armhammer gp1 final

Brand Overview and Growth Strategy for Heavy Duty Liquid Detergent

By:

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Qing Liu, 02/21/13,

You have provided a good overview of the focal brand (Arm&Hammer), the company(Church and Dwight Co.), and the whole detergent category. There are some interesting findings from your secondary research on the overall trend in this category – since 2008, economic considerations play an important role in consumers' purchase decisions. Another important factor is the effectiveness of cleaning, while the ease of use is weighted less.I especially like what you have done through your qualitative research. Through in-depth interviews with relatives and friends, you have obtained valuable insights on consumer perceptions of the brand and its major competitor Tide. Among them are consumers' concern about the environmental impact and the desire for free and clear hypoallergenic options. Based on these insights, you have identified opportunities for Arm&Hammer to offer a free and clear or odor-free detergent. In addition, you have identified key areas for improvement -- cleaning effectiveness and environmental friendliness.Additional areas that I would suggest you look into include:While the sales mainly stayed flat or even went down for other companies, Church and Dwight Co. saw the highest positive increase in shares in 2011-2012 (see Appendix 4) . Any insights on what could have contributed to that increase? Implications?It looks that you have also conducted some observation research. Any insights from your observation research? For example, in regards to appendix 3, what are your findings on the shelf placement, variety, competition, pricing, etc? Overall, this is a great report with high readability. Well done!Grade: A

Company Overview: Church & Dwight Co.1

Founded in 1846, Church & Dwight earned its initial fortune selling the branded product

that it is most known for today – Arm & Hammer Baking Soda. Over the next century, however,

the company expanded into other consumer products and more than 80 brands, of which eight

account for more than 80% of consumer sales. These “power brands” include Arm & Hammer,

Trojan (#1 condom brand), OxiClean (#1 laundry additive brand), Spinbrush, First Response (#1

branded pregnancy kit), Nair, Orajel and Xtra (leading “deep value” laundry detergent). Of these

“power brands,” the undisputed leader is Arm & Hammer, which accounts for 35% of the

company’s domestic consumer products sales and has been one of the most recognizable and

trusted brands in the world for several generations. In fact, the company claims that there is an

Arm & Hammer product in more than 90% of American households. The other seven “power

brands” were added to Church & Dwight’s portfolio, via acquisition, since 2001.

Financial Performance

Church & Dwight Co. saw net sales increase 6% to $2.748B in 2011 with gross profit

margin holding steady at approximately 44%. The company believes that its balance of

premium and value brands (60% vs. 40%) will help it weather the ongoing economic malaise.

Church & Dwight Co. is traded on the New York Stock Exchange under ticker symbol CHD.

Brand Overview: Arm & Hammer2

The Arm & Hammer brand was trademarked in 1867 by Church & Dwight co-founder

James A. Church. The iconic logo depicts the hammer of Vulcan, the Roman god of lava, fire

and smoke. For more than 100 years, the Arm & Hammer logo appeared on every yellow box of

Church & Dwight Co.’s signature product, baking soda. It was not until the 1970’s that the

company began to stretch the iconic brand into household cleaner and personal care products,

including laundry detergent and toothpaste.

1 Church & Dwight 2011 Annual Report: http://www.churchdwight.com/investors/financial-reporting/annual-reports.aspx

2 http://en.wikipedia.org/wiki/Arm_%26_Hammer

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The brand’s long history and trustworthiness, coupled with its association with

cleanliness and odor-fighting, made Arm & Hammer a credible entrant into a variety of

categories where those attributes are valued. For example, Arm & Hammer can now be found in

fabric care, pet care, and personal care categories (see Appendix 1 for a complete list). Today,

Arm & Hammer’s laundry detergent business is the largest (by net sales) in Church & Dwight’s

vast portfolio. Arm & Hammer detergents are available in both liquid and powder forms, and are

marketed as value products, priced at a discount below market leaders such as Tide.

Additionally, Church & Dwight’s Xtra brand is positioned as a “deep discount” detergent and is

priced below Arm & Hammer, as well as significantly below the price points of the category

leaders.

