A marketing strategy presentation addressing a Harvard business case.

1. HENKEL
Team 7
Lilitha, Martin, Nicolas, Jeff, Olim

2. Executive Summary
¡ Problem / The strategic problem is that the competition is increasing their cost
competitive advantage by standardization of branding and product features
globally, threatening our position in the market.
¡ Insight and Implication / High value placed on preference based on culture in
terms of product/brand, leading to markets that would be excluded by
standardization of products
¡ Alternatives /
¡ Harmonize branding across markets and standardize product features
¡ Maintain unique branding specific to each market and standardize product features
¡ Maintain unique product features to each market and standardize brand elements
¡ Further localize both branding and product features specific to each market
¡ Recommendation / Increase localization and diversification of products in
Southern European market vigorously over the next 5 years. Maintain branding
and product features most suited to Italy and Spain in order to gain market
share and boost revenues by 20% and 50% in Italy and Spain respectively.

3. Major forces in the HDD category are
retailers and competitors
Intense rivalry
in capturing
the global
market
“The big
soapers”- Low
risk of new
entrants
Retailers
preference for
global,
standardized
products
Consumer
indifference
leads to High risk
of substitution to
competing
brands
Low supplier
bargaining
power
Henkel
A balance that simultaneously satisfies retailers’ needs and is
differentiated from competitors is required for success in this category

4. Our strong brand image is not used
effectively to be a market leader
Relative Strengths
• Significant market
penetration abroad.
(73% of sales is made
outside Germany)
• Strong brand image –
“Persil-ization of the
East"
Relative Weaknesses
• Complex range of
products in portfolio
• Slow reaction to the
international initiatives
of our competitors
Capitalizing on our strengths to gain market share in
Southern Europe and becoming market leaders is key
Company

5. With internationalization, specific needs of
our target market won’t be addressed
Relative Opportunities
• Internationalization of
products neglecting
specific preferences of
consumers
• Market share of
competitors in South
Europe declining
Relative Threats
• Retailers pressure to
globalize and the low
bargaining power
• Bold in Spain (growing
market share 184% last
three years) – Competitor
reaction to failure of
brand
But we should not only satisfy our consumers...
Company

6. Competitors are finding new ways to
streamline products and globalize markets
Reorganizing and
harmonizing brand portfolio
internationally
Dash’s market share
decreasing 3.5% over
the last 3 years (in
Italy)
Sales growth in 2000:
‘Bold’ - 79.4%, Ariel –
26.1%
Reduced its portfolio
from 1600 brands to
400
Brazil - reduced 20
brands to 7 in 5 years
increased revenues by
50% and margins by
100%.
Competition
Satisfy retailers
Production
savings
Marketing
Concentrated

7. GE/McKinsey
Matrix
Business Unit Strength
High Medium Low
IndustryAttractiveness
High
Medium
Low
Success in Northern European markets can be used a lever as
long as Southern Europeans tastes are understood and satisfied
Opposing forces of retailer pressure and unique tastes of
Southern Europeans challenge industry attractiveness

8. Stronger and confident international retailers
prefer standardization (and
internationalization) of products
Customers and
Collaborators
Top 5 retailers in Northern European
market have a greater market
influence (85% in Switzerland). Lower
market share in Italy and Spain
decreases pressure to meet their
demands
30% Market share in Italy // 57% Market share
in Spain
Market share of top 5 retailers in Northern
Europe will grow by 8% on average per
year. Translating into a 4.16% growth share
of our sales . In Southern Europe we can
expect growth even higher, as the
Northern European market is fully
penetrated
Italy and Spain retail market influence is growing, however as it stands,
there is lower pressure to succumb to standardization trends

9. Southern European market is influenced by
emotions and value functionality
Functional
ExperientialEmotional
Considering the centers of influence are
friends and family as well as cultural and
social factors; in this geographic market,
higher value is placed on “Performance”
HDD products and therefore a
combination of emotional and functional
value is applied.
Consumers and their
centers of
influence
Need to satisfy the preferences of target market, despite
pressure to globalize from retailers

10. Care Performance
Italian Consumer Perceived Value
RelativePrice
High
Low
Dash
Bolt
Dixan
Challenge is to differentiate in order to gain market share
A tight race between Dash (P&G) and Dixan
(Henkel) in terms of perceived value and
market share
Consumers

11. The market holds higher value in local brands and products
Care Performance
Spanish consumer Perceived Value
RelativePrice
High
Low
WIPP
Ariel
Dixan
Dixan (Henkel) has the most perceived value despite
WIPP (Henkel) having 24% higher market share
Consumers

12. Various strategic alternatives impact variable
costs and target market satisfaction
Product
features
Standardization
Branding
Standardization
+ Lower cost on advertising and production
- Lower diversification in brand variety and chance for local
brands
+ Lower unit variable cost
- Lose Southern European ‘performance’ oriented
customers
Branding
Standardization
+ International quality signal and global myth effect
- Lose local brand sensitive customers in Southern Europe
+ Chance for higher diversification and meet target market
preferences, brand protection from international reputation
volatility
- Higher unit variable costs, higher marketing and advertising
costs
YES
No
No
Launch
Persil
Alternatives
YES
YES
No
The benefits of satisfying our target market’s specific
needs should outweigh any resultant increase in costs

13. Standardization may destroy
consumer value
Product
features
Standardization
Branding
Standardization + Chance for higher diversification and meet target market
preferences, brand protection from international reputation
volatility
- Higher unit variable costs, higher marketing and advertising
costs
No
Alternatives
No
§ Laundry habits are deeply culturally and traditionally
engrained activities in Italy and Spain.
§ Southern European consumers are relatively brand loyal
(42% compared to 20% average) and are sensitive to
changes in traditional packaging or a lesser degree of
performance.
The key to success in choosing this alternative is emphasizing in our
tactical marketing plan the differentiation of a localized product in
comparison to global trends and our competitors.

