Nivea Oral The Launch Plan

Table of Contents

Table of Contents1

Marketing Analysis2The Oral Care Products Market Overview - A Competitive Analysis2

SWOT Analysis4Strengths4Weaknesses5Opportunities6Threats7

Segmentation, Targeting and Positioning Analysis8

The Marketing Mix9Product9Price10Promotions10Place12

Financial Projections13Launch Plan Budget13Penetrative Pricing Projections14The Break Even Point14The Future for Nivea Oral15

Implementation and Controls16Initiation16Planning16Execution16Evaluation17

Appendix 1: Advertising and Promotions Schedule for Nivea Oral

Marketing analysis The Oral Care Products Market Overview A Competitive AnalysisThe Malaysian oral care market has always been dominated by two main players in the market, Colgate-Palmolive and Procter &Gamble. It is known that Colgate-Palmolive is the market leader of toothpaste and also other oral care product such as mouthwash, dental floss, and toothbrushes with global sales of US$10 billion annuallyand a net income in the range of US$1.3-billion.Procter & Gamble on the other hand enjoys sales revenue of US$51 billion yearly with a net income of US$6.5 billion. They invest a total of 4% annually on research and development for their products and this covers all its product range including facial wash, skin care and other personal care products.Increasing its dominance in the market, P&G acquired P&G acquired the Gillette Company together with the range of personal care brands under its belt in 2005.This was the biggest ever acquisition by P&G and has added an additional US$6 billion in revenue each year. Within the toothpaste market, P&G owns Crest, which is considered the worldwide market leader for the past three decades. Whilst still at the top rank, Crest is suffering from loss of market share with competitors aggresively coming out with products that directly compete with Crest.The oral care market is segmented into six classes or segments, with toothpaste being the largest segment. It is reported that 54 percent of oral care sales is projected by toothpaste alone, followed by toothbrushes 22 percent, at-home whitening 10 percent, mouthwash 7 percent, dental floss 2 percent and denture products accounts for 5 percent.1 The combined market share of both the leading brands, Crest and Colgate is worth 60% of the total market share for toothpaste, and this translates to US$1.8 billion worth of business worldwide as illustrated in the chart below.1 Source: AC Nielsen data as published in Drug Store News, June 2002.

Chart 1: Worldwide Oral Care MarketOn the toothpaste market in particular, the whitening variety of toothpaste are increasingly gaining polularity and it accounts for 45 percent of the overall toothpaste market. This figure alone translates to US$ 0.81 billion of the overall toothpaste market. This figure alone is enticing enough for us, Nivea, to be entering into this market which has long been dominated by the two main competitors, Crest and Colgate. As an experimental platform, we are launching our own toothpaste in the Malaysian market, a market that is very volatile and easily manipulated by proper and effective branding, promotion and price adjustments. We believe that with the right blend of pricing, promotional activities and distribution points of our toothpaste, we will be able to capture a large chunk of the market within the shortest time span. Market research and strategy analysis have been carried about with to ensure the feasibility of Nivea entering the toothpaste market as reported following in the SWOT, Competition and Marketing Strategy of this report.

SWOT AnalysisThe initial analysis that we have carried out before even deciding on whether it is feasible to intriduce Nivea Oral into the market is the analysis of our own strengths and weaknesses as well as the opportunities and threats that are beyond our control and currently present in the marketplace. This is true to the principles of Sun Tzu in his Art of War scrolls that if you know your enemies and know yourself, you can win a hundred battles without a single loss.If you only know yourself, but not your opponent, you may win or may lose.If you know neither yourself nor your enemy, you will always endanger yourself.2Strengths Nivea, already a household brand name when it comes to skin care products will be the best strength we have in launching the Nivea Toothpaste. This is proven with the increased total sales of Nivea products throughout the years, as illustrated in the graph below.