Category Overview: Laundry Detergent3

The U.S. home laundry detergent category is filled with numerous product variations and

features a very competitive landscape. The need to compete in this heavily contested market

has spurred the need for differentiation. Born from this are new types of laundry products that

include, but are not limited to, liquid detergents, powder, single-use products, and ultra

concentrate – all innovations driven by different customer needs (convenience, stain fighting

ability, desire to keep clothes looking new, etc). The hope is that these innovations will increase

pleasure in cleaning and result in more cleaning being done.

Sales in 2012 were flat compared to the year before, at just under $9.2 billion, and the

future outlook continues to be challenging. The 2008 economic crisis has affected overall home

care and the laundry category has struggled along with it. People have cut back their spending

in all categories, but what’s troubling is the home laundry segment has not recovered its

momentum after the economic crisis, which has resulted in flat growth. Retail channels have

been changing as well, as supermarkets have seen a 1% decrease in home laundry product

3 Mintel, Home Laundry Products – September 2012 and The Gale Group, Soap and Other Detergents, Except Specialty Cleaners

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sales between 2010 and 2012. Meanwhile, other channels such as drug stores, mass

merchandisers and dollar stores have increased their share.

Despite the lag in sales, consumers continue to wash their clothes. 98% of households

use laundry detergent, and this number has changed little from year to year. Although the

products that are used might change, it seems clear that most households need detergent. The

households that use the most laundry products are families aged 35-54, which is likely due to

more individuals in the household and more laundry to do. In general, these users agree that it

is more important to do the laundry right than to do it more easily. While time-saving products

are important, the number one goal is to clean clothes properly. As such, these consumers are

focused on brands and products that clean effectively, while also keeping price and savings on

their radar.

See also: Appendix 4: Laundry Detergent Sales and Market ShareSee also: Appendix 5: Leading 10 liquid laundry detergent brands sales (U.S.) in 2011

Qualitative Research Overview

To learn more about consumer perceptions of the laundry detergent category, the team

conducted interviews with a sample of 19 people ranging in age from 26-86. We intend to use

this initial qualitative survey to guide our strategy and narrow our focus for additional research.

Our key findings (see Appendix 2 for complete survey results):

● All survey respondents used liquid detergents.

● Most respondents purchased their detergent every 1 - 2 months from wholesale clubs

(15.8%), big box stores such as Target and Wal-Mart (26.3%) and grocery stores

(63.2%).

● Tide is consistently top-of-mind for consumers and appeared in 79% of unaided sets,

while Arm & Hammer was mentioned by 47.3% of consumers interviewed.

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● Economic considerations played a key role in consumer’s choice of brand, as more than

half of the respondents (52.6%) mentioned price, discounts and coupons as key criteria

in their purchase decisions.

● Some common themes emerged during our qualitative interviews, such as:

○ Concerns about the environmental impact of laundry detergents,

○ Seeking out free and clear hypoallergenic options,

○ Effectiveness/quality is still a key concern, as 42.1% cited cleaning power or

effectiveness as a top purchase consideration.

The two Arm & Hammer brand enthusiasts (the only two respondents who currently use

the brand) in the survey set mentioned that baking soda helps with odors and the Arm &

Hammer with OxiClean was an important feature and an excellent value. Aside from these two

respondents, the most common sentiment about Arm & Hammer was that it is a “lesser brand”

of inferior quality. Additionally, people seemed to think of Arm & Hammer in the past tense (“I

used to use it” or “I used it many years ago” or “No, I don’t use it anymore”). Our survey set

yielded two people (10.5%) who currently use Arm & Hammer, six people who have tried it at

least once (31.6%), and eleven (57.9%) who have never used it.

Strengths and Opportunities for Arm & Hammer

Based on the consumer familiarity with baking soda and the perception of baking soda

as a natural odor reducer, Arm & Hammer may have an opportunity to stretch its brand equity to

free and clear or odor-neutral offerings. While Arm & Hammer’s portfolio currently includes a

detergent for sensitive skin, a free and clear offering would assure consumers that irritating

chemicals are not in the detergent. Furthermore, capitalizing on the odor-reducing qualities

associated with baking soda would allow the brand to offer a unique detergent that kills odor

and does not have a strong scent.

Weaknesses and Challenges for Arm & Hammer

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Qing Liu, 02/20/13,

Good point!

