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    Arimount Deodorant Strategies

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    Guidance on Marketing Plan for Arimount Deodorants
    1. Situational Analysis
    To conduct a situation analysis, an organization has to do its internal environment analysis and external environment analysis and thereafter a SWOT Analysis is done to identify the strengths and weaknesses from internal factors and opportunities and threats existing in the external environment (Kotler & Keller, 2012). Along with this information of Market Demographics, Market Needs and Trends, Competitive Analysis, Product Offerings and Keys to success need to be analyzed (Kotler & Keller, 2012). This can be done as follows

    External Environment Analysis
    Market Demographics
    The target market for deodorants will include young Male and Female consumers, teenagers and adults. According to a report by Mintel based on research on deodorant users, 92% of the teenagers used deodorants, making them at par with the adults (Mintel, 2012: May 1). In United States of America, adults comprise the majority with age group of 25-54 years constituting 40.2% of the population and 15-24 years age group comprising majority of teens constituting 13.7% of the population (Index Mundi, 2013: n.d)
    Market Growth Rate
    The global deodorant industry is the fastest growing industry in the global beauty and personal care industry and is growing on an average annual rate of 7% at fixed U.S dollar prices for last five years with sales increasing by $1.5 billion in 2012 (Walker, 2013: Nov. 18). But in United States of America, the deodorants category has matured with a compounded annual growth rate of 2% (Euromonitor, 2013: n.d). Euromonitor predicts the retail value growth of deodorants industry by 8% in constant terms to reach $3.2 billion by 2017 (Euromonitor, 2013: n.d).
    Market Needs and Trends
    The deodorant market is characterized by following market needs and trends:
    - In U.S, men are substituting deodorants as a low cost alternative to after-shave or fragrance (Walker, 2013: Nov. 18).
    - The U.S deodorant market has reached the stage of maturity as the growth is low and only new innovations can help penetrate the market (Walker, 2013: Nov. 18).
    - According to Mintel's research, consumers are not brand loyal in deodorant's market and like experimenting new varieties of deodorants (Yeomans, 2012: May 2).
    - All-natural ingredients and organic ingredients do not matter in deodorant market as Mintel's research suggests that only 10% of the buyers prefer deodorants having all-natural ingredient (Yeomans, 2012: May 2).
    Arimount deodorants faces a tough competition in United States of America from Unilever and Proctor & Gamble with the two companies together command 65% market share while Unilever 's major brands such as Degree, Axe, Dove and Suave commanding 34% of retail value share in 2012 (Euromonitor, 2013: n.d). The concentration ratio of two leading players (total market share of 2 leading market players - Unilever and Proctor & Gamble) of 65% and poor brand loyalty towards single brand means that the two major players are competing on product differentiation and low price offerings. Although such a large market share is commanded by the leading players, none of their brand is commanding more than 6% market share wherein 'Degree Men' brand of Unilever is the market leader is 5.9% and Concentration Ratio of four leading brands CR4 is only 19.2% (Statista, 2013: n.d). This means that to be competitive, Arimount needs to launch deodorants with different varieties and lower prices that will help it penetrate the American market.

    PEST (Politico-legal, Economic, Socio-Cultural and Technological Environment) Analysis

    Politico-legal Environment
    U.S Food and Drug administration has specified regulations concerning use of chemicals in beauty and cosmetic products including deodorants but regulations are not very strictly followed and almost all chemicals are being used in such products by the companies through lobbying with government officials (States, 2012: 21 Mar.). This means that the government policies are favourable towards the industry.

    Economic Environment
    GDP growth rate of United States of America have increased marginally by 1.8% in third quarter of 2013 above 1.6% in the previous year (Trading Economics, 2013: n.d). The deodorants industry seems to be maturing with only 2% growth of the market but is expected to grow at a steady rate (Euromonitor, 2013: n.d). According to a report by Bloomberg, household spending on services such as personal care increased marginally by 0.2% although overall consumer spending has cooled down and consumers are increasing their savings rather than doing expenditure (Chandra, 2013: Nov. 8).