Graph 1: NIVEA Worldwide Sales.(source: www.business2000.ie)

2 Excerpts from en.wikipedia.org/wiki/The_Art_of_WarNivea has lalways been in the forefront when it comes to reinvesting its profits to research and development. The brand has invested 149 million Euros in 2008 to R&D and this evidently shows the commitment Nivea has on producing only products of the highest quality and in turn this has earned Nivea bigger slices of the total market pie it is competing in.Niveas standard marketing launch platform has proven successful over the years. A perfect example would be the launch of the Nivea Mens range of skin care products. This success is attributed to the marketing plan that invokes the need for men to feel the need to groom and care for skin. This has resulted Nivea to be the leading worldwide brand in mens care products.Ample financial resources and stability is also a determining factor for the success of the Nivea brand as more advertising, R&D money can be spent to bring forth better products and more brand recognition to cover more market share. Evidence of this is the amount spent on R&D and also sponsorship of football teams which brings the brand to a much higher level recall.A good product that is not widely available in the shelves would defeat all purpose of even selling the product. Therefore, Nivea has engaged ony the best distribution channels concentrating mainly on hypermarkets, supermarkets and pharmacies with eye-level product shelving to ensure highest visibility and market coverage of Nivea products. The same goes for Nivea Oral as well.WeaknessesNew products, when entering new markets will definitely have its disadvantages against the known and trusted brands available in the market. The same goes for Nivea as well.One of the perceived weaknesses is that Nivea Oral will be a new comer in the toothpaste market. And thus consumers may have the let others try first attitude when adopting the product. Colgate and Crest, already trusted brands in the toothpaste market will be hard competitors to beat as they are afterall household brands when it comes to toothpaste. This will cause slower consumer adoption of Nivea Oral. The table below shows the current growing market share of both the top three brands as compared to other toothpaster manufacturers:BrandMarket Share 2004Market Share 2003

Colgate34.2%34.0%

Crest31.7%29.0%

Aquafresh15.0%16.0%

Table 1: Toothpaste Market Share(http://wps.prenhall.com/wps/media/objects/3357/3438371/chapter%20cases/tuckwell_case02.pdf)

The high cost of launching a new brand must be considered as it entails product research, packgaging, and more so on the marketing, advertising and promotion of the product. Any changes that affect the rest of the Nivea product line may hinder the launch of Nivea Oral toothpaste and have it put on hold.OpportunitiesThe oral care industry has been on the rise year-by-year and more people are concerned and aware about the importance of oral care. This translates to an expanding market for toothpaste as well. With the introduction of new flavours, new variants and packaging by competitors and players in the market, it makes the toothpaste industry even more exciting and vibrant. By engaging in the toothpaste industry, Nivea can now participate in a new business field.The increased emphasis given to oral care by the public in general is surely reason for Nivea to be introducing Nivea Oral into the market. This will be due to the fact that more and more people will be consuming and buying oral care products and in turn expands the oral care market exponentially.Current loyal customers of Nivea, who already uses our other range of products such as skin care, Nivea Mens, etc will definitely want to try out the Nivea Oral toothpaste as they are users of our trusted brand and brand loyalty has already been formed with this group of consumers.With the current tehnological advancements and also the effort Nivea puts into R&D, we are certain that the Nivea Oral toothpaste will be a product that will be well accepted by consumers loyal to Nivea and also other brand loyal consumers to be buying and trying the toothpaste.ThreatsStrong competitors such as Colgate, Crest and Oral-B ,with vast experience in the dental product would want to fend for their market share. Should they sense that any new entrants in the market to threaten their position as market leaders, they will formaulate their fight back plan to counter our launch.Consumers may have biasness in new products quality. A perception may be formed that new products will require more time to develop and be perfect for the market. This would leave them waiting for second release of the product and let the pioneer adopters do the testing as evidenced in Apples iPad launch compared to the iPad 2. The iPad 2 sales during launch day was 3 times than that of the iPad.New technological advancements may affect the launch of Nivea Oral toothpaste or even the toothpaste industry as a whole. This will be when a totally better new way of cleaning teeth be found, it would cause the toothpaste market to crash when consumers adopt the new technology. Not only Nivea Oral suffers from this new technology, but the industry as a whole too will drastically die off. An example from a different industry is the introduction of CDs into the market where cassette tapes dominate. It has cause the downfall of the cassette tape which now is considered ancient technology.Other new market entrants are definitely a threat to Nivea Oral, as the market is a free-market, other competitors may decide to venture into oral care and take their slice of the pie.

