Introduction
Facial and body care market is extremely competitive for a variety of reasons. Companies in the segment are forced to look for innovative solutions and compete on price, as the demand of the target customer group and the lack of product differentiation drive more severe rivalry and bring the product life cycle to a minimum. ODF and Dove are the major competitors in the facial care market, private brands and such companies as L'oreal, Nivea, and RoC, however, builds on competition in many specific product lines.
Current Situation Analysis
Launched in June 2000, Olay Daily Facial (ODF) facial cleansing cloth was an innovative product that addresses needs and wishes of the target customer group for the company. It is evident that ODF enjoyed the pioneering position in this product offer, gaining over 10% market share during the first three months after the product launch. While the competition was caught by surprise and allowed ODF to benefit from the unique offer, building on a short-term return, a facial cleansing cloth was not a type of product that could build on the organizational sustainable competitive advantage due to easy imitability and the lack of unique technology. That said, already by October 2000, ODF faced competition from its major rival Dove and even private labels, exposing their own cleansing products side by side wth ODF and Dove brands on the shelves of major retailers. High-level analysis of the operation allows identifying the following core challenges for the company:
Easy imitability of the product;
Low switching costs for consumers, resulting in significant losses up to 40% in year two after the market entrance.
Lack of product differentiation with main competitors;
Investment-heavy marketing strategy;
Low barriers to entry;
In spite of rebranding and new marketing campaign, ODF is still often seen as a brand for old lady;
Given the market potential and good understanding of its strategic position,it is possible to argue that all the above elements present challenges for the company, rather than problems. The challenges outlined above according to their significance for the company. Given the importance of the first four factors, these influences should be primarily addressed in the Olay's marketing plan.
Market Segmentation
Core segments
An analysis of the market, conducted by the company outlines that the primary customer for ODF product is a white woman between 25-45 years old. At the same time, the study identified an opportunity to further expand into teenager category and build on bigger target group as the facial cleansing cloth proved to become an incremental facial cleansing product rather than substitute to traditional soap bars or foams. That said, it is possible to separate three major customer groups, based on the following criteria: age group, purchasing habit and reasons behind the use of the cleansing cloths. The market for the product should be segmented in:
Women between 25-45 y.o, well-aware of the benefits of the product, constantly seeking for improved solutions to care of their skin;
Occasional buyers, women between 25-65 y.o, using cleansing cloth as on-the-go solution for immediate issue;
Young consumer between 19-25 years old, considering the product fashionable and substituting the use of traditional facial cleaning products.
Core segments
Based on the size of the market and the overall marketing strategy for the brand that aims at shifting from the "old lady brand" to young and fashionable public, it is reasonable to assume that Olay should focus on the first customer category wth secondary attention is given to the young consumer. This decision is based on several assumptions: market size for women in a 25-45 category will continue to grow as women tend to increase the variety of facial cleaning products; regular purchasing behavior opens more opportunities for developing customer loyalty and building brand identity. Additional focus on younger population can allow Olay building on its "young brand" image and enter new market segment through cheap social marketing campaigns. Occasional buyers should not build on the focus group as marketing campaigns and promotional strategy proves to be extremely costly for the company without a potential sustainable return in the segment, given low switching costs and frequency of purchase (Applegate and Johnsen, 94-98).
ODF Positioning
Olay brand with its entire line of the facial and skin care product positions itself in the middle scale segment, offering high-quality products and one-stop-sopping complete solution for daily facial and body care. Based on the recent re-branding strategy and a strategic goal to reach out to the younger public, it is recommended that ODF focuses on the same positioning with several critical propositions to its target customer: accessibility of the products; competitive price; stylish and user-friendly packaging; 360 solutions, offering standard sizes of the products as well as travel size options. The positioning statement for ODF is: "You care about-about the skin you live in? ODF cares about every aspect of I, by offering complete, quality and affordable skin care products, developed especially for you!”
Advertising Strategy
It is essential that in a long run ODF reduces its advertisement costs. The target customers in both segments belong to the generation, highly involved in digital solutions and under the influence of mobile technology and social media. While the advertisement campaign should continue with mass promotions and classic media propaganda through TV and magazines, the new strategy should try to shift the focus for word-of-mouth advertisement. With that in mind, advertising strategy should be based on the following pillars:Aggressive marketing and local promotional campaign on Facebook, Pinterest, and Instagram targeting women, who care about their skin;
Investment in own ODF blog and participation other opinion-building blogs, talking about unique qualities differentiators of ODF products from competition;
TV and magazine advertisement for reaching the mass public and raising overall awareness of the brand;
Stakeholder training and motivation program to build on ambassadors from within the core of the organization.
The overall tone of the message should bring in a fresh thinking, feeling of belonging and clear message that ODF understands what women need and feel. ODF should share the emotions of their target customers, bringing style, fashion, excitement and longevity in the core of their communication campaign.
Marketing Mix Decisions
Based on the challenges that the market of facial and body care presents, it is important to take several critical marketing mix decisions. More specifically, the company should focus on price, product variety, and distribution.
Price
Olay should look at more aggressive pricing strategy in some of the categories, such as their new product, facial cleansing cloth. This should be done in a short term to attract new clients and build on the brand recognition in the target segment. In a long term the company should raise the prices to the market average and continue looking at the ways to improve the costs to benefit from higher profit margins. This will build a new client base, give visibility to the brand and will put pressure on the competition (Applegate and Johnsen, 101-132).
Distribution
It is evident that the companies in the segment do not have any specific differentiation strategy in terms of distribution. ODF should look at the opportunities to enhance their distribution chain and work with smaller retailers, differentiating their product from the competition. The current market situation illustrates that the brands are diluted by being exposed side by side with each other and with private labels, which makes switching costs for a client extremely low and reduces an opportunity to build on unique brand identity. By building on new sales channels, ODF will be able to offer a unique exposure of its products and differentiate the experience of their target group.
Product
ODF competes with Dove and other companies in the segment in the majority of the product lines. Current product variety is adequate for the company strategy and expansion of the product line would be seen as the arguable strategy in the modern business setting. It is recommended, however, that ODF penetrates the market by focusing on the variety of packaging and sizes to build on customer loyalty. The above will improve customer retention rate and increase the cost of switching to another brand.
Works Cited
Applegate, Edd and Johnsen Art. Reuters. Cases in Advertising and Marketing. Real Situations for Tomorrow’s Managers. 2007. Lanham: Rowan and Littlefield Publishers, Inc. Print.
