Aanish Ashfaq

MBA II
Section B
19P01911

SUAVE (C)

Questions:

1.Why is Tom so worried?

Tom is worried about Suave C as the brand has only increased 2% sales which were
expected to grow at 4% for year 1983. The brand was dealing in a market that was highly
fragmented with little brand loyalty and fickle consumer segments that had no concrete
way of determining trends or customer retention. The brand was only growing due to new
product development and not via innovation or significant competitive advantage. The
sole competitive edge it has was price based and not value based. Statistical data from
exhibit 4 and 5 showed almost 34.80% of women had awareness but had not used Suave.
The company was dealing in a high potential, high competition market and yet was not
able to make significant sales or profitability improvements.

2. Has marketing support for SUAVE decreased, increased or remained the same
over the years?

It has remained the same over time in terms of methodology and the budget allocation.
Vallera has spent primarily on Day-time TV advertisements more than prime time as the
latter is 5.8x more expensive than day-time. Print media accounts for only 6.8%.
Although budget increased over-time, the execution has remained the same. General
advertisements for mass awareness with primary focus on trade promotions as price is the
most decisive factor.

3. Has fragmentation decreased, remained same or increased over the years (in
the market)? What will be its impact on SUAVE?

Fragmentation has increased as seen from exhibit 1. However, Suave has performed
better than its competitors with lesser percentage drops in Market share and unit sale
share.

4. Calculate growth in dollar sales in SUAVE shampoo and SUAVE line in

percentage across years

From Exhibit 2, Sales Growth is only 25% from 1982 to 1983 complemented with an
increase of 24.7% of total marketing expenditure. It worsens in the next fiscal year, with
only 9.36% increase in sales from a 17.3% increase in total marketing expenditure. From
Exhibit 1, we can see that Unit Share has decreased by 0.4% from 1982 to 1983. Suave
shampoos are losing unit share value due to low retention and high fragmentation of the
market.

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Aanish Ashfaq
MBA II
Section B
19P01911

5. Who buys SUAVE?

Lower middle- and Middle-class families with European ethnicities. Women from ages
18 – 34 make up the major chunk of the target market.

6a. What do you know about brand loyalty in the market in general and of SUAVE
in particular?

Exhibit 4 shows that the number of Suave users is spread disproportionately. Customer
retention is 37% making it the industry leader in that category however, customers have a
likelihood to switch to Faberge or V05 over Suave.

6b. Is there cross-purchasing between high-priced and low-priced brands?

Yes, there is some cross purchasing among the brands as seen from exhibit 5. Sauvé users
purchased other brands disproportionately. However, the suave customers were mostly
the ones who were trial rejectors. Very less of the customers were retained and were loyal
to the brand .
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8. Analyze Competition

High competition based on price and awareness. Highly fragmented market with huge
variety of SKUs of one brand alone (40 for Suave). Primary competition is on the basis of
price per ounce where Suave is usually the cheapest. Customer retention is very low but
Suave has better retention than its competition.

9. Draw a table comparing SUAVE with Other Brands on Price/oz, Share of Ad

spending, % of marketing budget dedicated to ads, consumer promotion, trade
promotion; Strategy, Consumer, Line Length, Competition

10. Why Advertise?

More awareness, better reach, better conversion, better appeal on the basis of price,
differentiation of product and in turn, more contribution to sales.

11. Has Advertising helped SUAVE?

It has helped Suave to maintain its place as the cheapest brand with the highest retention
rate. IT has also made Suave, the number one brand in terms of unit sale and the second
largest conditioner brand in the US market.

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Aanish Ashfaq
MBA II
Section B
19P01911

12. Who should be the target of Advertising?

Target audience should be middle and upper middle class with different ethnic
backgrounds and should have some degree of education that leads to interest in choosing
Suave in the first place. Focus should shift from current age and gender segment to older
generations as well, mainly women from ages 34 to 50 as they are 52.4 Million in number
as of 1990, a 15% growth from last year.

13. Media Allocation: What should be do?

Follow Tom’s allocation with focus on Prime time and day to day but cut down on prime-
time exposure after there is a net increase in sales by more than 10% with a total
marketing allocation increase of no more than 20% than before. Focus primarily on
generating awareness and brand exposure as prime-time is very costly to maintain as the
primary source for advertisement. Budget allocation should be as Tom states for the
initial years but should be cut to 30/70 for better margins and profitability in the future.