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MKT300TeamAssignment.docx

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Department
Marketing
Course
MKT 300
Professor
Helene Moore
Semester
Fall

Description
1 Create Your Brand Dashboard Team Assignment MKT 300 Helene Moore Ryerson Jathushan Rasalingam - 53 Samantha Dorafshani - 32 Natasha Graham - 55 Jane Chong - 56 Nujhat Nabeela - 69 Paper ID: 372286472 2 Table of Contents Executive Summary ……………………………………………………….…………….. 03 Situation Analysis …………………………………………………………….…………. 04 Dashboard Proposal ………………………………………………………….…………..06 Tracking your competition …………………………………………………….…………10 Show Me The Money! ………………………………………………………..………….12 Conclusion ………………………………………………………………………………. 14 References ……………………………………………………………………………….15 Executive summary 3 Old Spice is one of today‟s most reputable companies in the line of men‟s grooming. Found back in 1934, they had a reputation for their masculine scented products but over the 1 years, had their brand slandered by the perception of their products smelling „like grandpa‟ . Old Spice had difficulty shaking this brand image off, but through a brilliant brand management team, they had managed to make history in the advertising industry. In 2010, they had decided to integrate advertising with the use of social media and began “The Man Your Man Could Smell Like” campaign. As this was such a foreign method for companies to use at the time, the success of this campaign has ever since given dominance to Old Spice. The five main key metrics selected to measure Old Spice are as follows: net present value, internal rate of return, promotional lift, traffic source, and rich media interaction. Net present value and internal rate of return influences the company‟s decision on its investments. Traffic source, rich media interaction and promotional lift takes a look on where the company is gaining the most attraction from, how engaging the company is with its consumers and how much sales have increased as a result. Consistent with all metrics, the key issues that the proposed metrics face is by the fact on how there are many factors and elements that are not taken into consideration; the metrics cannot be fully relied upon. This may include factors such as competitors, the economy, reliability of the data, and many more. Through this report, we will furthermore go into detail on the issues each metric faces. Situation Analysis 4 As the brand management team for Old Spice we want to analyze the organization‟s internal and external atmosphere to understand the organization‟s abilities, explore existing and potential customer trends, and the complete business environment. Despite the economic recession, the male specific beauty/grooming market has been booming. A report conducted by MarketResearch.com valued the men‟s grooming industry 2 worldwide at $19.7 billion and growth to $28.0 billion by 2014 (Kellett, 2009). Men‟s grooming with the addition of beauty and personal care is no longer a taboo subject amongst men. More men are spending big bucks to maintain themselves and are not just picking up whatever‟s closest to the cashier. According to Euromonitor figures, by 2016, the US male grooming industry is projected to grow to $5.8 billion in revenue. Mintel, a research firm based in Chicago, reported that younger men are driving sales of person care services and suggested that this is a key demographic to engage (McDougall, 2013). Males today are beginning to discover the benefits of keeping up appearances especially with today‟s faced paced lifestyle and competitive workplace where appearance is key. Men‟s grooming has definitely evolved in the past few years and Old Spice is a huge contributor to this new evolution brewing in the personal care industry. The body wash market is a $757 million market, and in 2009 sales surpassed the traditional bar soap sales. The marketing campaign of communicating directly to women in a male communication 4 style was the spark that ignited the fire under this booming market. (Miller, 2013). Fueled by a new line of products and the renewed interest in male grooming, Old Spice is now recognized as the leading male body wash and deodorant brand in the United States. Followed by an original advertising campaign, Old Spice is on its path to become the industry leader when it comes to men‟s grooming. While trying to expand in the men‟s 5 grooming industry, Procter & Gamble, Old Spice‟s parent company, research team had discovered a startling statistic: 60% of men‟s body washes were actually purchased by women. This led to the conclusion that their new campaign had to be dedicated to both men and women. Old Spice changed the entire men‟s grooming marketing style when they introduced the “The Man Your Man Could Smell Like” campaign. The idea behind the campaign was to bring back the masculine credibility to men‟s grooming products and also spark a dialogue between the sexes. The “Smell Like a Man, Man” campaign quickly became a viral video sensation. According to Nielson, sales of Old Spice body wash doubled three months after the first “The Man Your Man Could Smell Like” campaign premiered (Axon, 2010). When looking at numbers, the commercials had nearly 105 million YouTube views, which ultimately led to become the #1 Most Viewed Sponsored YouTube Channel. Old Spice also recorded an astonishing 2700% increase in Twitter followers plus an 800% 6 increase in Facebook fan interaction (StopPress, 2013). Our competitors picked up on this new form of advertising and imitated but none can replicate the same results we had achieved. Our original campaign received the highest honor in advertising in June 2010 when the ad won the Grand Prix for film at the Cannes Lions International Advertising Festival (Diaz, 2011).7 Some of the closest competitors include Dove Men-Care, AXE, and L‟Oreal. However, our main competitor is AXE, a company under the British-Dutch company Unilever; also a main competitor to Proctor & Gamble; the parent