Case Study: P & G Scope Vs Plax

Define the problem

Plax entering the market in 1998 has seen a significant attainment in market share in which the competition lead by P&G, Scope, has 32%. With Plax's attainment in two years time, P&G sees the potential of losing market shares in the product category. She is concerned that with all the competitions such as Listerine following suit of Plax's new position for the product category of "Plaque fighter" in addition to fresh breath and killing germs. She must come up with a plan of action to counter the competition. She has to answer three questions:

1- Does Scope plan and execute a new Line Extension;

2-add new claims to the present product; and

3- Take no action.

These alternatives will affect all aspects of the business in terms of financial, personnel, and manufacturing resources.

Enumerate the decision factors

There are three alternatives courses of action within the decision making factorsare:

1) Add a new claim- is considered the most prevalent of the three courses of action. This will give Scope the additional claim of fights plaque.

2) The second course of action is Line Extension- is to develop a new product specifically focusing on only fighting plaque. This is to ensure that the consumer is not confused about the additional claims on the original product.

3) No action taken-simply put P&G, Scope would do nothing directly in response to the potential threat in terms of the two other alternatives. However she will increase her promotion and advertising of the product reemphasizing her claims of fresh breath and killing germs.

Uncertainties

Plax will continue if not do more advertising. Competitors will continue to emphasize their own claims. They will increase spending on advertising to reinforce the new claims.

Consider the relevant information

Market Share

P&G, Scope has 32 % of the market share as of 1990 and of the distribution 42% is out of supermarkets, 27% out of drug stores. Listerine has 16% market share with 12% in supermarkets and 18% in drugstores. Plax has 10% market share after two years of being in the market. Distribution is 8% in supermarkets and 11% in drugstores. It appears that Plax claim of fighting Plague is driving her market shares and as such she has priced the product at a higher cost per liter. Giving her not only a potential large market share but also yielding a strong financial gain.

Cost of Claims-Financial

Up to 1990 the total market size of the industry was 1,358,000 units and out of that Scope had 440,000 units. She had gross sales of $18 million and gross margin of $6,741,000 after subtraction the cost of goods sold, $11,409,000. All of these figures represent a total gross margin $15.32 per unit.

Comparatively Plax had a 135,800 units per in the market share. The cost of goods sold 25.36 with a gross margin of 39.73.

From all indications the competition, Cepacol, Listerine, Listermint, and Plax are on the verge of eating away Scope's market share. This is based on Plax's two years run with the new claim of fighting plaque. The competitors see Plax's financial gains, market position as not only a threat but a viable marketing strategy.

SWOT

Strengths--

* Experienced and strong management team

* Worldwide recognized products

* Personnel

o Excellent and skilled workers

* Finance

o Strong sales growth and revenue

o Vast financial resources

* Manufacturing

o Innovation and efficient production facilities

Weakness

* Long line of management hierarchy;

* Time is of the essence. Many departments with different time frames to perform study.

Opportunities

* Expand and maintain market share in mouthwash industry

Threat

* Plax's speedy gain of market share

* The remaining competitors engagement into the new claim

Identify the Best Alternative