Vicks Throat Drops

A case study
BA 230. Marketing Management

Prepared by:

Carlo Abas
Mara Angelica Raina Aranas
Alyssa Loren Arellano
Carlos Rev Cao
Chernobyl Diones

Prepared for: Prof. Des Cruz

Cesar E.A. Virata School of Business
University of the Philippines Diliman

Date Submitted: 13 March 2014. 2000H

I. Case Background
In 1985, Procter & Gamble, Inc. (P&G) bought Richardson-Vicks, Inc. Through this acquisition,
P&G launched a diversified portfolio of health care products one of which is Vicks Throat Drops. Vicks
Throat Drops was perceived to be a medicinal throat drop by consumers. Thus, adults infected with
colds and laryngitis were its primary customers. However, in 1990, P&G decided to drop the product
due to difficulties in production and distribution.
In May 1993, P&G relaunched its Vicks Throat Drop brand. Its image was changed from being a
medicinal throat drop to a menthol candy. The packaging was changed from aluminum foil to individual
plastic wrapper; distribution broadened to include not only drugstores but also small retail stores,
grocery stores and supermarkets.
II. Problem Statement
Despite all the efforts and resources used by P&G, Vicks Throat Drops was unsuccessful in
penetrating the market for menthol candy; it failed to meet its sales volume expectations. This case
study tries to analyze what went wrong in Vicks marketing strategy and tries to suggest how Vicks could
have done it differently.
III. Case Analysis
In order to have a structured analysis in determining the reasons behind the failure of Vicks
Throat Drops, it is best to understand first the Philippine confectionary market, particularly the menthol
candy market. By doing so, it is easier to understand the pattern and rationale of the consumers and the
existing market competition. Furthermore, it will give clues as to what marketing strategies should be
implemented. Porters Five Forces Analysis was used to evaluate the competitive strength and position
of Vicks Throat Drops. Lastly, an analysis of the marketing strategies that P&G implemented in 1993 will
be scrutinized. This should give a better understanding on what went wrong.
Overview of the Menthol Candy Market
People buy menthol candies for various reasons. Based from the different interviews that were
conducted by the group, some buy menthol candies due to the soothing and cooling effect it provides,
which can relieve sleepiness. Others bought it to relieve hunger while others use it to avoid dizziness
during travel. Then, some says that consuming menthol candies can have refreshing effect on the
breath.
Out of the reasons provided, it can be inferred that majority who have bought menthol candies
buy it due to their need of having a fresh breath. The people who would likely to buy them are smokers
and commuters. These types of consumers, however, are not very particular with the brand of the
menthol candy as long as the desired strength of the mint flavor is met. Thus, it is hard to keep the

consumers loyal to a particular brand of menthol candy.

Given that fresh breath is socially desirable for all age groups and income brackets, the menthol
candy market captures a large number of potential customers. To take advantage of this diverse market,
a rapid inflow of new brands - Maxx, Halls, Stork, Green Ice, Polo and Nano-nano - was experienced in
the menthol candy segment by 1993. Brands compete head on thru heavy TV and radio advertising.
Brands also continued innovating the product by providing different flavors of menthol candy such as
Halls Honey Lemon and Maxxs Cherry flavor.

Exhibit 1: Prominent Menthol Candy in the Philippine Market (1993)

Menthol candies were marketed in high traffic locations to bring them closer to the consuming
public and to capture a larger chunk of the market. This is particularly true with the market leader,
Stork, whose candies were being distributed by street vendors and sari-sari stores. The distribution
strategy was followed by other brands.
Porters Five Forces Analysis for Vicks Throat Drops
The group used the Porters Five Forces Diagram to analyze the competitive intensity and
attractiveness of the menthol candy market, of which Vicks is a new entrant. See the diagram below:
Power of Suppliers
Based on the case, Vicks is at a disadvantage vis-a-vis its competitors. Stork, Halls, and
Maxx all obtain their stocks locally while Vicks obtains its candies from Indonesia. The longer the
supply chain the more it poses delays in providing Vicks candies to the retailers. This is crucial

for a mass marketed product. Goods such as candies should be available on the point-ofpurchase.