Segmentation, Targeting and Positioning AnalysisEvery new product intended to be launched in the market will definitely go through segmentation, targeting and also positioning before being officially launched. This is crucial as without proper analysis and research on the target market and how to position the product, the marketing mix employed during launch is bound to fail.Therefore, before Nivea Oral is being launched into the market, proper marketing research and STP has to be carried out as this will help in planning the Pricing, Product, Promotion and Place of the launch.With the 2 main players, Colgate and Crest being in the oral care market for a long time, we are considered as newcomers. Even then, we do have the backing of a strong and trusted brand Nivea and product adoption and acceptance will be faster compared to a brand that is trying to enter the market new.The market for oral care products encompasses everyone. This means that there are about a total of 28 million consumers of oral care products in Malaysia. For Nivea Oral, the main target group will be urban dwellers who shops at pharmacies and supermarkets. These are mainly professionals in the mid-20s to mid-40s who lives in the capital city of Kuala Lumpur and also the major towns such as JB, Ipoh and Penang.With this target market, the positioning of the product has to be something that is of quality and reliable, consistent with the brand name Nivea. Consumers must be able to see that the range of Nivea Oral products are of high quality and comparable to the best and most common brands available in the market.

The Marketing MixIt is only after the thorough analysis of the STP that we are able to come out with the marketing mix for Nivea Oral. As we will also have to compare and contrast our offerings with that of the competitors in order to come up with products that are acceptable in the market.ProductThe Nivea Oral toothpaste will be presented in the tube form only. This not only reduces the need for a separate box to have the product in, it will also help in Niveas contribution to a greener environment by using less paper. The tube itself will be made from biodegradable and recycled plastic. Design of the toothpaste tube will be in line with the rest of the Nivea range of products, clean and simple with the Nivea logo prominent near the base of the tube. The recycle logo will also be a prominent feature at the bottom of the tube and it will be a reminder for consumers to recycle to save the environment.

Picture 1: Mock-up Design of Nivea Oral toothpastePriceBeing a new entry into the oral care market, we will have to adopt the penetrating pricing strategy during the launch of the products to the market. This will help boost the sales and gain consumer acceptance at a much faster rate. Currently, the market rate for main toothpaste by the leading brands are as follows:Toothpaste Brand / VariantShelf Price

Colgate TotalRM 9.80

CrestRM 8.50

Oral-B Gum CareRM 12.50

As such, during the launch period, Nivea Oral will be penetratively priced at RM 7.50 to boost sales and attract the price sensitive customers to try and adopt the toothpaste. Even though the profit margin is lower, but it is being made up by quantity as we anticipate large volumes of sales during the launch period.Thereafter, once the promotional and introductory period is over, we will then switch to market-based pricing at a price point of RM 9.25. This is to match with the current price level of toothpaste and also to increase the profit margin that is being lowered during the product launch.PromotionSince Nivea Oral is a new toothpaste that we are introducing to the market, the initial product launch promotions will be carried out in a big way to ensure that the bang is felt when we roll Nivea Oral to the market. We have decided to exclude radio commercials in the promotional activities as it defeats the purpose of advertising if the consumer cannot visualise the product in mind.

