisted of foregrounding Arctic Power as a superior detergent in countries with

strong gross revenues, and concentrating on promoting Canadians to utilize cold H2O lavation in

countries with comparatively weak gross revenues. Analysis When it comes to laundry detergents,

Canadians chiefly think of one name, Tide. Procter and Gamble & # 8217 ; s Tide detergent

has captured over tierce of the market and is 20 per centum points in front

of its closest rival in market portion. While Tide and Arctic Power are

tantamount trade names in footings of cleaning power, Tide outsold Arctic Power by a 5

to 1 ratio in 1986. The market portion for Tide has remained degree ( at

about 34 % ) during the same clip that Arctic Power has enjoyed a market

portion addition from 4 % to 6.5 % . Due to Tide & # 8217 ; s laterality in the detergent market,

it will play an of import function in any major alteration in Arctic Power & # 8217 ; s scheme.

Costss and net income constructions for taking detersive trade names were similar. Angstrom

break-even analysis for the market ( see Appendix A ) indicates that a detergent

must capture about 8 % & # 8211 ; 8.5 % of the market in order to interrupt even

nationally. Detergents with little parts of market portion have experienced

decreasing gross revenues ( see Appendix B ) . Of the 12 offerings ( or group of

offerings ) that held 10 % or less of the market portion, merely two experienced gross revenues

growing from 1983 to 1986 & # 8211 ; Wisk and Arctic Power. To maintain its market portion, Wisk

spent disproportionately high sums of money on advertisement ( see Appendix B ) .

In such a competitory market with a high break-even threshold and increasing

monetary values for stuffs, it is sensible to believe that the offerings with lower

market portions will go on to worsen. This diminution will supply chance

for Arctic Power ( although CPC & # 8217 ; s economic system detergent offering, called ABC, has

consumed much of the market portion that was lost by the smaller rivals ) .

North-polar Power holds a strong portion of the market in three parts: Quebec

( 17.5 % ) , Maritimes ( 6.3 % ) and British Columbia ( 5.5 % ) . These three parts

consist 44 % of the entire volume of detergent gross revenues for the state. Other

regional market sizes are displayed in Appendix C. For Arctic Power to capture

12 % of market portion, it must look beyond these three parts ( see Appendix C ) .

Thirty-nine per centum of the Canadian market is held in Ontario. Arctic Power & # 8217 ; s

incursion into this big part is a meagre 0.8 % . For Arctic Power to make

its end of 12 % market portion, Ontario must be considered a major portion of the

scheme. Ontario has the highest return on media outgo of any part ( see

Appendix D ) . Ontario is besides altering the manner that it washes apparels. The

proportion of families in Ontario that use cold H2O lavation has increased

from 14 % in 1981 to 17 % in 1986. Hence, a selling scheme that will supply

farther incursion into Ontario is rather desirable. Arctic Power & # 8217 ; s positioning

scheme has been two times. First, Arctic Power has been positioned in eastern

Canada as a superior wash detergent, particularly formulated for cold H2O

rinsing. In the western market, Arctic Power has attempted to develop the cold

H2O market. In either instance, Arctic Power & # 8217 ; s place is connected to cold

H2O. The good intelligence is that regular cold H2O lavation has increased nationally

from 20 % in 1981 to 29 % in 1986. Another 25 % of consumers could be described as

occasional users of cold H2O for rinsing. Hence, 54 % of Canadians wash in cold

H2O. When people were asked about the benefits of rinsing in cold H2O, the

consequences were amazing. The eight most common replies could be easy divided

into two classs & # 8211 ; those that were money salvaging in nature ( saves energy,

cheaper, saves hot H2O, saves electricity ) and those that related to the

quality of the occupation performed ( stops shrinking, prevents colour running, colourss

stay brighter, easier on apparels ) . Appendix E analyzes the responses given by

part. The consequences clearly indicate that Quebec, the Maritimes, and British

Columbia are more interested in the cost salvaging facets of cold H2O lavation.

Conversely, Ontario, Alberta and the Manitoba/Saskatchewan believe that cold

H2O rinsing & # 8217 ; s p

ositive intervention of apparels is its greatest benefit. The

state is really divided on its perceptual experience of the benefits of cold H2O

rinsing. Consequently, giving the client what he/she wants may ask two

different selling places. One place should foreground the cost economy

benefits of cold H2O lavation, while clearly saying that Arctic Power is

formulated to be the best detergent for the occupation. The other place should concentrate

on the positive characteristics of rinsing in cold H2O ( less shrinking, easier on

apparels, colourss stay brighter ) while saying one time once more that Arctic Power is

specially formulated to be the best detergent for cold H2O rinsing. On

mean, Canadians kept 1.3 laundry detergents in their places. This means that

more than two-thirds of purchasers purchase merely one detergent. A detergent that is

positioned as effectual in all temperatures would most probably be purchased. Tide

holds a great selling place as a superior-cleaning detergent that works in

all temperatures. Arctic Power & # 8217 ; s advertisement provinces that detergents that work in

hot H2O will non be as effectual in cold H2O. Their message would take the

consumer to believe that their detergent will non work good in hot H2O. Hence,

taking themselves as an option for the purchaser who washes in all temperatures

and wants to buy merely one detergent. North-polar Power is in a good place to

be purchased as a 2nd ( complementary ) detergent in markets such as Ontario –

for those who use more than one detergent. When a consumer buys Tide for quality

cleaning in hot and warm tonss, she will besides purchase Arctic Power for high quality

cleansing in cold H2O. Tide aired transcript in Quebec that stated its efficaciousness in

cold H2O. These attempts made small difference in Tide or Arctic Power gross revenues.