    Socio-cultural Environment
    A new study has linked the use of deodorants to increased risk of breast cancer among women as it is supposed to contain carcinogenic substances and one in eight of the 82,000 ingredients used in cosmetic and personal care products are toxic and hazardous industrial chemicals which have raised a concern among various advocacy groups (Walia, 2013: Sept. 14). United States of America comprises of diversity of its culture with Latinos, Hispanics, Native Hawaiians, Blacks, Whites etc. comprising the population (Index Mundi, 2013: n.d). The deodorant can be manufactured keeping into consideration the needs of these segments.

    Technological Factors
    Technologies are changing fast and even deodorant brands such as Degree men has launched a new deodorant range with Motion-sense technology that responds to the movement of the wearer to fend-off sweat and odor by releasing bursts of fragrances (Olson, 2012: 3 May).

    SWOT Analysis

    1. Arimount is a well established brand name.
    2. Arimount has strong credibility to raise finance from the market.
    3. Dedicated R&D support with 30 labs across United States of America
    4. Higher profit margins Weaknesses
    1. Poor Distribution Network as compared to Unilever and Proctor & Gamble.
    2. Low manufacturing capability
    3. Poor HR policies and high attrition level
    4. Poor Inventory Management
    1. Teenage segment's growing and comparable to adult segment
    2. Young men using deodorant as after shave lotion.
    3. Emerging International Markets such as China and India
    4. Strong Women's segment Threats
    1. Threat of losing women customers due to increased risks of breast cancer.
    2. Threat of recession and probability of reduced consumer spending
    3. Threat of substitutes such as anti-perspiring soaps
    4. Threat of new competitors

    2. Marketing Strategy

    Target Markets
    Market Segments that Arimount will Target:
    - Young Men
    - Teenagers
    - Young Women
    - Upper Class

    Airmount deodorants will be positioned as the deodorant that keeps the consumers 'safe, young and fresh.' For upper class Arilux will be positioned to keep 'strong desire to be at the top.'

    - The product mix will initially comprise of Deodorants only with 10 different variants - small (150 ml), medium (300 ml) and large (450 ml) for men, women and teens along with AriLux for Upper Class in 300 ml.
    - Arimount brand will be extended as an umbrella brand with sub brands such as Arifresh, Ariyouth and Aribeauty targeted at teens, young men and young women respectively

    - Competitive pricing will be done with small deodorant priced at $5, medium at $10 and large at $20.
    - Market Skimming will be done for AriLux launching it at a price of $400.

    - Aggressive advertising will be done for the Arimount deodorants with television spending of $5 million and sales promotions worth $1 million
    - Social Media Facebook and Twitter will be also used to connect with the consumers and a dedicated marketing and sales team will also be engaging consumers through online social media promotions along with involvement of each and every employee in promoting the brand on social media.
    - Television, Print Media Advertising, Outdoor Advertising, Radio Advertising and Event Marketing will have a proportion of 50%, 30%, 10%, 5% and 5% respectively in total expenditure.

    - Company will go for intensive distribution even in rural areas in America and capture all major retailers such as Walmart, JC Penney, Target, K-mart etc. to reach as many people as possible for its non-luxury brand. Retailers will be provided attractive margins of 25% in the first year. For its luxury brand the company will open 20 exclusive retail stores in the first year to sell the product. U.S market will be divided into 10 sales territories, each of which will have a Territory Sales Manager under each of whom 20 Sales Executives will be appointed in the next one year.

    - Sales Forecast for 2013-2014: $10 million
    - Cost of Production: $2 million
    - Advertising Expenditure: $5 million
    - Sales Promotion Expenditure: $1 million
    - Other Selling and Distribution Expenses: $1 million
    - Administrative Expenses: $1 million
    - Break Even Point to be achieved in one year
    - Net Profit Margin to be attained at 15% of sales in second year
    The following control tools will beused
    - Annual budgets to monitor and control expenditures.
    - Monthly Sales and Expenditure Reports
    - Use of Balanced Scorecard
    Balanced Scorecard for Arimount
    S.No. Measure Time or Target Initiative/Primary Responsibility
    1 Sales Revenue Achieving Sales revenue of $10 million in one year Developing strong sales force of 200 people
    2 Distribution Channels To develop 20 company owned stores within one year for luxury brand and reaching 40000 retail outlets for non-luxury brand by December 2014 Developing distribution infrastructure, Appointing Sales Managers and teams
    3 Return on Investment To gain a return on investment of 15% by 2015. Improvement in inventory management and cost control
    4 Improving Brand Awareness To increase the brand awareness levels among target audience from 50% at present to 80% among the teen segment by December 2014 Focus on Sponsorships, evens, advertising