The tagline of Cleaner teeth from Nivea will be used throughout the promotional activities. Activities included in the launch will include:a. Advertisementswill be run on major newspapers.Advertisements will be simple and emphasizes on the toothpaste. Promotional details such as the discounts, contests being run and promotion period will be included in the press advertisements.Cut out coupons will be printed as well for the toothpaste sample exchange at our roadshows. Target newspapers are The Star, Harian Metro and Sin Chew Jit Poh. These advertisements and coupons publication will be at random except Sundays as readership differs everyday and the type of readers also differs from weekdays to Saturdays.

b. Prime time television commercial.This method, the costliest of all the advertising and promotional activities will have to really be targeted and used sparingly to avoid going over the budget allocation. Prime time commercials will be aired during the 8.00pm to 9.00pm slots of the major stations TV3, ntv7, 8TV,Astro Prima and Wah Lai Toi. Television commercials will be scattered throughout the month mainly primetime weekdays as those are the times with the highest viewership.

c. Roadshows with contests, product coupon exchanges and lucky draws to be organized and participation requires only the purchase of Nivea Oral. Suggested to target the Klang Valley at Tesco Shah Alam, Carrefour Sri Petaling and Giant Sri Gombak for the roadshows. Roadshows will be held only during the weekends to ensure maximum coverage during peak shopping hours.The planned launch of the product will be during the month of December 2011 right up to the first week of January 2012. The schedule for the promotional activity will be in Appendix 1 of this proposal.

PlaceOnce Nivea Oral is launched, we will have to ensure that our main channels of distribution will have all our products in their shelves. As we are doing a positioning Nivea Oral as a product of high quality and reliable, we will only be offering this Nivea Oral range in hypermarkets, supermarkets and pharmacies nationwide. This is to ensure that control of the brand and product shelf life can be monitored closely as we are dealing only with the headquarters of each distribution point.The actual toothpaste stocks must be on the shelves by the final week of November 2011 just before the launch activities are being carried out. After much negotiation, we will be given the best shelf space available in every store within the oral care range of products and brands. This will be the shelflocated 4 floor from the ground which is eye level and will be the first thing spotted by the shopper within the aisle. Aisle-side banners and product-stands will be strategically located near check-out counters together with the brochures and coupons.All these four elements of the Marketing Mix, if done in a timely and proper manner with integration to the Segmentation, Targeting and Positioning Analysis done earlier, should be a fail proof recipe for Nivea to introduce the Nivea Oral toothpaste to the market.

Financial ProjectionsLaunch Plan BudgetBudgets and numbers are main concerns for any companies when it comes to launching any products. The numbers shown must be attractive enough for the top management of any company to even have a look at the proposal. The same goes for the Nivea Oral toothpaste as well. With all the activities planned to launch the toothpaste in a bang, the budget must be closely monitored and used wisely with projections given on the breakeven point and time.The table below illustrates the expected expenditure during the month long launch activities:ActivityRateFrequencyTotal

The Star AdsFull Page B&W @RM25,0005 insertionsRM125,000

Harian Metro AdsFull Page Colour @RM30,0005 insertionsRM150,000

Sin Chew AdsJunior Page B&W @RM12,0005 insertionsRM60,000

TV3, ntv7 & TV8 Commercials (Media Prima)RM8,000 / 30sec3 airs * 2 days * 3 channelsRM144,000

Awani & WLT Commercials (Astro)RM12,000 / 30sec3 airs * 2 days * 2 channelsRM144,000

Tesco BoothRM400 / day9 daysRM3,600

Carrefour BoothRM450 / day15 daysRM6,750

Giant BoothRM350 / day9 daysRM3,150

Grand Total RM636,500

Table 2: Promotional Activities Costing Sheet

Penetrative Pricing ProjectionsThe toothpaste itself will be an escalating cost as this will rise according to the quantity that we produce for the market. As we are leveraging on the existing production facilities of Nivea, this cost can be kept to a minimum of RM1.50 per tube of Nivea Oral. Including storage, distribution, labour and all others, the final cost of goods sold will come to RM3.50 per tube when it is estimated that Nivea Oral will sell 50,000 tubes per month for the first 6 months. This translates the profit before other deductions (cost of promotional activities) to be at RM200,000 per month provided sales and production is consistent at 50,000 tubes per month.Profit (Selling price cost) * Production Quantity / month= (7.50 3.50) * 50,000= 200,000The Break Even PointThis earnings of RM200,000 per month cannot be taken as nett earnings as the cost of the launch needs to be taken into consideration as well as the fact that this is the penetrative pricing to gain market share. The market based pricing will be applied after 6 months to bettle settle the product in the market. Therefore, the break even point would be illustrated in the table below:MonthAmount to breakevenEarningsBalance to breakeven

