St Ive\'s Body Wash
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Transcript of St Ive\'s Body Wash
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Team B1Jeremy Blanchard • Molly Brown • Paul Kim • Pingnan Li • William Peterman • Ioli Stathi-Dedaki
Integrated Product Management Project
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Introduction Alberto-Culver Industry SWOT Recommendations
Body Wash Category
52 Weeks Ending 06/19/04
52 Weeks Ending 06/18/05
52 Weeks Ending 06/17/06
52 Weeks Ending 06/16/07
52 Weeks Ending 06/14/08
0
50
100
150
200
250
300
350
Body Wash Category
Sales UnitsSales Dollars
Mil
lion
Growing Steadily Replacing Deodorant Bar Soaps
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Current Body Wash Market
Lucrative: $400MHighly Fragmented: 475 Products with Sales
DOVE DIAL OLD SPICE SUAVE OLAY SOFTSOAP AXE ST. IVES0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
40000000
45000000
Sale
s
7.7%6.24% 6.22% 5.9% 5.8% 5.4%
3.9%
9.9%
Introduction Alberto-Culver Industry SWOT Recommendations
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Market GrowthFast GrowingSt. Ives: Stagnant Sales
2005 2006 2007 P20080
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
AXEDIALDOVEOLAYOLD SPICESOFTSOAPST. IVESSUAVE
Sale
s ($)
Introduction Alberto-Culver Industry SWOT Recommendations
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RecommendationsIntroduction Alberto-Culver Industry SWOT Recommendations
Phase 1
Reduce SKUs
Reduce Price
Identity Development Program
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Alberto-Culver Overview
• Target the Ethnic MarketStrategy
• Focus on Core CPG BusinessStructure
• President Carol BernickStyle
Introduction Alberto-Culver Industry SWOT Recommendations
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Creating Demand Beyond Utilitarian Need for Cleanliness
Introduction Alberto-Culver Industry SWOT Recommendations
St. Ives
Facial Hand & Body Lotion Body Wash
Healthy/Revitalized
Firmer & Younger
Healing & Natural
Fragrant & Silky
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Porter’s 5 ForcesIntroduction Alberto-Culver Industry SWOT Recommendations
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Consumer Trends
African-Americans:Ideal target demographic
for St. Ives
Least Expensive All Natural Eco-friendly Extra Moisturizers0%5%
10%15%20%25%30%35%40%45%50%
What Kind of Soap Do You Buy?
White Black
Hispanic
2008
0%5%
10%15%20%25%30%35%40%45%50%
What Brand of Soap Do You Buy?
WhiteBlackAsianHispanic
Introduction Alberto-Culver Industry SWOT Recommendations
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Competitive Field
Strong Brand Images
Introduction Alberto-Culver Industry SWOT Recommendations
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Marketing StrategiesAXE
“Any excuse to get dirty”College Age Men Baby Boomer Echoes
SUAVE“Suave knows mommy needs to play princess too”
Middle Aged MothersPrice conscious Generation X Mothers
DOVE Pro-Age“Dove believes in pro-age, not anti-age”
Aging Female Baby-Boomer population
Introduction Alberto-Culver Industry SWOT Recommendations
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Who is the St. Ives
consumer?
What is its brand
message?
How does St. Ives create value for its consumer?