The 68.4% of consumers who explicitly stated their negative perception of Arm &

Hammer often pointed to the brand’s performance issues. 30.7% of those with negative brand

perceptions of Arm & Hammer specifically stated that they saw Arm & Hammer as an inferior

brand or product. The perception that Arm & Hammer had weaker cleaning performance was

the most frequently stated reason for the negative brand perception; however, strong scent,

animal testing and lack of environmental friendliness were also deterrents to purchase.

Moving forward, Arm & Hammer must address the following challenges: how to change

the consumer perception about the brand’s ineffectiveness and how to strengthen its

environmental friendliness.

Research Limitations

Though the team’s research provided some useful insights into consumer preferences in

the laundry detergent category and consumer perceptions of Arm & Hammer, there were some

limitations to the sample. Only 15.7% of the sample was male; it is possible that more qualitative

research on male consumer preferences in the laundry category would yield valuable insights

for the Arm & Hammer brand. Furthermore, a sample size larger than 19 people might provide

a broader view of category and brand-specific trends.

Future Research

To build on the exploratory research conducted thus far, we will leverage Nielsen data in

the descriptive research stage. This will provide us with industry data and allow us to examine

whether Arm & Hammer’s sales reflect the initial category and brand perceptions we observed

in our exploratory research. Depending on what the descriptive research yields, we may need to

examine our exploratory research further and potentially expand the size or composition of our

initial sample.

See also: Appendix 6: Importance of laundry detergent attributes from Mintel

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Appendix 1: Arm & Hammer Brand Portfolio

Product Portfolio: Segments

Deodorization: Baking Soda; Household DeodorizersFabric Care: Laundry Detergent; Fabric Softeners; Plus OxiClean® Stain Fighters; Power Pak Detergents; Fine Fabric Wash; Laundry BoostersPersonal Care: Toothpaste & Whitening Systems; Antiperspirants & Deodorants; Nasal Care; Wound Care & Eye CarePet Care: Dog Care; Cat Care

Arm & Hammer Branded Household Products:

Laundry Detergents

ARM & HAMMER Powder and Liquid Laundry DetergentsARM & HAMMER Power Gel Laundry DetergentARM & HAMMER plus OXICLEANARM & HAMMER Laundry Detergents for Sensitive SkinARM & HAMMER CRYSTAL BURST power packs

All Other Household Products

ARM & HAMMER Pure Baking SodaXTRA Powder and Liquid Laundry Detergents ARM & HAMMER Carpet & Room DeodorizersARM & HAMMER Cat Litter DeodorizerARM & HAMMER Clumping Cat LittersARM & HAMMER FRESH’N SOFT Fabric SoftenersARM & HAMMER Total 2-in-1 Dryer ClothsARM & HAMMER Super Washing Soda

Arm & Hammer Branded Personal Care Products:

ARM & HAMMER ToothpastesARM & HAMMER Deodorants & Antiperspirants

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Appendix 2: Qualitative Survey Data

Survey Administrator Sydney Sydney AaronSurvey Taker Sarah Mom AnnaGender Female Female FemaleAge 26 66 28Profession Social Work Retired StudentName all of the detergents you can think of.

Tide, A&H, All, Wisk, Purex, Generic brand

Tide, Wisk, All, A&H, Era Tide, Cheer, A&H, All, Era, Caldrea, 7th Generation, Mrs. Meyers

A&H unaided mention? Y Y YWhat form do you typically buy - powder, liquid, pods?

A&H with OxiClean (liquid)

Liquid Liquid

Where do you usually buy detergent?

Target or Wal-Mart Sam's Club or Target Grocery

Frequency of purchase Once every two months (80 load size)

Every two weeks Once every couple of months

What are the most important factors you consider when making a detergent purchase (brand, price, scent, power to remove stains, package, other)Have you used A&H?

1) Likes to keep clothes bright and clean, 2) scent, 3) price

The power to remove stains is at top of list, doesn't like oversized containers (obnoxious to lift), buy Tide almost exclusively because it cleans better and also because P&G always coupons so she can get it competitively priced

Scent, natural (sensitive skin), price

Are you still using this brand?

Yes and yes. Have used it, but don't use it regularly. And if gets something other than Tide, usually gets A&H.

