Posted: May 17th, 2015

Soap Companies Do Battle

Soap Companies Do Battle

Procter & Gamble has been the leading soap manufacturer in the United States since 1879, when it introduced Ivory soap. However, late in 1991, its major rival, Lever Bros. (Unilever), overtook it by grabbing 31.5% of the $1.6 billion personal soap market, of which Procter & Gamble had a 30.5% share. Lever Bros. had trailed Procter & Gamble since it entered the soap market with Lifebuoy in 1895. In 1990, Lever Bros. introduced a new soap, Lever 2000, into its product mix as a soap for the entire family. A niche for such a soap had been created because of the segmentation of the soap market into specialty soaps for children, women, and men. Lever Bros. felt that it could sell a soap for everyone in the family. Consumer response was strong; Lever 2000 rolled up $113 million in sales in 1991, putting Lever Bros. ahead of Procter & Gamble for the first time in the personal-soap revenue contest. Procter & Gamble still sells more soap, but Lever’s brands cost more, thereby resulting in greater overall sales.
Needless to say, Procter & Gamble was quick to search for a response to the success of Lever 2000. Procter & Gamble looked at several possible strategies, including repositioning Safeguard, which has been seen as a male soap. Ultimately, Procter & Gamble responded to the challenge by introducing its Oil of Olay Moisturizing Bath Bar. In its first year of national distribution, this product was backed by a $24 million media effort. The new bath bar was quite successful and helped Procter & Gamble regain market share.
These two major companies continue to battle it out for domination in the personal soap market, along with the Dial Corporation (a subsidiary of Henkel, AG) and Colgate-Palmolive. While liquid soaps have made great strides in the marketplace in the past few years, bar soaps are still popular, particularly among men. Shown below are the year 2009 sales figures for both deodorant and nondeodorant bar soaps at supermarkets, drug stores, and mass merchandisers, excluding Wal-Mart in the United States.
Soap    Manufacturer    Sales ($ millions)
Dial (all brands)    Dial     73.4
Dove (all brands)    Unilever     57.7
Irish Spring    Colgate Palmolive     49.2
Lever 2000    Unilever     35.7
Ivory    Proctor & Gamble      7.8
Caress    Unilever      4.6
Olay    Proctor & Gamble      4.3
Zest    Proctor & Gamble      3.1
Others         120.4

In 1983, the market shares for soap were Procter & Gamble with 37.1%, Lever Bros. (Unilever) with 24%, Dial with 15%, Colgate-Palmolive with 6.5%, and all others with 17.4%. By 1991, the market shares for soap were Lever Bros. (Unilever) with 31.5%, Procter & Gamble with 30.5%, Dial with 19%, Colgate-Palmolive with 8%, and all others with 11%.
Discussion
1.      Suppose you are making a report for Procter & Gamble displaying their share of the market along with the share of other companies for the years 1983, 1991, and the latest figures. Using either Excel or Minitab, produce graphs for the market shares of personal soap for each of these years. What do you observe about the market shares of the various companies by studying the graphs? In particular, how is Procter & Gamble doing relative to previous years?
2.      Suppose Procter & Gamble sells about 20 million bars of soap per week, but the demand is not constant and production management would like to get a better handle on how sales are distributed over the year. Let the following sales figures given in units of million bars represent the sales of bars per week over one year. Construct a histogram to represent these data. What do you see in the graph that might be helpful to the production (and sales) people?
17.1    19.6    15.4    17.4    15.0    18.5    20.6    18.4
20.0    20.9    19.3    18.2    14.7    17.1    12.2    19.9
18.7    20.4    20.3    15.5    16.8    19.1    20.4    15.4
20.3    17.5    17.0    18.3    13.6    39.8    20.7    21.3
22.5    21.4    23.4    23.1    22.8    21.4    24.0    25.2
26.3    23.9    30.6    25.2    26.2    26.9    32.8    26.3
26.6    24.3    26.2    23.8

Construct a stem-and-leaf plot using the whole numbers as the stems. What advantages does the stem-and-leaf plot of these sales figures offer over the histogram? What are some disadvantages? Which would you use in discussions with production people, and why?
3.      A random sample of finished soap bars in their packaging is tested for quality. All defective bars are examined for problem causes. Among the problems found were improper packaging, poor labeling, bad seal, shape of bar wrong, bar surface marred, wrong color in bar, wrong bar fragrance, wrong soap consistency, and others. Some of the leading problem causes and the number of each are given here. Use a Pareto chart to analyze these problem causes. Based on your findings, what would you recommend to the company?
Problem Cause    Frequency
Bar surface    89
Color    17
Fragrance     2
Label    32
Shape     8
Seal    47
Labeling     5
Soap consistency     3