Arctic Power

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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).

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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 as a superior laundry detergent, especially formulated for cold water
washing. In the western market, Arctic Power has attempted to develop the cold
water market. In either case, Arctic Power’s position is connected to cold
water. The good news is that regular cold water washing has increased nationally
from 20% in 1981 to 29% in 1986. Another 25% of consumers could be described as
occasional users of cold water for washing. Hence, 54% of Canadians wash in cold
water. When people were asked about the benefits of washing in cold water, the
results were astounding. The eight most common answers could be easily divided
into two categories – those that were money saving in nature (saves energy,
cheaper, saves hot water, saves electricity) and those that related to the
quality of


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