First semester brand management integrated project presentation on St Ive\'s body wash.

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

40. • “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.
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<http://www.unisg.ch/hsgweb.nsf/df76d44a9ef44c6cc12568e400393eb2/668b6bb00866f671c125746b00478f25/$FILE/media%20rele
ase%20Swissness%20Worldwide,%2018.06.2008.pdf>.