St Ive\'s Body Wash

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    St Ive\'s Body Wash - Presentation Transcript

    1. Team B1 Jeremy Blanchard • Molly Brown • Paul Kim • Pingnan Li • William Peterman • Ioli Stathi-Dedaki
    2. Introduction Alberto-Culver Industry SWOT Recommendations Body Wash Category Growing Steadily Replacing Deodorant Bar Soaps Body Wash Category 350 300 250 Million 200 Sales Units 150 Sales Dollars 100 50 0 52 Weeks Ending 52 Weeks Ending 52 Weeks Ending 52 Weeks Ending 52 Weeks Ending 06/19/04 06/18/05 06/17/06 06/16/07 06/14/08
    3. Introduction Alberto-Culver Industry SWOT Recommendations Current Body Wash Market Lucrative: $400M Highly Fragmented: 475 Products with Sales 45 9.9% Millions 40 35 7.7% 30 6.24% 6.22% 5.9% 5.8% 5.4% 25 Sales 20 3.9% 15 10 5 0 DOVE DIAL OLD SPICE SUAVE OLAY SOFTSOAP AXE ST. IVES
    4. Introduction Alberto-Culver Industry SWOT Recommendations Market Growth Fast Growing St. Ives: Stagnant Sales 45 Millions 40 35 AXE 30 DIAL DOVE 25 Sales ($) OLAY 20 OLD SPICE SOFTSOAP 15 ST. IVES SUAVE 10 5 0 2005 2006 2007 P2008
    5. Introduction Alberto-Culver Industry SWOT Recommendations Recommendations Identity Development Program Phase 1 Phase 2 Advertising Reduce Magazine New Bottle SKUs Ads Reduce Fresh Linen Promotions Price
    6. Introduction Alberto-Culver Industry SWOT Recommendations Alberto-Culver Overview Strategy • Target the Ethnic Market Structure • Focus on Core CPG Business Style • President Carol Bernick
    7. Introduction Alberto-Culver Industry SWOT Recommendations Creating Demand Beyond Utilitarian Need for Cleanliness St. Ives Hand & Body Facial Body Wash Lotion Fragrant & Silky Healthy/Revitalized Firmer & Younger Healing & Natural
    8. Introduction Alberto-Culver Industry SWOT Recommendations Porter’s 5 Forces
    9. Introduction Alberto-Culver Industry SWOT Recommendations Consumer Trends What Kind of Soap Do You Buy? 50% 45% 40% 35% 30% White 25% 20% Black 15% Hispanic 10% 5% African-Americans: 0% Least Expensive All Natural Eco-friendly Extra Moisturizers deal target demographic for St. Ives 2008 What Brand of Soap Do You Buy? 50% 45% 40% 35% White 30% Black 25% Asian 20% Hispanic 15% 10% 5% 0%
    10. Introduction Alberto-Culver Industry SWOT Recommendations Competitive Field Strong Brand Images
    11. Introduction Alberto-Culver Industry SWOT Recommendations Marketing Strategies AXE SUAVE “Any excuse to get dirty” “Suave knows mommy needs to play princess too” College Age Men Middle Aged Mothers Baby Boomer Echoes Price conscious Generation X Mothers DOVE Pro-Age “Dove believes in pro-age, not anti-age” Aging Female Baby-Boomer population
    12. Introduction Alberto-Culver Industry SWOT Recommendations What Does St. Ives Represent? Who is the St. Ives consumer? How does St. What is its Ives create brand value for its message? consumer?
