method co. strategic marketing planning
DESCRIPTION
A strategic marketing planning for Method Company "an environmentally- friendly cleaning manufacturer" by The stuudents of UC Berkeley Extension 2008TRANSCRIPT
Adina Crossley Alejandra Jimenez
Lily Yang Navid Farzinnia Stephen Yeung
Marketing Planning K. Gerlach August 2008
Method Overview Recommended Strategy STEEP Analysis Target Markets and Customers Competitors Core Competencies and SWOT Current Objectives Market Growth Analysis Risks Recommended Actions
Introduction ◦ Produces broad range of home cleaning and
personal care products ◦ Founded in 2000 by two partners: Eric Ryan a
designer and Adam Lowry a chemical engineer
◦ Key positioning: non-toxic, biodegradable, inexpensive, not tested on animals, with attractive packaging made from recycled plastic ◦ Tagline: People Against Dirty ◦ SMP Focus: largest part of business: home cleaning
products
◦ In seven years Method becomes a 100-person international enterprise (source: Marin Magazine)
◦ Inc. magazine recently named Method "the seventh-fastest growing private company in America.“
◦ The Method's 2006 revenue reached $55 million, up about 80 % over the previous year. In industry 4 % considered good growth. (source: Information Resources Inc.)
◦ The Method's annual turnover is $100m (source: Adam Lowry, co-founder of Method)
◦ In 2007 Method launched in the UK.
EXISTING PRODUCT NEW PRODUCTS EXISTING MARKETS (CUSTOMERS)
Launch Innovative retail: pop-up stores, website sales, online postings
Expand product line to include more personal care products
NEW MARKETS (CUSTOMERS)
Expand distribution of all products nationwide to mass market
Limit revolutionary products to one to two a year
OPPORTUNITY: Eco-friendly market is hot! Competitors still fragmented RISKS: Rapid expansion of advertising and promotion may increase costs, drive out profits, Some new products may not be winners!
SOCIAL MOVEMENTS: Green Consumer
Purchase behavior closely aligned with personal values regarding outside environment.
Eco-Friendly Increasing interest in non-toxic home products that do not
harm the environment – term is eco-friendly Mass Luxury
Offers better quality at prices that are still low Customer Education
consumers looking for more information in return for brand loyalty
Youth demographic emerging huge youth demographic entering 20s in next five
years
TECHNICAL: Cleaners can now be made using oxygenated processes, natural bacteria and enzymes
EVIRONMENTAL Outdoor environment: Cleaning product additives in soil and water USGS found metabolites in 69% of streams and disinfectants in 66% of
streams Indoor environment: EPA study: concentration of pollutants inside 2 to 5 times higher than
outside Mt. Sinai studies indicate high levels of dioxin and chemicals in all human
bodies in US.
ECONOMIC: Natural biobased products now produced on large scale to
support green movement – reduces cost of ingredients and are renewable
Rising cost of raw materials - especially petrochemical products
POLITICAL: Emphasis is on decreasing use of petroleum both as energy
and in products
Public demand for 3rd party certification of Green products: Green Seal, Scientific Certification System (SCS), USGBC (LEED for buildings)
Increasing likelihood of tax benefits for use or production of green products
European Union restrictions on common cleaning chemicals: parabens.
Hazardous Products Act: requires labeling of hazard or toxic products w/ first aid information
Customer Segment One Customer Segment Two
Customers with green preference lifestyle
Is concerned primarily with indoor pollution and personal/family health
Concern for the outdoor environment: recycled packaging and organics ingredients are relevant but not more important than price
Responds to design in packaging and home environment
Prefers natural aroma to that of chemical smell in the home
Is not looking for the absolute lowest price
Is likely female Is likely between ages of 25 and 50
Considers himself/herself to be a green consumer
Very concerned with the environment in general
Customer Type Motivation and Needs Trial Willing to try, but tend to stick to
natural foods. Open to the idea of doing more but it’s not a priority
Occasional Have integrated a few Green products into their lives, usually consumables
Regular Take action to make Green a part of their lives, yet remain primarily in the food/beverage categories
Committed Dedicated to a Green lifestyle, for the good of themselves as well as the world around them. Using Green products from all categories, including household cleaners and laundry.