1RM 636,500RM 200,000RM 436,500

2RM 436,500RM 200,000RM 236,500

3RM 236,500RM 200,000RM 36,500

4RM 36,500RM 200,000- RM163,500

5RM 200,000- RM 363,500

6RM 200,000- RM 563,500

Table 3: Breakeven point to cover cost of production and promotional activitiesEven while still at the penetrative pricing for the first 6 months, the breakeven point can be achieved by the 4th month of launching the product to the market. With the planned conversion of the penetrative pricing to the market based pricing after the 6th month, Nivea Oral would have already achieved its golas to penetrate the market and still make nett profits of RM 563,500.

The Future for Nivea OralIn the long run, once the hype is over on the new product, the price would be adjusted to RM9.25 to restabilise the market for toothpaste. It will also be obvious that with this price adjustment, there will be a drop on the demand for Nivea Oral. A projected 40% decrease in demand will occur and cause the sales and production of Nivea Oral to be at 30,000 tubes per month. The projections then will be as follows:Profit (selling price cost) * production quantity / month(9.25 3.50) * 30,000= RM 172,500 nett profit per month

MonthBalance from previous monthEarningsNett Profits

7RM 563,500RM 172,500RM 736,500

8RM 736,500RM 172,500RM 908,500

9RM 908,500RM 172,500RM 1,081,000

10RM 1,081,000RM 172,500RM 1,253,500

11RM 1,253,500RM 172,500RM 1,426,000

12RM 1,426,000RM 172,500RM 1,598,500

Table 4: Projected nett profits for Nivea Oral for the first year

Implementation and ControlThe launch of Nivea Oral toothpaste must be closely monitored and controlled for the launch to be a success. Each activity conducted is essential to the big picture of the launch and therefore it is of utmost importance that each be monitored closely so that contingencies and fallback plans can be immediately run to salvage undesirable situations that may arise. Not only this will keep track of the launch activities, it will also keep track on the budget, which is essential during budget estimations and further considerations for the break-even point of launching Nivea Oral.We will adopt a modified Project Management Life Cycle2 phases of Initiation, Planning, Execution and Closure process to ensure that Nivea Oral will hit the market as it is intended to.Initiation This stage is where we do the market research on the oral and dental industry in Malaysia. Feasibility studies are also conducted here to determine if Nivea Oral should be launched in Malaysia. The STP Analysis done in this phase is crucial as it will be the direction that we will be undertaking for the whole range of products. Market research will also be carried out with targeted consumers to gauge the acceptance of the products. Planning Once Nivea Oral is determined to be launched based on the feasibility studies, the Marketing Mix will now be formulated here in the planning phase. The product itself, the packaging, price and distribution points or outlets will be molded here. The planning phase will also include the planning of the big launch, all the advertising and promotional activities to be done during the launch.Execution This phase will be the determining phase on the success of Nivea Oral. Everything that has been planned will now be put to test and the results that we achieve here determines the survivability of Nivea Oral.2 Project Management Life Cycle: http://www.method123.com/project-lifecycle.php

From the product itself, to the packaging, pricing and places it is available right up to the timeliness of the promotional campaigns, everything must be in harmony in order for the launch to be a success.Evaluation This is the post-mortem phase for Nivea Oral. Evaluation will be carried out and areas where there are slacks will be identified and ironed out in order for avoid the same mistakes in the future. - The End -

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Appendix 1:Advertising & Promotions Schedule for Nivea Oral

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