    13. Introduction Alberto-Culver Industry SWOT Recommendations Strengths Weaknesses oAlberto-Culver’s oDeclining market share financial stability oConcentrated oGrowing industry customer base Opportunities Threats oRestructuring initiatives oEconomic recession oDemographic trends oIntense competition
    14. Introduction Alberto-Culver Industry SWOT Recommendations Brand Identity Brand Awareness 100% 90% 80% Conversion Ratio 70% 60% 100% 50% 90% 40% 80% 30% 70% 20% 60% 10% 0% 50% Dove Suave St. Ives 40% 30% Brand Trials 20% 10% 100% 0% 90% Dove Suave St. Ives 80% 70% 60% Increase Trials to Improve Conversion Ratio 50% 40% 30% 20% 10% 0% Dove Suave St. Ives
    15. Introduction Alberto-Culver Industry SWOT Recommendations Brand Identity Most Frequently Purchased 45% 40% 35% Retention Ratio 30% 55% 25% 50% 20% 45% 15% 40% 10% 35% 5% 30% 0% 25% Dove Suave St. Ives 20% 15% Brand Trials 10% 100% 5% 90% 0% 80% Dove Suave St. Ives 70% 60% St. Ives is Unable to 50% Recruit Loyal Consumers 40% 30% 20% 10% 0% Dove Suave St. Ives
    16. Introduction Alberto-Culver Industry SWOT Recommendations Soy Milk Swiss & Lotus Vanilla Blossom Cucumber Fresh H2O Cool Energizing Blue Citrus Reduce SKUs Focus Brand Image Oatmeal & Whipped Silk Shea Butter Mineral Collagen Therapy Elastin Apricot Vitamin E Exfoliating
    17. Introduction Alberto-Culver Industry SWOT Recommendations Seasonal Scents
    18. Introduction Alberto-Culver Industry SWOT Recommendations Seasonal Scents Refreshing Qualities Providing Relief for: Body Soul Spirit Stimulating Effects Associated with: Home Food Security Warmth Softness Purity Evokes A Sense of Well-being
    19. Introduction Alberto-Culver Industry SWOT Recommendations Pricing Revision Strategy St. Ives’ Current Pricing Strategy 6 5 4 Price $ 3 2 1 0 Olay Dove St Ives Suave Softsoap Dial
    20. Introduction Alberto-Culver Industry SWOT Recommendations Market Opportunities Recessions Encourage Consumer Frugality Consumers Enjoy Trying Different Brands How Often Do You Buy This Brand? 25% 20% 15% Most Often 10% 2nd Most Often Sometimes 5% 0% 2007
    21. Introduction Alberto-Culver Industry SWOT Recommendations Optimal Pricing Position St. Ives Optimal Price is $2.99 600,000 Correlation = -0.924 540,000 480,000 Units 420,000 360,000 300,000 240,000 2.4 2.6 2.8 3.0 3.2 3.4 3.6 Price
    22. Introduction Alberto-Culver Industry SWOT Recommendations Price Reduction Communication – 10% off regular price Impact – Increase Retail Sales by $2M (14.3%)
    23. Introduction Alberto-Culver Industry SWOT Recommendations Sensitivity Analysis Close Competitors Reaction to Price Change Correlation Matrix Suave St. Ives Dove Dial Suave 1.00 St. Ives 0.316 1.00 Dove -0.298 -0.117 1.00 Dial 0.212 0.027 0.295 1.00 NPV of Price Reduction $2.30M
    24. Introduction Alberto-Culver Industry SWOT Recommendations Scent Preferences Spring Summer Fall Winter Citrus Citrus Vanilla Vanilla 1st 52% 64% 37% 46% Floral Fruity Almond Almond 2nd 40% 47% 35% 27% Fresh Linen Fresh Linen Fresh Linen Fresh Linen 3rd 39% 41% 29% 27% Fresh Linen is a Year Round Favorite
    25. Introduction Alberto-Culver Industry SWOT Recommendations 25% Increase Current Bottle is Bland and Uninspired in Excitement
    26. Introduction Alberto-Culver Industry SWOT Recommendations Current Positioning New Bottle Design Equals Differentiation