company of Old Spice. The Unilever product came to dominate the now $5 billion U.S. men‟s body-spray market in 2007, a category we are currently right behind them in and plan to oust them in the near 6 future (Feifer, 2012). While we target essentially the same audience, the AXE brand image and marketing is completely different and more focused on pure sex appeal. Dashboard Proposal The five key metrics that measure Old Spice success in the upcoming year are listed below from being most important to least: 1. Net present value: What it measures: Net present value measures the profitability of an investment. It is the difference between present cash inflow and outflow. In short, net present value analyzes the present value of future cash inflows taking inflation and returns into account. A negative net present value is undesirable as it indicates loss for the company. For example, when Old Spice decided to invest money into “The man your man could smell like”, it would first assess the future cash flows the campaign would generate. After, discount those cash flows into one lump-sum present value money . It is a crucial step as Old Spice needs to know if the campaign even going to bring positive cash flow. If the model yields a negative number, Old Spice would be better off not making that investment into the campaign. Reason for choosing this metric: The reason behind choosing this metric is because it is one of the most powerful tools for making decisions about investments. It simply allows one to evaluate the worthiness of a project, campaign or investment. Challenges: ● The drawback of net present value is its sensitivity to discounted rates. A small change in the discount rate has a large impact on the output. 7 ● The incremental cash flow cannot exclusively be recognized to a single part of the marketing mix since elements of the marketing mix are intended to function collectively. If a new product is launched using a new distribution system and advertising campaign, and the increase in profit is large. One cannot distinguish the profit attribution on just product development, new distribution system or a new advertising campaign . 10 Estimation problem is always a problem ● NPV excludes any real option. For example, Old Spice invests money into something innovative and creates a product that no one else in the market has ever come up with before and it is currently producing negative net present value. The reason could simply be that the consumers need to get more exposure to this brand new product and be given some time to adapt to it. The product may have a great future in 3 years. Net present value model, simply does not have the option to take this situation in consideration. At first look, one will see the negative value and eliminate this project 2. Internal rate of return: What it measures: Internal rate of return is calculated by determining the interest rate at which the net present value of cash flows equal to the essential capital investment. IRR measures the rate of return of anticipated cash flows produced by an investment. It also measures the efficiency and the yield of a project. An acceptable rate of return is that which exceeds the cost of capital . It adds value to the investment. As the internal rate of return increase, project becomes even more profitable. 8 Internal rate of return is not the same as rate of return because of inconsistent cash inflow. For example, with Old Spice, sales went up by 60% after two months and 125% after 4 months of its campaign launch. Reason for choosing: It is a simple way of comparing the value of several investments. It 12 determines the greatest prospective cash flow for a certain project . Challenges: ● It does not consider environmental factors. It ignores the possible future costs that could affect change the profit value ● Excludes capital cost. It only compares the generated cash flow. It makes the smaller investments look more profitable without taking the fact that it requires less in investment in account ● IRR may produce several values, in a case where there is both positive cash flow and negative cash flow present 13 3. Promotional lift: What it measures: Promotional lift is the percentage of incremental sales over baseline sales. It measures the rise in sales due to promotional activities. It also measures the financial success of a company caused by any form of marketing . 14 Before the launch of the Old Spice campaign, the baseline sale was 500 million. After the promotional activity, revenue grew to 755 million report by Mintel, the market research firm. Promotional work included means of free public social networking sites, coupons, etc. . 15 Reason for choosing this metric: It is one of the most useful metrics to measure the effectiveness of marketing efforts in profit. Often marketers just blindly keep marketing, 9 without knowing if it is even working; if it is, where it is working. The act of monitoring and optimizing lift can have a positive effect on sales and help it grow even faster Challenges: ● It is not directly related to revenue as sales may also go up due to other factors such as seasonality, competitors, or consumer‟s preference. ● It is hard to measure the success of solely one promotional as many may be going on at the same time, hard to determine what influence the boost in sales. 4.Traffic Sources: What it measures: It measures where the traffic is coming from and its‟ demographics. Examples include, Facebook, Twitter, Search engines like Google, MSN, organic or paid search etc. Google Analytics is one of the ways to measure campaigns and traffic sources. After the campaign launch, Facebook fans went up by 60%, twitter followers went up by 2700%, Youtube subscribers more than doubled to 150,000. Most traffics thus came from twitter . Reason for choosing this metric: Old Spice campaign is heavily based on social media and determining where the traffic source is coming from is go
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