What Does St. Ives Represent?Introduction Alberto-Culver Industry SWOT Recommendations
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StrengthsoAlberto-Culver’s financial stability oGrowing industry
WeaknessesoDeclining market shareoConcentrated customer base
OpportunitiesoRestructuring initiativesoDemographic trends
ThreatsoEconomic recessionoIntense competition
Introduction Alberto-Culver Industry SWOT Recommendations
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Brand Identity
Increase Trials to Improve Conversion Ratio
Dove Suave St. Ives0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Brand Awareness
Dove Suave St. Ives0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Brand Trials
Dove Suave St. Ives0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Conversion Ratio
Introduction Alberto-Culver Industry SWOT Recommendations
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Brand Identity
Dove Suave St. Ives0%
5%
10%
15%
20%
25%
30%
35%
40%
45%Most Frequently Purchased
Dove Suave St. Ives0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
Retention Ratio
St. Ives is Unable to Recruit Loyal Consumers
Introduction Alberto-Culver Industry SWOT Recommendations
Dove Suave St. Ives0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Brand Trials
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Introduction Alberto-Culver Industry SWOT Recommendations
Cool Blue
Fresh H2O
Swiss Vanilla
Soy Milk & Lotus Blossom
Cucumber
Energizing Citrus
Whipped Silk
Mineral Therapy
Apricot Exfoliating Vitamin E
Collagen Elastin
Oatmeal & Shea Butter
Reduce SKUsFocus Brand Image
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Seasonal Scents
6 Standard
SKUs
Swiss Vanilla
Energizing Citrus
Spring - Summer
Introduction Alberto-Culver Industry SWOT Recommendations
Fall - Winter
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Seasonal ScentsSwiss Vanilla Energizing Citrus
Associated with:HomeFoodSecurityWarmth SoftnessPurity
Evokes A Sense of Well-being
Refreshing Qualities
Providing Relief for:BodySoulSpirit
Stimulating Effects
Introduction Alberto-Culver Industry SWOT Recommendations
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Pricing Revision Strategy
St. Ives’ Current Pricing Strategy
Olay Dove St Ives Suave Softsoap Dial0
1
2
3
4
5
6
Price
$
Introduction Alberto-Culver Industry SWOT Recommendations
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Market Opportunities
Recessions Encourage Consumer FrugalityConsumers Enjoy Trying Different Brands
0%
5%
10%
15%
20%
25%How Often Do You Buy This Brand?
Most Often2nd Most OftenSometimes
2007
Introduction Alberto-Culver Industry SWOT Recommendations
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2.4 2.6 2.8 3.0 3.2 3.4 3.6240,000
300,000
360,000
420,000
480,000
540,000
600,000R² = 0.801753558466761
Price
Units
Correlation = -0.924
Optimal Pricing PositionIntroduction Alberto-Culver Industry SWOT Recommendations
St. Ives Optimal Price is $2.99
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Price Reduction
Communication– 10% off regular price
Impact– Increase Retail Sales
by $2M (14.3%)
Introduction Alberto-Culver Industry SWOT Recommendations
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Sensitivity Analysis
Close Competitors Reaction to Price Change
NPV of Price Reduction $2.30M
Correlation MatrixSuave St. Ives Dove Dial
Suave 1.00St. Ives 0.316 1.00Dove -0.298 -0.117 1.00Dial 0.212 0.027 0.295 1.00
Introduction Alberto-Culver Industry SWOT Recommendations
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Scent PreferencesSpring Summer Fall Winter
1st Citrus52%
Citrus64%
Vanilla37%
Vanilla46%
2nd Floral40%
Fruity47%
Almond35%
Almond27%
3rd Fresh Linen39%
Fresh Linen41%
Fresh Linen29%
Fresh Linen27%
Introduction Alberto-Culver Industry SWOT Recommendations
Fresh Linen is a Year Round Favorite
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Introduction Alberto-Culver Industry SWOT Recommendations
Current Bottle is Bland and Uninspired25% Increase in Excitement
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New Bottle Design Equals Differentiation
Current PositioningIntroduction Alberto-Culver Industry SWOT Recommendations
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Introduction Alberto-Culver Industry SWOT Recommendations
MRI Score for Magazines: 141
MRI Score for Television: 85
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Introduction Alberto-Culver Industry SWOT Recommendations
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Sunday PresenceIntroduction Alberto-Culver Industry SWOT Recommendations
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Cultural Crisis
Restructure
Clear Mission & Values
Education
WomenChildren
Introduction Alberto-Culver Industry SWOT Recommendations
Corporate Social Responsibility
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Corporate Social Responsibility
St. Ives Gives Back!
