What significant changes have occurred in the mouthwash market in the past three years?

Question

What will be an ideal response?

Answer 1

Scope is competing in a competitive, mature market where total unit sales have increased by 8 percent and 5 percent respectively in the past two years (case Exhibit 2). However, two innovations have had a major impact on unit sales in prior years: (1) the introduction of new flavors in 1987 led to an overall increase of 26 percent and (2) the introduction of Plax—a pre-brush rinse—led to a 10 percent increase in 1989. This suggests that the market responds to innovation and P&G should consider a very proactive stance to this business (i.e., there may be other possible innovations that P&G could introduce).

Major observations about the market are:
• The dominant brand is Scope (32 percent share), with five brands holding 8.0 percent of the market (case Exhibit 4).
• With the introduction of Plax, major share losses were experienced by Listermint and Cepacol.
• The introduction of Plax may be redefining the mouththwash business, which had been positioned around fresh breath (tastes good) and killing germs. A new segment is emerging that is positioned around a health benefit—fighting plaque. However, the evidence to date suggests that this segment may not grow beyond 10 percent of the market.
• There are considerable variations in the prices of competing brands, with up to a 70 percent differential (Plax versus Scope) in the marketplace (case Exhibit 5).
• In spite of a lot of jockeying among competitors, no new brand, with the exception of Plax, has gained
substan-tial market share.
Some comments are warranted on the product category from a consumer perspective. The basic reasons for use are habit and reducing/eliminating bad breath/germs. Mouthwash is a convenience product that may have some consumer brand loyalty (taste, image), but switching among an acceptable brand set is probably likely and would be stimulated by promotions. Consumers’ perceptions of brand images (case Exhibit 3) are relatively strong for their own brand but, with two exceptions, most brands are seen as “average” on a number of attributes. The two exceptions are Listerine, which is seen as strong on the “kill germs” side, and Plax, which is strong on the plaque/ better gums side.