Exhibit 2: Porters Five Forces Analysis for Vicks Throat Drops

Power of Customers
Given the number of candy brands in the retail market, it is obvious that customers can
dictate the trends for this industry. Any customer may shift his/her purchase if Vicks was not
available or deemed to be expensive.
Threat of New Entrants
The high capitalization required to establish a candy factory and a mass marketed candy
brand pose high barriers for the entry of new players. Unfortunately for P&G, other companies,
which has economies of scale and experience in FMCGs (e.g. Warner-Lambert for Halls, URC for
Maxx), also launched their own candy brands during the same period.
Threat of Substitutes

Other types of candies and cheap sweets may be considered substitutes for menthol
candies. However, menthol candies are already well-differentiated from other candies such as
gums (ex. juicy fruit, double mint), and soft candies (ex. gummy bears).
Rivalry Among Existing Competitors
As seen in the diagram above, Stork was the leading and most recognized menthol
candy brand prior to the launch of Vicks Throat Drops. Competition, however, became tougher
as Halls and Maxx arrived in the market shortly after Vicks was relaunched.
P&Gs Marketing Strategies for Vicks Throat Drops

Exhibit 3: Vicks Marketing Mix Strategy

Product
In order to relaunch the product as a menthol candy, the company introduced 4 flavors Orange, Cherry, Menthol and Lemon, which is a good strategy as it made a good point of
difference from its main competitor, Stork, which sells only one type of menthol candy. Though
Vicks is the smallest, in terms of size, among the competing menthol candies, it has maintained

its point of parity of being a hard and refreshing candy.

However, the main problem on the products introduction was in the brand identity
itself. Indeed Vicks is a very strong and powerful brand, but people associate Vicks with
medicinal products. Couple that with the fact that the product was named Vicks Throat Drops, it
solidifies the perception of the buyers that the product is medicinal and not a menthol candy.
Hence, it begs the question is it a candy or a medicine?
Another miss, which is very obvious, is how the company packed its products. Indeed
Vicks Throat Drop can be bought in jars or in smaller packs to cater the needs of both retailers
and home buyers. However, the wrapper is not as lively as what a candy should be. The image of
the candy is similar and is still highly associated with other Vicks medicinal products. In general,
perception of the product has not changed even though the company has already altered its
positioning.
Price
The product was priced slightly higher than their competitors even though it is smaller
in size. In the point of view of P&G, this small difference in prices doesnt play an important
role in the marketing strategies of Vicks Throat Drops. However, it is worth noting that P&Gs
target market are the masses or regular consumers, who are very price sensitive. These people
are typically affected with pricing. As a result, they easily shift from one product to another
depending on which one will give more value for their money.
Promotion
In terms of sales promotions, it is evident that the company has done a very intensive
campaign. The people behind the campaign has made sure that Vicks Throat Drops is almost
everywhere in stores: from the island displays to cash registers, posters and streamers, products
of Vicks Throat Drops can be seen. Furthermore, different merchandise have been given to
salespeople and customers such as caps, key chains, t-shirts and more to raise awareness of the
products. Indeed, the company has spent a lot of resources to make this campaign grand and
intensive.
Unfortunately, the television advertisement for Vicks Throat Drops was a big miss. The
reason is that the company is trying to sell the product as a menthol candy but its advertisement
doesnt say so. From the title of the commercial, Pesteng Ahem, it is evident that the message is
eating Vicks Throat Drop will help you get rid of cough or clear your throat. The message
relayed by the tagline limits the potential market of the product and is a big contrast to the mass
marketing goals the company is trying to achieve.
Place

The company is correct when it has decided to distribute the product in a nationwide
scale. Furthermore, it is also a great move to penetrate the sari-sari stores as they are still the
number one place to sell a heavily commoditized item such as menthol candies. However, the
company missed geographical importance of prioritizing Metro Manila.
In terms of demographics, the population of Metro Manila is very dense as compared to
the other regions of the country. More often than not, Metro Manila usually dictates which
products will be successful. It would have been wiser to distribute the product first in Metro
Manila before distributing it on a national level.
IV. Alternative Courses of Action
New Market New Product Approach (Different brand name, different target market other than
medicinal candy)
A good strategy that P&G should have done in penetrating the confectionary market,
particularly the menthol candy, is to introduce a new brand and totally go away with the Vicks branding.
People always associate Vicks with medicines. Therefore, any indication that the product is made by
Vicks, or is associated with Vicks, people would have the notion that it is a medicine and not a menthol
candy.
In developing this strategy, marketers should design the packaging in such a way that it is more
appealing to the masses. The current packaging is too dull, too professional and with close association
to medicinal items; wrappers should be designed with fun and lively colors. Additionally, wrapper and
packaging should move away from technical or scientific words in describing the products in order to
change the peoples perception of the Vicks brand.
In terms of promotions, the TV advertisement should also be revised. In designing the new
commercial of the product, it is important to move away from messages that say it clears the throat or
pesteng ehem. Even though this is a fact, it is not a claim that is big enough for a mass marketing
campaign. Avoiding these taglines will help the product to move away from its previous positioning as a
medicinal candy.
As for distribution, it is best that the concentration of distribution will be in Mega Manila first
before going to the provinces and on a national level. A hype in Mega Manila will translate to better
product recognition and sales. Likewise, word about the product in Mega Manila will resound across the
nation if found to be successful.
Lastly, for pricing, it is best if the candies will be priced lower than its competitors. P&G has this
capability since it is a big company that can influence its suppliers to support its strategies. By having a
lower price than usual, the company can create a hype, which eventually would translate into sales.
After the target market has been captured, then P&G may opt to reposition its pricing if deemed
necessary.
Old Market Old Product Approach