    5 Improving workforce productivity To improve workforce productivity by 25% by December 2014 To implement employee friendly HR policies, training and development programmes

    Marketing Research
    Since the market is highly competitive and most of the consumers are brand switchers, it is essential to identify how brand loyalty can be increased and how customers can be retained. For this purpose, it is essential to identify the factors that influence brand loyalty towards deodorants. Research will be descriptive in nature finding out the reasons for consumers to stick to a brand and be involved with it. For this purpose different segments and their brand loyalty needs to be assessed. The following research questions can be addressed:
    - Why does the consumer purchases a deodorant (for impressing someone/social status, stay fresh, habitual usage etc.)
    - How regularly does the consumer purchases a deodorant?
    - Which brand of deodorant does he/she regularly uses?
    - What is special about the brand?
    - What factors are considered while purchasing the brand?
    - Rate the factors from 1 to 7 where one means Least Important and 7 means most important (Factors can include price, fragrance of deodorant, special offers, discounts, freshness of deodorant, long lasting, easy accessibility etc.)
    - Will the consumer switch to any other brand? If no then why and if yes, what factors will be considered for switching to another brand?

    6. Describe how your company will examine customer satisfaction, and what will you do to create customer loyalty?
    In following ways, customer satisfaction can be measured:
    - Customer Satisfaction surveys will be conducted on a quarterly basis to assess the customer satisfaction. An external research team such as AC Nielsen ORG Marg can be hired for the purpose.
    - Mystery Shopping Audit can be done who is paid some money to buy products on a regular basis and give the feedback on satisfaction level.
    - Customer Satisfaction Forms can be made available at the retail stores where consumers need to fill the form while leaving the retail store.
    To create customer loyalty, it is essential that there is an aspirational appeal of the brand by communicating through different media such as social networking sites and interactive advertising to generate word-of-mouth communication, quality of deodorants is maintained through stricter quality control and customer loyalty programmes can be provided wherein the customers purchasing the deodorant again are given price-offs, rebates and coupons.

    Chandra, S. (2013, Nov. 8), Consumer spending cools in U.S as households boost savings, Retrieved from: http://www.bloomberg.com/news/2013-11-08/consumer-spending-cools-in-u-s-as-households-boost-savings.html

    Euromonitor (2013), Deodorants in the U.S., Retrieved on December 14, 2013 from: http://www.euromonitor.com/deodorants-in-the-us/report

    Hoovers (2012) PureBeauty Inc. - Company Description, Retrieved from: http://www.hoovers.com/company/PureBeauty_Inc_/ryscjhi-1.html

    Index Mundi (2013), United States Demographic Profile 2013, Retrieved on December 14, 2013 from: http://www.indexmundi.com/united_states/demographics_profile.html

    Kotler, P., & Keller, K. L. (2012). Marketing management (14th ed.). Upper Saddle River, NJ: Prentice Hall.

    Mintel (2012, May 1), No sweat for marketers as deodorant industry sees continued growth, Retrieved from: http://www.mintel.com/press-centre/beauty-and-personal-care/no-sweat-for-marketers-as-deodorant-industry-sees-continued-growth
    Olson E. (2012, May 3), Mixing marketing with social games and extreme sports, Retrieved from: http://www.nytimes.com/2012/05/04/business/media/degree-men-deodorant-turns-to-video-marketing.html

    States S. (2012, Mar. 21), States lead the fight against toxic chemicals lurking in cosmetics, Retrieved from: http://www.saferstates.com/2012/03/cosmetics.html