    27. Introduction Alberto-Culver Industry SWOT Recommendations MRI Score for Magazines: 141 MRI Score for Television: 85
    28. Introduction Alberto-Culver Industry SWOT Recommendations
    29. Introduction Alberto-Culver Industry SWOT Recommendations Sunday Presence
    30. Introduction Alberto-Culver Industry SWOT Recommendations Corporate Social Responsibility Clear Mission & Values Restructure Education Cultural Crisis Children Women
    31. Introduction Alberto-Culver Industry SWOT Recommendations Corporate Social Responsibility Donate 10% of the Regular Price Seasonal SKUs Swiss Vanilla Energizing Citrus Sticker on the Package Shelf Talkers
    32. Introduction Alberto-Culver Industry SWOT Recommendations Projected Financial Results: Beta & WACC Correlation Matrix Alberto-Culver S&P 500 Alberto-Culver 1.000 S&P 500 0.312 1.000 Summary Statistics Alberto-Culver S&P 500 Count 24.000 24.000 Mean 0.004 -0.018 Median 0.013 -0.009 Standard deviation 0.057 0.050 0 .0 5 7  0 .3 1 2   0 .3 5 0 .5 rE  r f   * risk  premium  3.16%  0.35  5.7%  5.17% E D 2.29 billion rw acc  rE  rD   5.17%  5.17% ED ED 867, 000  2.29 billion
    33. Introduction Alberto-Culver Industry SWOT Recommendations NPV of Pricing Strategy Assumption for Alberto-Culver Perpetuity growth rate 3.6% Tax rate 32.96% SGA/Sales 40.91% r-wacc 5.17% changes in NWC/Sales 0.83% Gross margin 52.46% Beta 0.35 Depreciation/Sales 1.73% % margin changes in NWC/Sales 0.83% retailer 27% Capital Exp/Sales 4.33% wholesaler 15% All Numbers in Millions of Dollars 2009 2010 2011 2012 2013 Increased Sales Due to Pricing $2.15 $2.3 $2.48 $2.66 $2.85 Adjustment Less Retail Margins $1.57 $1.68 $1.81 $1.94 $2.08 Less Distributor Margins $1.33 $1.43 $1.54 $1.65 $1.77 Less Cost of Goods Sold $0.69 $0.74 $0.80 $0.86 $0.92 Less Taxes $0.47 $0.50 $0.54 $0.58 $0.62 NPV $0.44 $0.45 $0.46 $0.47 $0.48 Total NPV $2.30
    34. Introduction Alberto-Culver Industry SWOT Recommendations NPV of Fresh Linen Incremental Earnings Beginning of Year 2009 2010 2011 2012 2013 2014 perpetuity Forecast ($millions) 2010 Growth rate 8.1% 7.1% 7.0% 7.0% 7.5% 3.6% Sales (millions) 2.34 2.51 2.68 2.87 3.09 203.78 Cost of sold good Gross profit (millions) 1.23 1.32 1.41 1.51 1.62 1 106.91 SG&A 1.17 1.19 1.21 1.23 1.26 83.37 Depreciation 0.04 0.04 0.05 0.05 0.05 3.52 EBIT 0.02 0.09 0.16 0.23 0.30 20.01 Income tax rate 32.96% Unlevered net income 0.01 0.06 0.10 0.15 0.20 13.41 Plus depreciation 0.04 0.04 0.05 0.05 0.05 3.52 Less capital expenditures 0.10 0.11 0.12 0.12 0.13 8.83 Less changes in NWC 0.02 0.02 0.02 0.02 0.03 1.68 -0.07 -0.03 0.01 0.05 0.10 6.43 FCF R-wacc 5.17% NPV ($millions) 4.05 4.26
    35. Introduction Alberto-Culver Industry SWOT Recommendations NPV of Fresh Linen – Sensitivity Analysis Parameter Initial assumption Worst case Best case Units sold (millions) 1.26 1.1 1.39 MSRP Price($/unit) 2.99 2.63 3.19 Wholesale price ($/unit) 1.86 1.63 1.98 SGA/Sales(1st year) 50% 60% 40.91% Parameter Initial ($millions) Worst case ($millions) Best case ($millions) Units sold 4.05 3.4 4.62 MSRP Price 4.05 3.44 4.26 SGA/Sales 4.05 3.7 4.36 Units sold (millions/year) 1.1 1.26 1.39 SGA&/Sales(%) 60% 50% 41% MSRP Price ($/unit) 1.63 1.86 1.98 1.0 2.0 3.0 4.0 5.0 NPV ($million)
