Arctic Power Essay Research Paper The Canadian

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Arctic Power Essay, Research Paper The Canadian laundry detergent market is mature, very competitive and dominated by three major consumer packaged goods companies, one of which is Colgate-Palmolive Canada (CPC). Arctic Power is CPC’s top-of-the-line offering in its laundry detergent line. Arctic Power is specially formulated for washing in cold water. The detergent has risen in market share from 4% in 1981 to 6.5% in 1986, and the Senior Product Manager has established a goal of reaching 12% market share by 1996. Problem Definition Linda Barton and Gary Parsons face two problems. First, they must determine whether to continue developing the brand in their already strong regional markets of Quebec, the Maritimes and British Colombia, or go national with marketing efforts.

Second, they must decide whether to use a single positioning strategy (as was successfully implemented in Quebec) or continue to use a dual positioning strategy. The dual strategy consisted of highlighting Arctic Power as a superior detergent in areas with strong sales, and focusing on encouraging Canadians to use cold water washing in areas with relatively weak sales. Analysis When it comes to laundry detergents, Canadians primarily think of one name, Tide. Procter and Gamble’s Tide detergent has captured over one-third of the market and is twenty percentage points ahead of its closest competitor in market share. While Tide and Arctic Power are equivalent brands in terms of cleaning power, Tide outsold Arctic Power by a 5 to 1 ratio in 1986. The market share for Tide has

remained level (at approximately 34%) during the same time that Arctic Power has enjoyed a market share increase from 4% to 6.5%. Due to Tide’s dominance in the detergent market, it will play an important role in any major change in Arctic Power’s strategy. Costs and profit structures for leading detergent brands were similar. A break-even analysis for the market (see Appendix A) indicates that a detergent must capture approximately 8% – 8.5% of the market in order to break even nationally. Detergents with small portions of market share have experienced diminishing sales (see Appendix B). Of the twelve offerings (or group of offerings) that held 10% or less of the market share, only two experienced sales growth from 1983 to 1986 – Wisk and Arctic Power. To keep its market

share, Wisk spent disproportionately high amounts of money on advertising (see Appendix B). In such a competitive market with a high break-even threshold and increasing prices for materials, it is reasonable to believe that the offerings with lower market shares will continue to decline. This decline will provide opportunity for Arctic Power (although CPC’s economy detergent offering, called ABC, has consumed much of the market share that was lost by the smaller competitors). Arctic Power holds a strong share of the market in three regions: Quebec (17.5%), Maritimes (6.3%) and British Columbia (5.5%). These three regions comprise 44% of the total volume of detergent sales for the country. Other regional market sizes are displayed in Appendix C. For Arctic Power to capture 12%

of market share, it must look beyond these three regions (see Appendix C). Thirty-nine percent of the Canadian market is held in Ontario. Arctic Power’s penetration into this large region is a meager 0.8%. For Arctic Power to reach its goal of 12% market share, Ontario must be considered a major part of the strategy. Ontario has the highest return on media expenditure of any region (see Appendix D). Ontario is also changing the way that it washes clothes. The proportion of households in Ontario that use cold water washing has increased from 14% in 1981 to 17% in 1986. Hence, a marketing strategy that will provide further penetration into Ontario is quite desirable. Arctic Power’s positioning strategy has been twofold. First, Arctic Power has been positioned in eastern Canada