Realign goals & strategy of the product position the product as medicinal candy
In this strategy, the company should assess if there can truly be a positive association between
the Vicks medicinal brand and menthol candies that will work on a mass marketing level. If none, then
the efforts of the marketers should not be towards the confectionaire market. Instead, all efforts should
be concentrated in strengthening Vicks Throat Drops as the number one choice for throat itchiness and
other related problems.
In pursuing this strategy, it is important that the company develop concrete but tempered goals.
Strategy formulation should be aligned to the revised goals. The objective is to strengthen the original
position of Vicks Throat Drops as a medicinal candy through market development (existing product for
an existing market). Given that, its pricing, distribution, packaging, and promotions should be changed
from the initial proposition of menthol candies.
Contraction Defense - Strategic Withdrawal
A large organization like P&G can withdraw from a market or particular market segment in
which it is not strong enough to compete with existing players to concentrate its resources on other
markets in which it has greater strength.
In this case, sales of Vicks Throat Drops registered low sales volume despite the massive and
heavy advertising. Aside from the supply problem, relatively low sales volume was primarily due to the
continuous association of the product with Vicks as a medicinal brand. This resulted to buyers
perception that the menthol candy that Vicks offering can only be consumed when you have sore throat
or flu. Since the strength of Vicks as a brand lies on its products which offers medical solutions, P&G can
get rid of the menthol candy segment and just focus on Vicks core business.
V. Recommendation
Thus, given the 3 alternative courses of action above, we prefer that Vicks opt for the New
Market, New Product approach in view of the following:

Economies of Scale - Considering that P&G is the company behind the Vicks brand, it can be said
that the group has the financial capability to venture into the confectionary market with a new
brand and value proposition. Likewise, they already have a solid distribution capability which
can reach sari-sari stores as seen in the massive presence of their products such as Tide,
Pringles, Whisper, and Pampers.

Experience - Likewise, P&G has been into the FMCG business for a long time already. Launching
a new brand and a new marketing campaign is not an unfamiliar territory for them.

Market Opportunity - At the time of the launching of the Vicks Throat Drops, only the Stork

candy is a mature brand. The group agrees that P&G was right in seizing the opportunity but has
a flawed strategy. Regardless, P&G would have missed the opportunity to enter another mass
market have they decided to stick with Vicks as merely a medicinal product.
By launching a totally new brand, they would leave the Vicks brand but still take advantage of
the existing process and know-how in producing the throat drops. However, including the Vicks brand
and visual appearance will not sell in the targeted mass market since associating anything with the Vicks
brand will either upsell the candy or limit its saleability to buyers with medical needs. This however
will not grab the opportunity to target a bigger market base.
However, it should be noted that currently, the supply of candies came from Indonesia. Given
that, it is best that P&G look for partnerships with a local company that has the capability to support
their plans of mass marketing a menthol candy brand. This would not only enable them to shorten their
supply chain, but also enable them to compete with local manufacturers.
Lastly, it is advisable for P&G not to directly challenge Stork (like what it tried to do with the
Vicks brand) during its launch phase. They should offer to the mass market through sideways attack.
This is similar to what Maxx did: offer to the mass market, have the same distribution channels, but put
in a more colorful packaging.