14. Localiza(on
produces
rela(vely
higher
margins
Alternatives
§ Annual 5.8% growth in Sales
increase Sales by 64.9 million EUR
and -15.4%
annual cut reduce advertisement
expenses by 2.7 million EUR by 2005
in ITALY.
§ Annual 1.5% growth in market
increase Sales by 6.5 million EUR and
-29.5% annual cut will reduce
decrease advertisement expenses
by 1.5 million EUR by 2005 in SPAIN

15. The effectiveness lies in the
goal and strategy
Goal: Obtain and maintain leading position in
HDD category of the Southern European regions
Objective: By 2005, increase market share in Italy
and Spain by 15%
Drive strategy going forward as DIFFERENTIATED
FOCUS and on MARKET DEVELOPMENT
Goal and Strategy
Vision: A global leader in brands, products and
technologies

16. With competition gearing towards
harmonization, this opens a gap in the
market
Lowest Cost
Supplier
Differentiated
Product
Cost Focus
Differentiation
Focus
BroadNarrow
Target
Competitive Advantage
Unique FeaturesLowest Cost
Superior Offering,
Branding and
Positioning and
Superior Target
according to
Protano’s sources
of competitive
advantage
Brand and product features differentiation should be the
driving force of our marketing strategy
“A brand
is a living
entity”
Competitive
advantage

17. Italian and Spanish consumers are more
loyal to ‘local’ brands – 40% loyal
compare to a 20% category average
Existing Brand Culture
Product loyalty >
Brand loyalty
Brand Culture Goal
“Henkel knows
exactly what the
consumer prefers”
- Package products to distinct tastes (e.g. Big
Boxes in Italy)
- Market product to emphasise local needs
(climate, performance, bleach)
Brand Strategy - Differentiation
Brand Engineering
Strategy Driver
By further localizing brands, we can retain existing and
attract new consumers
Competition
Brand Strategy
“A brand
is a living
entity”

18. Adopt and drive a product
marketing approach
Solution
Information
and Incentive
Value Access
The focus on a
consumer
specific
localised brand
to meet the
specific needs,
tastes and
heritage,
Scale up on
marketing
strategy. Focusing
on TV media,
sampling and
promotions and
sponsorships.
Emphasise the
localisation
relative to
competitors’
standardization
Relative value
portrayed and
perceived as
customised to
tastes and
preferences.
Emphasise the
functional
performance and
emotional value of
the product.
Availability at
major and minor
retail stores in
urban and rural
areas.
Initial drives of
samples available
at various
locations such as
shopping centres
and other retailers.
Tactical Marketing
Plan

19. Region-specific marketing strategies
increase brand equity
“Spanish Strategy”
§ Considering Spanish diversity,
campaign in different regions
§ Highlight Wipp’s Spanish
heritage
§ Research regional tastes and
apply them to Wipp and Dixan –
with existing Wipp loyalty in
mind
§ Target emotions with emphasis
on traditions as well as
functionality as a performance
brand with bleaching properties
“Azzurri Strategy”
§ Embark on a patriotic
campaign
§ Highlight Dixan as a truly
Italian brand
§ Blue colour in all aspects of
product and brand.
§ Target emotions with
emphasis on traditions as
well as functionality as a
performance brand with
bleaching properties
Tactical Marketing
Plan
“Think global, act local”

20. Thank you
Q&A
QA

21. Pestle analysis
Political
Economical
Social
Technological
Legal
Environmental
European historical
cultural divides
Growing retail sector
across europe
Varying demographics
influencing cultural tastes
of consumer
Technological advances
in product formulation
International trade
legislation
Environmentally friendly
products as a consumer
choice
Context

22. Northern and Southern
Europe consumer
preferences
Northern Southern
Water
Temperature
Hot water Cold Water
Bleach No Bleach Bleach
Detergent
Harshness
Harsh Detergent Less Harsh
Detergent
Environ. Sensitivity Sensitive Not sensitive
Compact likers? Accept Prefer “big boxes”
Performance vs
Care
Care Performance

23. Ansoff’s Matrix
Market
Penetration
Product
Development
Market
Development
Diversification
Products
Existing
ExistingNew
New
Market

24. Protano’s 11 sources of
competitive advantage
Superior Inputs
Superior
Operations
Superior
Offering, Branding & Positioning
Superior
Technology
Superior Access
Superior
Customers
Superior Target
Superior CollaboratorsSuperior Data & Insights

25. Appendix