Arctic Power has great room to turn and about nil to lose in Ontario, since

its market portion there is already less than one per centum. Although it is equal to

Tide in cleaning ability, it is non perceived that manner. The western run was

by and large unsuccessful in Alberta, nevertheless CPC learned that gross revenues of Arctic

Power more than doubled about immediately ( from 1.1 to 2.8 market portion ) with the

execution of the test size box with voucher followed by the $ .40 Free

Standing Insert voucher. Recommendation Based on the analysis, Arctic Power must

travel beyond the three strong parts and market nationally if it is to finally

obtain the coveted 12 % of the market portion. Particularly, the big market of

Ontario must be penetrated, where trade name and advertisement consciousness are at 0.0 %

and 0.7 % severally. Furthermore, holding two positioning schemes will

benefit Arctic Power. A positioning scheme of a money-saving cold H2O

detergent should be further developed for Quebec, Maritimes and British

Columbia. A positioning scheme of a superior-cleaning cold H2O detergent

that is soft on apparels can be expressed to Ontario, Alberta and

Manitoba/Saskatchewan. Appendix A National Break-Even Analysis Fixed Costs = .23

Gross saless Volume in $ = $ 19,805,500 Contribution Margin = .18 Break-Even = [ ( .23 ) ten

( 19,805,500 ) ] / ( .18 ) = 4,555,265 / .18 = $ 25,309,027 Assuming each per centum of

market portion = $ 3 million in gross revenues: A detergent would necessitate 8.4 % market portion to

interrupt even. North-polar Power is soon at 6.5 % market portion. Appendix B Detergent

Offers with 10 % or Less of Market Share ( 1986 ) % of Nat & # 8217 ; l Share Percent Media

Expend. Company Offer 1983 1986 Change Change in 1986 CPC Arctic Power 4.7

6.5 +1.8 +38 9.3 Fab 2.1 1.4 & # 8211 ; .7 -33 na Punch 2.0.3 -1.7 -85 na Dynamo 1.0.5

– .5 -50 na P & A ; G Oxydol 4.9 3.3 -1.6 -33 6.4 Bold 4.8 2.3 -2.5 -52 na Other

4.7 4.3 & # 8211 ; .4 & # 8211 ; 9 sodiums Lever All 4.1 3.2 & # 8211 ; .9 -22 4.0 Surf 2.6 2.2 & # 8211 ; .4 -15 na Wisk

3.8 4.4 + .6 +16 14.6 Other.9.4 & # 8211 ; .5 -56 na All Others 10.4 9.8 & # 8211 ; .6 & # 8211 ; 6 sodiums?

Of the “ smaller market portion ” offerings, merely Wisk and Arctic Power

gained market portion between 1983 and 1986. ? Wisk spent a comparatively big

sum of money on media to keep ( and somewhat turn ) its market portion

Appendix C Size of Regional Markets ( in 1986 ) Arctic Power Total Market Volume

Percentage of Region Market Share ( in Million Liters ) National Market Maritimes 6.3

32.6 8 % Quebec 17.5 113.8 28 % Ontario.8 158.5 39 % Man/Saskat.1 28.4 7 % Alberta

2.1 40.6 10 % British Columbia 5.5 32.5 8 % Arctic Power & # 8217 ; s Strongest Regions:

Maritimes 8 % of national market Quebec 28 % of national market British Col. 8 % of

national market Arctic Power is strong in 44 % of Canada. Hence, Arctic Power

would necessitate 27 % market portion in these three parts in order to accomplish a sum

national market portion of 12 % . Appendix D Gross saless and Media Expenditures by Region

( in 1986 ) Media Expenditures Region Gross saless in $ 000 & # 8217 ; s ( in $ 000 & # 8217 ; s ) Gross saless $ per

Media $ Maritimes 2,055 91 22.6 Quebec 19,914 800 24.9 Ontario 1,268 24 52.8

Man/Sask 28 13 21.5 Alberta 853 263 3.2 British Columbia 1,788 195 9.2 Most

gross revenues gross per media dollar are realized in Ontario. The Western Campaign, a

recent advertisement run in Alberta and B.C. showed assorted consequences. The gross revenues

consequences in Alberta were dissatisfactory.