No

What do you like/ don't like about A&H? (brand, price, scent, power to remove stains, package, other)

A&H OxiClean is more affordable but gives quality clean and likes the way it smells. Really likes the OxiClean - it gives an extra boost.

Biggest reason is it doesn't work quite as well as Tide. It's second best. Wisk and others have fragrance issues.

I don't.

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Survey Administrator Aaron Aaron AaronSurvey Taker Mom Gram KateGender Female Female FemaleAge 49 86 57Profession Waitress Retired School Social WorkerName all of the detergents you can think of.

Tide, Gain, Surf, All, Purex, A&H

Whisk, Tide, Era, A&H Tide, All, Gain

A&H unaided mention? Y Y NWhat form do you typically buy - powder, liquid, pods?

Liquid Liquid Liquid


Sam's Club or BJ's Stop & Shop (grocery) Meijer (grocery)

Frequency of purchase Every couple of months

Every two months. Once every 6 weeks.


Scent; I also check to see how much you need to use per load. I'd rather pay more and use less. I always check to see how many loads I get out of a bottle.

Not the price so much. I like Era because it cleans well. I know it's a heavy duty detergent. Also, something that's good for the environment.

Brand (Tide)


No I love A&H. In fact, I have a container downstairs. I also use the baking soda in my fridge.

I almost named A&H - I could visualize the yellow box but couldn't remember the name.


A&H seems like a lesser brand.

It helps with the different odors because of the baking soda. I like it as a laundry product.

I feel like it's good for the environment because of the baking soda - more natural.

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Survey Administrator Aaron Brian BrianSurvey Taker Auntie Jane Kate JuliannaGender Female Female FemaleAge 56 27 29Profession School Teacher Marketing Research Graduate StudentName all of the detergents you can think of.

Era, Tide, Whisk, Woolite

Tide, Arm and Hammer, All Ariel, Persil

A&H unaided mention?

N Y N

What form do you typically buy - powder, liquid, pods?



BJ's Wholesale Club Albertson's (grocery) Pick N Save

Frequency of purchase Every 6 -7 weeks. Twice a month "Every3 months maybe."


Brand (Era), stain removing power - use it as a stain-lifter and overall cleaner. Also, no one is allergic to Era. I also like a little bit of scent, but nothing too flowery.

"Brand/CleaningPerformance/Price/No perfumes or dyes"

"1.Price 2. Scent 3. Brand "


A long time ago. 15 – 20 years.

"Yes,I have used Arm and Hammer, I am no longer using it"

"Theyreally manufacture laundry detergent? I thought they were a kitchen cleaning /de-clogging brand."


I think it’s an inferior product.

"Likes: Price- tends to be less expensive than Tide

Dislikes- Cleaning performance, Husband has sensitivity to scents and dyes and can't use Arm and Hammer"

Don't know.

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Survey Administrator Brian Sydney BrentSurvey Taker Elena Sara AmberGender Female Female FemaleAge 30 27 31Profession Marketer Contracts Negotiator History ProfessorName all of the detergents you can think of.

"Method,Tide, Gain"

Tide, Purex, A&H Seventh Generation

A&H unaided mention? N Y NWhat form do you typically buy - powder, liquid, pods?



Target Grocery Store Target

Frequency of purchase Once every month or two.

5 month’s worth at a time (every 5 months)

Every couple of months


1. Chemical-free 2. Sustainable formula and packaging 3. Brand

1) Chemical Free, 2) Brand, 3) Price

Not tested on animal, natural, non-toxic


I have used Arm & Hammer laundry detergent, but am not still using it.

Just tried A&H Free and clear but hasn't used it before

Nope


"I didn’t feel that it was effective detergent and it wasn’t veryenvironmentally friendly."

Didn't like that it always had very heavy scents - don't like laundry coming out with a smell.

Tested on animal.

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Survey Administrator Sydney Brent BrentSurvey Taker Aunt Marsha Beth GregGender Female Female MaleAge 63 61 33Profession Retired Software Engineer EntrepreneurName all of the detergents you can think of.

All, Purex, Tide, Gain, Ivory (for babies)

Tide Tide cold water

A&H unaided mention? N N NWhat form do you typically buy - powder, liquid, pods?