Customer Segment One = Trial, Occasional, Regular Target segment for Method! Customer Segment Two = Committed
Ranked in Order of Threat Level 1. Clorox Green Works 2. Seventh Generation
Experienced 40% growth annually since Method launch. Now at $100 million (source: Mintel Research 06)
3. Simple Green 4. Earth-Friendly 5. Consumer trend to make non-toxic cleaners
in the home
STRENGTHS WEAKNESSES Brand known for high quality, effective product Breadth of product line Lower price Large Advertising/promo budget Large distribution channel of 24,000 stores* Education
Ordinary package design and odor Packaging not made of all recycled material Low innovation in formula Low trust as a green brand
OPPORTUNITIES THREATS 20% increase in Eco-friendly/green market Home consumer product industry focused on green products Brand already known by large Emerging Millennium generation
Multiple competitors entering Low barrier to entry Established green brands moving into cleaning product category Downturn in economy Difficult to promote Green brand without damaging existing “chemical” brand image *source: Mintel Research
Design: Innovative recyclable packaging with attractive curvy colored
package Technology:
Produce fruity smell products with regular natural materials Mass Market Distribution Channel:
Achievement of economies of scale distribution while keeping advantages of small-scale manufacturing operation
New Product Must Adhere to Core Competencies Be visible in the home = value: design Be used frequently = value: non-toxic Be low to mid priced = value: available to mass market
STRENGTHS WEAKNESSES Fast growth Very popular herbal aroma Innovative package design Recycled plastic packaging Non-toxic for use on and around people and pets Highly effective natural surfactants Broad product line Strong distribution channel in areas w/large target market segments Low price for value Strong brand loyalty
Not all products viewed as equally effective Some products contain petroleum-based ingredients Lack of bulk sizes for product refills Still not widely recognized in mass consumer market Low level of advertisement and promotion Inexperienced mgmt team
OPPORTUNITIES THREATS High demand for products in current distribution channels Only 2-5% of cleaning products available are green Cleaning product market huge: 17.5 billion Products are popular and recognized by large emerging youth market
Growing number of competing products: low barrier to entry Global detergent co. moving into market Clorox GreenWorks popularity and large distribution channel Price pressure by competitors Retailers closing due to soft economy
Source: Mintel, Natural Products Marketplace Review
Method Products attractive to Trial, Occasional And Regular
consumers
These groups together make
Up 77% of the consumer population
As interest in natural products increases so will Method’s target market
• Green cleaners consumers are rising exponentially during last 3 years
• Consumers are price sensitive and normally they showed to shift to non green products when there was more than 20% price difference.
• Sales of natural cleaning products rose by 23% between ‘06 and ’07.
Source: SPINS Market Research
Key Strength for Effective Growth Strategy ◦ Early deal with Target ◦ Have not focused on traditional Green product
channels: Specialty stores, Whole Foods, Catalogs ◦ Focus has been on where trial, regular, and
occasional consumers shop. ◦ Now expanded to Costco, Safeway and other
“mainstream” retailers Consumers are eco-friendly, looking for value but still
have relatively high income ◦ Still primarily on the West Coast
External: Green Products Market lacks uniform or trusted
certification or endorsement Lack of label uniformity drive consumers to decide on
price Still lack of access to green and/or eco-friendly
products for most consumers (especially in the mid-west)
Consumer excitement over eco-friendly may dissolves in the face of high prices (note 20% price increase study SPINS research)
Internal To date company has no experience with product
failure – could bet too much on a flop.
Aggressively expand distribution of core successful cleaning product line to East Coast and Mid-West • Create tailored bundle (not bulk) packaging for Warehouse stores
like Costco Evaluate and drop any laggard products Expand line of complementary personal care products Limit introduction of revolutionary product
introductions to one a year Step-up Creative Promotion
Colleges, mid-luxury green focus hotels, airlines Pop-up store events Website community: blogs, education and FAQ
Obtain 3rd party green certification Don’t stop core competencies: product aesthetics,
design, distribution and value