    36. Introduction Alberto-Culver Industry SWOT Recommendations NPV of Fresh Linen – Scenario Analysis Strategy MSRP Wholesaler Price Expected Units Sold NPV ($/unit) ($/unit) (millions) ($ millions) Current strategy 2.99 1.86 1.26 4.05 Price reduction 2.69 1.67 1.34 3.86 Price reduction 2.79 1.73 1.33 3.99 Price reduction 2.89 1.79 1.31 4.06 Price increase 3.09 1.92 1.19 3.96 Price increase 3.19 1.92 1.11 3.78 Price increase 3.29 2.04 1.02 3.58 Correlation = -0.605 5.0 4.0 NPV($ millions) 3.0 2.0 1.0 0.0 2.6 2.8 3.0 3.2 3.4 MSRP Price($/unit)
    37. Introduction Alberto-Culver Industry SWOT Recommendations NPV of Projects 7 6.35 6 5 NPV ($ Millions) 4.05 4 3 2.3 2 1 0 Pricing Revision Fresh Linen Total NPV
    38. Introduction Alberto-Culver Industry SWOT Recommendations • Reduce SKU Phase 1 • Reduce Price • New Bottle Phase 2 • Fresh Linen • Magazine Ads Advertising • Promotions
    39. • “Soap, Bath and Shower Products – US – October 2008” Mintel Oxygen. 2008. Mintel Group. October 2008 <http://academic.mintel.com.ezproxy.bu.edu/sinatra/oxygen_academic/subject/view=reports_category&levels=9065/cat_items/cat=2 5&type=RCItem&mode=future&list=cat_items/display/id=296669>. • “Soap, Bath and Shower Products – US – August 2007” Mintel Oxygen. 2007. Mintel Group. August 2008 <http://academic.mintel.com.ezproxy.bu.edu/sinatra/oxygen_academic/subject/view=reports_category&levels=9065/cat_items/cat=2 5&type=RCItem&list=cat_items/display/id=226616 • AC Nielsen • Braverman, L. (2008). Standard & Poor’s Industry Surveys (Household Nondurables). New York: McGraw-Hill • Datamonitor (2007). Industry Profile (Bath & Shower Products in the United States). Reference code: 0072-0012 • http://query.nytimes.com/gst/fullpage.html?res=9504E5DF123AF931A15754C0A9679C8B63&sec=&spon=&pagewanted=all • http://www.businessweek.com/magazine/content/04_44/b3906117.htm • Marketer’s Guide to Media 2007. Nielsen Business Media. New York, NY • Berk, Jonathan and DeMarzo, Peter. Corporate Finance. Boston: Pearson Education Inc. 2007, 391 • http://finance.yahoo.com/q/hp?a=&b=&c=&d=11&e=11&f=2008&g=d&s=ACV • Alberto-Culver Annual Report 2007 • MRI Mediamark Reporter, Mediamark Research Inc. (mriplus.com). • TNS Media Intelligence 2007 – Ad $ Summary. Magazine Publishers of America. New York, NY • http://www.sirc.org/publik/smell_vanilla.html • http://www.vanilla.com/html/leg-calmdown.html • http://www.content4reprint.com/beauty/citrus-oil-for-electrically-tuned-skin-cleansing.htm • http://www.alberto.com/company/overview.aspx • Alberto Culver Annual Report 2007 • Bernick, Carol. Marino, Jim. Memo to The Alberto-Culver Consumer Products Team. 10 January 2006. <http://www.secinfo.com/d14D5a.v5ct.htm>. • Qualtrics Survey • Datamonitor (2008). Company Profile. New Alberto-Culver Company. June 19, 2008. http://web.ebscohost.com.ezproxy.bu.edu/bsi/pdf?vid=5&hid=15&sid=2da62ad7-82ba-49e0-8a81-f016e50a7cbd%40SRCSM2 • http://www.etsy.com/view_listing.php?ref=sr_gallery_15&listing_id=13023089\\ • 1. Aaker, Jennifer L. “Dimensions of Brand Personality.” Journal of Marketing Research, Vol. 34, No.3 (August 1997), pp.347-357. • Media Release. The Swiss Cross: a purchasing motive. McCann Erikson, University of St.Gallen. 18 June 2008. <http://www.unisg.ch/hsgweb.nsf/df76d44a9ef44c6cc12568e400393eb2/668b6bb00866f671c125746b00478f25/$FILE/media%20rele ase%20Swissness%20Worldwide,%2018.06.2008.pdf>.
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