Liquid (Purex, A&H) Liquid Liquid


Kroger Giant Safeway

Frequency of purchase 120 load bottle every other month

Every couple of months Every few months


1) Free & Clear, 2) Price

Lots of coupons and discounts, husband collects coupons

It's what family used


Yes, but not recently Nope, but used to use powder detergents

No


Liked price and liked that it wasn't heavily scented and washes clothes well.

A&H reminds me of brand that is powder and is cheaper

It's not as popular as Tide

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Survey Administrator Brent Brent NhienSurvey Taker Tammy Jason ApurvaGender Female Male MaleAge 55 29 30Profession Stay at home mom Engineer StudentName all of the detergents you can think of.

Gain Arm+Hammer Tide, Arm+Hammer, Era, Our Family

A&H unaided mention? N Y YWhat form do you typically buy - powder, liquid, pods?



Wal-Mart Shaw's Copps

Frequency of purchase Every month Once every couple of month

Once every 3months probably (32 loads, HE)


It cleans better and the smell is nice

Because allergy reasons made Arm+Hammer a better

Price, sale promotion, package design


No Making laundry detergent at home, which is more hypoallergenic

No


Because Gain is better.

No reason, have time to make detergent at home now

Probably don't use A&H because I think it is an expensive brand, never seen it on sale

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Survey Administrator NhienSurvey Taker TramGender FemaleAge 30Profession MarketerName all of the detergents you can think of.

Tide

A&H unaided mention? NWhat form do you typically buy - powder, liquid, pods?

Liquid


Grocery

Frequency of purchase Once every couple of month


Cleans better, scent

Are you still using this brand? NoWhat do you like/ don't like about A&H? (brand, price, scent, power to remove stains, package, other)

Tide has the best quality

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Appendix 3: Laundry Detergent On Shelf (Arm & Hammer in yellow packaging on right)

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Appendix 4: Laundry Detergent Sales and Market Share

Manufacturer

52 weeks ending June 12, 2011 Market share

52 weeks ending June 10, 2012 Market share

Sales change 2011-12

Share change

$ (millions) % $ (millions) % % % pointProcter & Gamble 2,702.00 52.5 2,698.90 52.4 -0.1 -0.1Church & Dwight Co. Inc. 549 10.7 584.2 11.3 6.4 0.7The Sun Products Corp. 550.5 10.7 558.2 10.8 1.4 0.1Henkel Group 277.3 5.4 279.4 5.4 0.8 -Clorox Co. 254 4.9 244.3 4.7 -3.8 -0.2Subtotal 4,332.70 84.1 4,365.10 84.7 0.7 0.6

Source: Source: Mintel/based on SymphonyIRI Group InfoScan® Reviews

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Appendix 5: Leading 10 liquid laundry detergent brands sales of the U.S. in 2011

Sales of the leading 10 liquid laundry detergent brands of the United States in 2011 (in million U.S. dollars)

Brand Values

Tide 1,269.40

Arm & Hammer 248.90

Gain 239.90

All 227.20

Purex 145.80

Private label 127.60

Xtra 99.90

Wisk 84.40

Era 55.40

Cheer Brightclean 55.40

Million U.S. dollars

Source: Grocery Headquarters, State of the Industry Almanac 2012, page 64, April 2012

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Appendix 6: Importance of laundry detergent attributes from Mintel

Very important Important

Neither important nor unimportant Unimportant

Very unimportant

% % % % %Power to remove tough stains 44 47 6 2 -Format (eg, tablet/powder/liquid/gel) 26 45 22 6 2Works well at low temperatures 26 45 21 6 2Scent/fragrance 25 42 21 8 4Not tested on animals 23 27 34 10 5Antibacterial element to kill germs 22 41 26 8 3Formula for sensitive skin 21 32 29 12 6Formulation for colors 20 46 27 5 2Concentrated formula 17 43 32 6 2Ingredients kinder to the environment 17 40 31 8 4Recyclable packaging 14 34 35 12 6Packaging made from recycled materials 12 31 39 13 6

Base: 1,754 internet users aged 18+ who bought laundry detergent in the past six months

Source: Mintel, Home Laundry Products - US - September 2012 - Laundry Detergent Attribute Importance

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