Exhibit 4. Proposed New Brand and Candy Wrapper

BA 230
Case 1: Vicks Throat Drops
1. Problem Why was Vicks Throat Drops unsuccessful in penetrating the market?

o
o

Company strategy of marketing the product vs perception of buyers

Positioned as medicinal candy when it was first launched in the market
Re-launch reclassified from medicinal candy to menthol candy
Marketing: similar with Stork, Halls and Maxx
Perception: upscale, medicinal
2. Benefits

For smokers to remove smell of nicotine

Freshen breath

Short-term relief of minor sore throat and throat irritation

Cooling effect

Attributes
Menthol strength

3. Marketing mix elements (4Ps) crucial in the menthol candy category:

Product
o What the customer wants from the product
o Needs that are satisfied by the product
o Features of the product that will meet the needs of the market
o Branding
Strength popular medicinal product management assumed that mass marketing the product fits
Vicks brand equity
Alternative courses of action
1. Different brand name but same target market
2. Realign goals & strategy of the product position the product as medicinal candy like Strepsils
Notes:
Compare different brands

Packaging

Advertisements

Distribution

Supplier

Vicks P&G Indonesia

***evaluate using Porters Five Forces Model
Menthol Candy Market
experiencing rapid inflow of new brands
used TV and radio for advertisements
introducing new candy flavors
sari-sari stores were tapped for distribution
dominated by Stork
strong distribution at retail level
candies were differentiated through flavors they offer, shape, strength of menthol flavor,
individual packaging
key success factor: distribution
Halls

Maxx

first introduced the honey lemon flavor

already heavily supported with advertising and promotions before VTD relaunched
provided heavy TV and radio advertising support when VTD relaunched
launched its Cherry flavor in August 1993
distribution: wholesalers and selected supermarkets
perceived as brand with quality and class
appealed to middle and upscale sector

launched in July 1993

heavy TV and radio advertising and outdoor sampling
distribution: nationwide sari-sari store
backed by merchandising support
posters
plastic streamers
jar distribution
introduced Maxx Cherry
no brand equity to capitalize on
tasted and looked almost the same as Stork

Vicks Throat Drop

market relaunch in May 1993
from medicinal throat drop to a menthol candy
when positioned as medicinal, primary customers were adults infected with
colds and laryngitis

may increase in customs, duties and taxes by 50%

however, sales volume did not meet expectation
marketing managers attributed this to insufficient supply of stocks
however, above problem was already addressed early in the launch
packaging from aluminum foil to individual plastic wrapper
distribution broadened from drugstores to include small retail stores, grocery stores and
supermarket
phased out in 1990 due to difficulty in production and distribution
imported from P&G Indonesia
marketing services by Anderson Group, Incorporated
competitors: Halls and Max
perceived as brand with quality and class
appealed to middle and upscale sector

Strategy
1. Product
a. 4 Flavors
i.
Orange
ii.
Cherry
iii.
Menthol
iv.
Lemon
b. 2 Pack sizes
i.
100s
ii.
20s
c. size
i.
2g (2.5g for Halls, 3,5g for Stork, 4.5g for Maxx)
d. jars of 200s with the four flavors
e. jars of 300s per flavor (in September 1993)
2. Price
a. volume discount scheme
i.
30-49 cases - 1%
ii.
50-99 cases - 2%
iii.
100 cases and above - 3%
b. discount of 2% for paying within 7 days of delivery
3. Distribution
a. distributed nationwide
b. hired a marketing arm to distribute to sari-sari stores nationwide
i.
nationwide distribution - May 1993
ii.
MM-based sari-sari stores - September 1993
iii.
urban centers of Luzon - Nov - Dec 1993
4. Promotions
a. advertising

i.
TV to create awareness
ii.
limited supply from Indonesia delayed some of the heavy TV ad placements
b. sales promotions
i.
merchandising materials
1. island display
2. cash register display
3. posters
4. streamers
5. shelf-takers
6. hanging clips
7. shelf trays
8. sales organizers
9. tire covers
10. jars
11. display allowances
a. 2500/unit/month for large tree display
b. 500/unit/month cash register display
ii.
trade deals
1. 100s + 20s
a. 10 cases + 1 case free
2. 100s
a. 100 cases + 10 cases free
b. 50 cases + 4 cases free
c. 25 cases + 2 cases free
3. 20s
a. 12 cases + 1 case free
iii.
premiums
1. distributed to sales and customers during relaunch
a. t-shirts
b. key chains
c. baseball caps
d. waist pouches
e. calculators
Problem
Why was VTD unsuccessful in penetrating the market
What is the primary benefit provided by a menthol candy? What are the attributes consumers
look for?
Recommend marketing strategies to increase the sales of VTD
Minor recommendations: (Rev)
- should have focused its marketing promotions on drugstores rather than broad media (ex. TV, Radio)

instead