Seasonal SKUsSwiss VanillaEnergizing Citrus
Sticker on the PackageShelf Talkers
Introduction Alberto-Culver Industry SWOT Recommendations
Donate 10% of the Regular Price
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Projected Financial Results: Beta & WACC
0.057 0.3120.35
0.5
* 3.16% 0.35 5.7% 5.17%E fr r risk premium
2.295.17% 5.17%
867,000 2.29wacc E D
E D billionr r r
E D E D billion
Correlation Matrix
Alberto-Culver S&P 500
Alberto-Culver 1.000 S&P 500 0.312 1.000
Summary Statistics
Alberto-Culver S&P 500
Count 24.000 24.000Mean 0.004 -0.018Median 0.013 -0.009Standard deviation 0.057 0.050
Introduction Alberto-Culver Industry SWOT Recommendations
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NPV of Pricing Strategy
All Numbers in Millions of Dollars 2009 2010 2011 2012 2013
Increased Sales Due to Pricing Adjustment $2.15 $2.3 $2.48 $2.66 $2.85
Less Retail Margins $1.57 $1.68 $1.81 $1.94 $2.08
Less Distributor Margins $1.33 $1.43 $1.54 $1.65 $1.77
Less Cost of Goods Sold $0.69 $0.74 $0.80 $0.86 $0.92
Less Taxes $0.47 $0.50 $0.54 $0.58 $0.62
NPV $0.44 $0.45 $0.46 $0.47 $0.48
Total NPV $2.30
Introduction Alberto-Culver Industry SWOT Recommendations
Assumption for Alberto-Culver Perpetuity growth rate 3.6%
Tax rate 32.96% SGA/Sales 40.91%
r-wacc 5.17% changes in NWC/Sales 0.83%
Gross margin 52.46% Beta 0.35
Depreciation/Sales 1.73% % margin
changes in NWC/Sales 0.83% retailer 27%
Capital Exp/Sales 4.33% wholesaler 15%
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Incremental Earnings Forecast ($millions)
Year 2009 Beginning of 2010
2010 2011 2012 2013 2014 perpetuity
Growth rate 8.1% 7.1% 7.0% 7.0% 7.5% 3.6%
Sales (millions) 2.34 2.51 2.68 2.87 3.09 203.78
Cost of sold good
Gross profit (millions) 1.23 1.32 1.41 1.51 1.62 1 106.91
SG&A 1.17 1.19 1.21 1.23 1.26 83.37
Depreciation 0.04 0.04 0.05 0.05 0.05 3.52
EBIT 0.02 0.09 0.16 0.23 0.30 20.01
Income tax rate 32.96%
Unlevered net income 0.01 0.06 0.10 0.15 0.20 13.41
Plus depreciation 0.04 0.04 0.05 0.05 0.05 3.52
Less capital expenditures 0.10 0.11 0.12 0.12 0.13 8.83
Less changes in NWC 0.02 0.02 0.02 0.02 0.03 1.68
FCF -0.07 -0.03 0.01 0.05 0.10 6.43
R-wacc 5.17%
NPV ($millions) 4.05 4.26
Introduction Alberto-Culver Industry SWOT Recommendations
NPV of Fresh Linen
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3.0 4.02.01.0 5.0
Units sold (millions/year)
SGA&/Sales(%)
MSRP Price ($/unit)
1.63 1.86 1.98
1.1 1.26 1.39
60% 50% 41%
NPV ($million)
Parameter Initial assumption Worst case Best case
Units sold (millions) 1.26 1.1 1.39
MSRP Price($/unit) 2.99 2.63 3.19
Wholesale price ($/unit) 1.86 1.63 1.98
SGA/Sales(1st year) 50% 60% 40.91%
Introduction Alberto-Culver Industry SWOT Recommendations
NPV of Fresh Linen – Sensitivity Analysis
Parameter Initial ($millions) Worst case ($millions) Best case ($millions)
Units sold 4.05 3.4 4.62
MSRP Price 4.05 3.44 4.26
SGA/Sales 4.05 3.7 4.36
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Strategy MSRP($/unit)
Wholesaler Price($/unit)
Expected Units Sold(millions)
NPV($ millions)
Current strategy 2.99 1.86 1.26 4.05
Price reduction 2.69 1.67 1.34 3.86
Price reduction 2.79 1.73 1.33 3.99
Price reduction 2.89 1.79 1.31 4.06
Price increase 3.09 1.92 1.19 3.96
Price increase 3.19 1.92 1.11 3.78
