From 2010 to 2014, J&J's Listerine has made progress in market penetration as one of the leading brands in the oral hygiene industry. Now, its brand manager, Ronaldo Art would want to come up with a long-term plan to keep the product's profitability and competitive edge.
Paul W. Farris, Leandro Guissoni, Olegario Araujo
Harvard Business Review (UV7205-PDF-ENG)
April 21, 2016
Case questions answered:
- According to the case, what are the pros and cons of targeting each marketing metric proposed in the decomposition of market share (penetration share, share of requirement, usage index)? As Listerine’s brand manager around 2010, which marketing metrics did Art emphasize as reflecting the brand’s objectives?
- What was the role of the sub-brand Listerine Essencial and, later, the Listerine Zero new product launch? How are the product launches related to the targeted brand’s objectives?
- If you were Listerine brand manager in 2012, how would you react after seeing the market share loss shown in Table 3? Which metric would you focus on to address the brand challenge at the time?
- What were the importance of the “21-day challenge” campaign and new TV campaigns? And what about the new larger SKUs and the promotional effort to offer a 1.5 L bottle for the price of a 750 mL one? What metrics was the brand trying to influence according to the proposed system of metrics?
Not the questions you were looking for? Submit your own questions & get answers.
Choosing the Right Metrics for Listerine Brand Management in Brazil Case Answers
This case solution includes an Excel file with calculations.
1.) According to the case, what are the pros and cons of targeting each marketing metric proposed in the decomposition of market share (penetration share, share of requirement, usage index)? As Listerine’s brand manager around 2010, which marketing metrics did Art emphasize as reflecting the brand’s objectives?
Out of total purchases of a customer of a product or service, what percentage goes to a company defines its market share. It can be simply interpreted as to what extent consumers prefer some products instead of competitors’ ones, and the higher the market obtained by a firm, the greater the sales and the lesser the effort to sell more, meaning a strong barrier to entry for other competitors. It is more likely to be a key goal when market shares are known and easily measurable, and it is often unimportant for small firms. It is helpful to allocate the customers across the companies within the market and define the objectives. Even though Listerine has been the leader in the mouthwash market between the years 2009 and 2014, because it reached the greatest market share, in 2010, there was a slight decrease of the revenue brand share metric in the mouthwashes category. However, this metric is considered to be too reductive since it does not allow the analysis of the whole context perfectly.
When Art, marketing manager at J&J, was hired to become the product manager for the Listerine brand in Brazil in 2010, he was faced with a critical landscape in terms of Colgate’s market share; an unexpected growth has just happened. His brand’s objectives were emphasized by the market share itself (basic metric from which start any strategy) and the following other metrics.
Penetration share is a measure of brand or category popularity (it looks at “active” consumers). In particular, the two key measures of a product’s “popularity” are penetration rate and penetration share.
The penetration rate is the percentage of the relevant population that has purchased a given brand or category at least once in the time period under study.
A brand’s penetration share, in contrast to penetration rate, is determined by comparing that brand’s customer population to the number of customers for its category in the relevant market as a whole. It can be useful when considering the opportunity to grow by bringing new consumers into the market (gaining competitors’ consumers or attracting non-users, or convincing the existent ones to increase the purchases). Penetration share can also be used in developing strategies to increase the market share of a particular product or service.
Regarding the Listerine case and the fact that the market share has been reduced in the first four years, this implies that the Penetration share for Listerine has decreased, and the brand lost some consumers. If Listerine wants to increase its popularity among the mouthwashes category, it should develop new strategies to become more attractive in that particular sector.
One of the first concerns of the new brand manager Art is to reach the overall category growth and consequently increase the brand awareness by planning a long-term strategy to reach a strong competitive advantage within the market. One of the cons of the penetration share is that it does not take into consideration the different purchasing behaviors of the consumers. For example, there could be customers who are not classified as “active” because they do not make frequent purchases within a category. Instead, they buy large quantities in longer periods.
Share of requirements is a measure of how well the brand meets the range of needs for its customer base. It is calculated solely among buyers of a specific brand. Share of requirements is, in essence, the market share for a brand within a market narrowly defined as the people who have already purchased that brand.
This metric can guide a firm’s decisions on whether to allocate resources toward efforts to expand a certain category that could be particularly profitable, to poach customers from competitors, or to increase the share of requirements among its established customers. Marketers consider the share of requirements as an indicator of customer loyalty, and in fact, it aids in understanding if the offering encounters customer satisfaction.
Share of requirement is useful when we want to…
Unlock Case Solution Now!
Get instant access to this case solution with a simple, one-time payment ($24.90).
- You'll be redirected to the full case solution.
- You will receive an access link to the solution via email.
Best decision to get my homework done faster!
MBA student, Boston