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Case Study_ Swiffer Situational Analysis.doc


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Case Study_ Swiffer Situational Analysis.doc

  1. 1. Situational AnalysisInternal EnvironmentParent company, Proctor and Gamble (P&G) dominate the consumer and household products with over$56 Billion in sales annually. Seventeen of their product lines do over one billion each year. They havea good system in place, which is heavily focused on innovation and product expansions. P&G is aglobal company that can take most products everywhere. 80% of their markets grew last year involume. They have great brand recognition and brand equity. Any product that they launch has a goodchance of survival, thanks to P&G’s time tested marketing and distribution system. Commitment toinnovation and R&D helps keep them in front of the pack.P&G was formed in 1937 by William Proctor and James Gamble. The first P&G products offered weresoap and candles. Throughout the years P&G have created new products and innovation. In 2005, P&Gand Gillette merged giving the company an even more diverse line up of products. Oral B, Braun,Gillette, and Duracell all came to see P&G as home. The latest billion-dollar brand for P&G wasActonel, which is used to fight osteoporosis. Actonel was released in 2004.P&G are very active in philanthropy causes. The P&G Fund contributed $39.5 million to educationalinstitutions, envirnomental causes, and health services. P&G is the leader in contributing to SecondHarvest, to feed the less fortunate here in the United States. P&G received the Hunger Hope Award in1998. P&G donated $2.5 million to 9/11 support efforts.The company’s foundation is based on a set of core values.LeadershipIntegrityTrustOwnershipPassion for winningP&G proudly proclaim that “innovation is the corner store of our success”. With good reason, evenmature markets such as household cleaning. P&G has managed to create a winning brand.Swiffer accounts for 75% of the quick-clean segment and is growing at about 7% in terms of sales peryear. The original dry Swiffer was a hit and they quickly brought out product extensions that did welland a few that did not. The Carpet flick of late has been underperforming. Last year the three mainSwiffer products sold approximately 220.4 million.P&G is internally and culturally the perfect breading ground for consumer product homer-runs. Theyare known for putting resources in the right place to get products in winning positions. They have afocus on end user convenience and value added features that set them apart as well as increaseconsumer satisfaction and margins.Customer EnvironmentSwiffer has certain segments that are focused but over all this is a mass marketing product. Every onewho has a floor to clean or something to dust is a potential customer. Today, it is no secret that peopleare willing to pay a premium for convenience specifically when that convenient product really delivers!
  2. 2. Starbucks is a great example of consumer’s elastic demand for quick coffee that is very good andconsistent. The cleaning industry is very similar. Ease and quick are the key messages that are sellingcleaning products second to that is extra sanitation and cleanliness. Young people are looking for aneasier and quicker way to do all the basic household activities and older more set in their ways people,have an open eye for a times saver that actually does the job well. The price point of the Swiffer alsomakes it a demographic sweep. Almost any age group or income level can justify paying for thisconvenience.Part of the consumer base, are those who have converted to Swiffer products completely. They do nothave the traditional mop and bucket in the closet. They use a Swiffer when they have a spill and whenthey just need to mop or clean floors.Another part of the mix, are those who have not given up on the traditional cleaning products andprocedures. However, they view the Swiffer line as a quick fix or band aid product, for when they arecrunched for time or when there is just a small clean that needs to be done.Busy,busy,busyKey Factors that influence Purchases of SwifferSwiffer being the first in the quick clean game naturally gets some benefits in terms of productrecognition and brand loyalty. They are looked at as the leader and the innovator and then the original,almost a classic. Another thing that is helpful for Swiffer is that the P&J clout gets them the choicestshelf space and store position. They make it easy to identify and find, like most P&G products. Theproduct is available just about anywhere you can buy groceries or cleaning supplies. The big guys(Wal-Mart, Target, and Meijer etc.) and the small players (small chains and mom and pops) generallyhave P&G representation.There are also other issues that have more to do with the product, rather than things that can be directlycreditable to P&G. Although they are because of the way P&G takes pride in their products. TheSwiffer is easy to use, reasonably priced, and very durable. The real profit potential is in the refills.This is where the majority of the margin comes in, thus they can offer the equipment at very low price.This is a great way of increasing trial and encourages having multiple units in one household.In 1999 the quick clean industry did not even exist. Swiffer and P&G started a completely new marketthat now brings in over 220 million per year. Pricing has been key, and promotion of the (ease of use)convenience and sanitary features have all combined to catapult this niche and change consumerbehavior.Competitor EnvironmentAlthough there are over ten brands that compete with Swiffer in the quick clean category or in asubstitute category, the top three brands are held by Swiffer. After that, the next four contenders areQuickie, Libman, Pledge Grab it, and Clorox Ready Mop with 33.2 million, 30.2 million, 22.9 million,and 22.4 million in 2005 sales respectively. Quickie is over 13 million behind the third place SwifferWet Jet and just over 86 million behind the original Swiffer. Some other notable competitors that wewill not focus on are Quickie Home Pro, Ever care, and private label brands. These brands onlycombined for about 40 million in sales in 2005. Few of these brands have nearly the product extensionas Swiffer. And the Prices are very similar and almost a non factor.