Chesebrough - Pond’s Inc.

:Vaseline Petroleum Jelly

Case Analysis

Identification of problem

Need to prepare a marketing budget for the product Vaseline petroleum jelly
for the year 1978, should consider that profit of this product should increase by 10%
than the previous year.

Definition of problem

The sale of the product in 1977 was not up to their expectation though their
marketing expenditure was consistent.

They found that over pumping of product through trade promotion in 1976,
which made consumer and retailer to stock the products. Due to this reason in first
half of 1977 the sales declined. So expenditure on trade promotion should be
controlled.

Vaseline petroleum jelly was distributed primarily through grocery, drug, and
mass merchandise stores , these accounted for 85% of Vaseline’s ounce volume.

Distribution penetration was high for the brand as whole, in 1977 VPJ was
carried in at least one size by 92% of grocery stores and 96% of drug houses. Earlier
brand advertisement had concentrated on baby care exclusively.in 1972 the
message began to include VPJ’s versatility as a skin care product for adults and
children.

Consumer promotion : By issues of family circle and ladies’s home journal,

Sunday newspaper advertisements supplements, issue in Reader’s Digest.

Trade promotion : By discount from regular price, to achieve the greatest

sales increase.stimulated cut price feature advertising and displays, especially on
larger sizes, reinforced and expanded distribution of larger sizes in all trade
channels, limited erosion of distribution of smaller sizes.

Solution objective

Need to find the strengths and weakness of the market positions and see the
behavioural issues of consumer and their nature and role.

Analysis of problem

Analysis on the usage of the product by various users is as given below in the table

User Heavy user Light user

Single Multiple Single Multiple
Uses
Personal   

Baby    

H/w   
Analysing the optimistic and pessimistic views on the various factors are as
mentioned below in the table

Optimistic Pessimistic
 Growth -
 Price increases -
 Total mrkt expenditure -
 Adv budget -
- Trade promotion 

Evaluate alternatives

We should increase our sales by concentrating on advertisement through

electronic and print media, we will increase our advertisement expenditure to 12%
and decrease on trade promotion to 8%.

Advertisement through electronic and print media will create lot of awareness
for the consumers, through advertisement consumer will be able to know that
Vaseline petroleum jelly is a multipurpose product. Brand image and brand loyalty
can be sustained through advertisements.

Selection and Implementation of alternative

We will increase the spending on advertisement, it will increase our sales. Innovative
advertisement should be used to create more awareness, of this product is a
multipurpose product. Consumer promotions like new offers, also should be
displayed through print media. “We should adopt pull strategy instead of push
strategy” trade promotion is like push strategy, consumer will buy more than their
requirements in trade promotion.

Push strategy

Meaning of the push strategy in marketing can be found in the communication

between seller and buyer. In dependence of the used medium, the communication
can be either interactive or non-interactive.

• Applied to that portion of the supply chain where demand uncertainty is

relatively small
 • Production & distribution decisions are based on long term forecasts
• Inability to meet changing demand patterns
• Large and variable production batches
• Unacceptable service levels

In 1976 our product followed the trade promotion strategy, sales of that strategy was
good but it affected the next year’s sales because retailers and consumers had
excess stock of previous year, it should not happen again. So we should reduce our
spending on trade promotion.

VPJ Brand budget for the year of 1978 (in 000’s):

PARTICULARS AMOUNT(IN $) PERCENTAGE

Gross sales 25,770 100
Variable manufacturing 10,550 44.7
cost
Gross margin 15,220 55.3
Advertising 2050 7.9
Consumer promotions 150 0.6
Trade promotions 1650 6.4
Total marketing 3850 14.9
expenditures
Profit before SG&A 11,370 44.1
expenses, overhead and
taxes
Here we have possibly increased spending for advertisement and decreased
in consumer promotion, trade promotion, on doing this we are able to achieve our
objective to increase our profit by 10%.