Suave Case Study

Suave (C):

Customer Behavior Analysis and Advertising Budget Recommendation

July 7, 2012

I. Recommendation:

In choosing between the two advertising campaigns proposed in the case, we recommend that Suave adopt Ellen Vallera’s cheaper marketing strategy. While it needs to defend market share, Suave would best accomplish this objective by focusing its efforts on acquiring and maintaining retail space, by staying price-competitive, and by focusing its efforts on consumer promotions or new product developments.

II. Industry Background:

The shampoo industry in 1985 is a highly fragmented, mature market. Competition is fierce and turnover is high, as consumers tend to be fickle and compulsive. The industry is heavily supported by advertising, as fixed costs and barriers to entry are low; declining growth rates, however, have led companies to seek untapped market segments.

Suave has positioned itself within this industry as the volume leader; it makes most of its sales as the low-priced brand at grocery stores and bulk retailers, and promotes its product primarily through producer promotions, getting its name on the shelf, rather than marketing directly to consumers via mass media. Somewhat perplexingly, however, suave has built a customer base that has been surprisingly loyal and stable based on its value proposition.

The following sections will address whether Suave should change its traditional approach in favor of building a more modern brand image, as its new marketing manager suggests. The customer analysis will describe the current and potential customers, as well as the dynamics of their purchasing decision. We will then discuss the strengths and weaknesses of Suave’s potential courses of action in light of this analysis and the case evidence.

III. Customer Behavior Analysis:

Who are the current and potential customers?

Suave sells well primarily among young, working (part time and full time) mothers in families with several children (large...