Chesebrough - Pond’s Inc.:Vaseline Petroleum Jelly

Case Analysis

Identification of problem

Need to prepare a marketing budget for the product Vaseline petroleum jelly

for the year 1978, should consider that profit of this product should increase by 10%

than the previous year.

Definition of problem

The sale of the product in 1977 was not up to their expectation though their

marketing expenditure was consistent.

They found that over pumping of product through trade promotion in 1976,

which made consumer and retailer to stock the products. Due to this reason in first

half of 1977 the sales declined. So expenditure on trade promotion should be

controlled.

Vaseline petroleum jelly was distributed primarily through grocery, drug, and

mass merchandise stores , these accounted for 85% of Vaseline’s ounce volume.

Distribution penetration was high for the brand as whole, in 1977 VPJ was

carried in at least one size by 92% of grocery stores and 96% of drug houses. Earlier

brand advertisement had concentrated on baby care exclusively.in 1972 the

message began to include VPJ’s versatility as a skin care product for adults and

children.

Consumer promotion : By issues of family circle and ladies’s home journal,

Sunday newspaper advertisements supplements, issue in Reader’s Digest.

Trade promotion : By discount from regular price, to achieve the greatest

sales increase.stimulated cut price feature advertising and displays, especially on

larger sizes, reinforced and expanded distribution of larger sizes in all trade

channels, limited erosion of distribution of smaller sizes.

Solution objective

Need to find the strengths and weakness of the market positions and see the

behavioural issues of consumer and their nature and role.

Analysis of problem

Analysis on the usage of the product by various users is as given below in the table

User

Uses

Heavy user Light user

Single Multiple Single Multiple

Personal

Baby

H/w

Analysing the optimistic and pessimistic views on the various factors are as mentioned below in the

table

Optimistic Pessimistic

Growth -

Price increases -

Total mrkt expenditure -

Adv budget -

- Trade promotion

Evaluate alternatives

We should increase our sales by concentrating on advertisement through

electronic and print media, we will increase our advertisement expenditure to 12%

and decrease on trade promotion to 8%.

Advertisement through electronic and print media will create lot of awareness

for the consumers, through advertisement consumer will be able to know that

Vaseline petroleum jelly is a multipurpose product. Brand image and brand loyalty

can be sustained through advertisements.

Selection and Implementation of alternative

We will increase the spending on advertisement, it will increase our sales. Innovative

advertisement should be used to create more awareness, of this product is a

multipurpose product. Consumer promotions like new offers, also should be

displayed through print media. “We should adopt pull strategy instead of push

strategy” trade promotion is like push strategy, consumer will buy more than their

requirements in trade promotion.

Push strategy

Meaning of the push strategy in marketing can be found in the communication

between seller and buyer. In dependence of the used medium, the communication

can be either interactive or non-interactive.

Applied to that portion of the supply chain where demand uncertainty is

relatively small

Production & distribution decisions are based on long term forecasts

Inability to meet changing demand patterns

Large and variable production batches

Unacceptable service levels

In 1976 our product followed the trade promotion strategy, sales of that strategy was

good but it affected the next year’s sales because retailers and consumers had

excess stock of previous year, it should not happen again. So we should reduce our

spending on trade promotion.

VPJ Brand budget for the year of 1978 (in 000’s):

PARTICULARS AMOUNT(IN $) PERCENTAGE

Gross sales 25,770 100

Variable manufacturing

cost

10,550 44.7

Gross margin 15,220 55.3

Advertising 2050 7.9

Consumer promotions 150 0.6

Trade promotions 1650 6.4

Total marketing

expenditures

3850 14.9

Profit before SG&A

expenses, overhead and

taxes

11,370 44.1

Here we have possibly increased spending for advertisement and decreased

in consumer promotion, trade promotion, on doing this we are able to achieve our

objective to increase our profit by 10%.