    Statista (2013), Sales share of the leading deodorant brands in United States 2012, Retrieved on Dec. 14, 2013 from: http://www.statista.com/statistics/194811/share-of-us-deodorant-sales-in-2010-and-2011-by-brand/
    Trading Economics (2013), United States GDP growth rate, Retrieved on Dec. 15, 2013 from: http://www.tradingeconomics.com/united-states/gdp-growth-annual

    Walia, A. (2013, Sept. 14), Attention Deodorant Users: New studies link aluminium to breast cancer, Retrieved from: http://www.collective-evolution.com/2013/09/14/attention-deodorant-users-new-studies-link-aluminum-to-breast-cancer/

    Walker (2013, Nov. 18), A rockier road ahead for booming deodorants industry, Retrieved from: http://www.gcimagazine.com/marketstrends/segments/bathbody/A-Rockier-Road-Ahead-for-Booming-Deodorants-Category-232391821.html

    Yeomans, M. (2012, May 2), Sweet smell of success for deodorants market as growth continues, Retrieved from: http://www.cosmeticsdesign.com/Market-Trends/Sweet-smell-of-success-for-deodorant-market-as-growth-continues

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    Solution Preview

    Guidance for Arimount

    Q1.To what segments will your company market to, and what variables should be used in these segmentations?
    Arimount sells deodorant which is a personal care product and the product is non-technological in nature and therefore, demographic and psychographic variables can be used by the company for segmenting the markets. Demographic variables such as life cycle stage and age groups can be used as the bases of segmentation. Geographical variables such as different regions such as North, West, South and East zones can be used as segmentation variables. Therefore, the segmentation of the market can be done as follows:
    Segmentation Variable Segment 1 Segment 2 Segment 3 Segment 4
    Age Group 15-20 years (Teens) 20-35 years (Young Adults) 35-45 years (Middle Aged) 45 years and Above
    Gender Male Female
    Geographical North East West South
    Social Classes Upper Class Upper Middle Class Middle Class Lower Middle Class

    Since Mintel's research shows that 92% of the teens use deodorant making them at par with young men, this is a potential segment for the company to tap (Mintel, 2012: May 1). Another potential group that the company can target includes the young adults as the age groups of 25-54 years comprising a majority 40.6% of the U.S population (Index Mundi, 2013: n.d). A research by Harrison Group and American Express Publishing has found that among the rich people which comprise of top 10% of the earners have a positive sentiment and had planned to increase their spends by 25% in 2013 as compared to 15% increase in 2013 (Frank, 2013: Apr. 29). Therefore, the company can find a great potential in this rich upper class segment. The middle class is another potential segment which comprises of upper middle class and lower middle class who earn $40,000 to $ 1 million per annum comprise 32-46% of the U.S population (Frozen Pea Fund, 2013: Apr. 4). Therefore, upper middle class is another potential segment which is closer to rich class and presents huge opportunity for the company. Therefore, the company will target the following groups
    - Teenagers (both male and female)
    - Young Men
    - Young Women
    - Rich Elite Class
    - Upper Middle Class
    Since Deodorant is a personal product and it is a product where the brand loyalty is very low and consumers keep on looking for new varieties (Yeomans, 2012: May 2), the company needs to develop different variants and target different segments connecting with those segments as follows:
    Arimount's Arilux Elva targeting Rich Elite Class
    Arimount's Delsa targeting upper middle class
    Arimount's Arifresh targeting Teenagers
    Arimount's Ariyouth targeting young men
    Arimount's Aribeauty targeting young women.

    Q2. Discuss the way your company will address your customers buying process.
    Arimount will address the consumer buying decision process in following ways:
    Consumer Buying Decision Process for Arimount Deodorants
    1. Problem/Need Recognition - This is the first and foremost stage in the consumer buying decision process wherein consumer recognizes the need for the product. This need recognition can done through stimulus in the form of advertising wherein the advertising message will reinforce the need for a deodorant that keeps the consumer's fresh and free of bad odour throughout the day. This need recognition can also be done through distribution of ...

    Solution Summary

    This solution addresses five vital questions relating to Arimount deodorant marketing and competitive strategies