Price increase 3.29 2.04 1.02 3.58
Introduction Alberto-Culver Industry SWOT Recommendations
NPV of Fresh Linen – Scenario Analysis
0.0
1.0
2.0
3.0
4.0
5.0
2.6 2.8 3.0 3.2 3.4
MSRP Price($/unit)
NP
V($
millio
ns)
Correlation = -0.605
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Introduction Alberto-Culver Industry SWOT Recommendations
Pricing Revision Fresh Linen Total NPV0
1
2
3
4
5
6
7
2.3
4.05
6.35N
PV ($
Mill
ions
)
NPV of Projects
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Phase 1
•Reduce SKU•Reduce Price
Phase 2
•New Bottle•Fresh Linen
Advertising
•Magazine Ads•Promotions
Introduction Alberto-Culver Industry SWOT Recommendations
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Questions & Answers
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• “Soap, Bath and Shower Products – US – October 2008” Mintel Oxygen. 2008. Mintel Group. October 2008 <http://academic.mintel.com.ezproxy.bu.edu/sinatra/oxygen_academic/subject/view=reports_category&levels=9065/cat_items/cat=25&type=RCItem&mode=future&list=cat_items/display/id=296669>.
• “Soap, Bath and Shower Products – US – August 2007” Mintel Oxygen. 2007. Mintel Group. August 2008 <http://academic.mintel.com.ezproxy.bu.edu/sinatra/oxygen_academic/subject/view=reports_category&levels=9065/cat_items/cat=25&type=RCItem&list=cat_items/display/id=226616
• AC Nielsen• Braverman, L. (2008). Standard & Poor’s Industry Surveys (Household Nondurables). New York: McGraw-Hill • Datamonitor (2007). Industry Profile (Bath & Shower Products in the United States). Reference code: 0072-0012• http://query.nytimes.com/gst/fullpage.html?res=9504E5DF123AF931A15754C0A9679C8B63&sec=&spon=&pagewanted=all• http://www.businessweek.com/magazine/content/04_44/b3906117.htm• Marketer’s Guide to Media 2007. Nielsen Business Media. New York, NY• Berk, Jonathan and DeMarzo, Peter. Corporate Finance. Boston: Pearson Education Inc. 2007, 391• http://finance.yahoo.com/q/hp?a=&b=&c=&d=11&e=11&f=2008&g=d&s=ACV• Alberto-Culver Annual Report 2007• MRI Mediamark Reporter, Mediamark Research Inc. (mriplus.com). • TNS Media Intelligence 2007 – Ad $ Summary. Magazine Publishers of America. New York, NY• http://www.sirc.org/publik/smell_vanilla.html• http://www.vanilla.com/html/leg-calmdown.html• http://www.content4reprint.com/beauty/citrus-oil-for-electrically-tuned-skin-cleansing.htm• http://www.alberto.com/company/overview.aspx• Alberto Culver Annual Report 2007• Bernick, Carol. Marino, Jim. Memo to The Alberto-Culver Consumer Products Team. 10 January 2006.
<http://www.secinfo.com/d14D5a.v5ct.htm>.• Qualtrics Survey• Datamonitor (2008). Company Profile. New Alberto-Culver Company. June 19, 2008.
http://web.ebscohost.com.ezproxy.bu.edu/bsi/pdf?vid=5&hid=15&sid=2da62ad7-82ba-49e0-8a81-f016e50a7cbd%40SRCSM2• http://www.etsy.com/view_listing.php?ref=sr_gallery_15&listing_id=13023089\• 1. Aaker, Jennifer L. “Dimensions of Brand Personality.” Journal of Marketing Research, Vol. 34, No.3 (August 1997), pp.347-357.• Media Release. The Swiss Cross: a purchasing motive. McCann Erikson, University of St.Gallen. 18 June 2008.
<http://www.unisg.ch/hsgweb.nsf/df76d44a9ef44c6cc12568e400393eb2/668b6bb00866f671c125746b00478f25/$FILE/media%20release%20Swissness%20Worldwide,%2018.06.2008.pdf>.