CLM2013-Final-Dark horse

Rediscovering market segmentation Dark Horse Team

Cup Moscow 2013

Executive Summary Market and brand analysis General approach for developing strategy “Dove - 2014�

- New segments - Current segments Promotion and sales channels Risks Timeline Summary Appendix 2

Executive Summary

Expansion and development of existing segments and introduction of new products will provide achievement of ambitious goals by 2015 Key steps for reaching the goal of increasing sales:

Increase in sales during 2014 Economic effect, mln units +31% 305 6

1

6

21

• Mother & daughter campaign • Baby products

39

• New model of liquid soap

232

2013 Mothers Babies Hotels

Liquid Market soap growth

2014

• Distribution in hotels

3

Market and brand analysis

Russian market analysis shows constant growth rate 1

In 2013 Beauty market still grows, but at a lower rate

+2% +8% 296

2007

334

2008

351

2009

407

380

2010

2011

430

438

447

2012

2013

2014

454

461

469

2015

2016

2017

Sales of Beauty and Personal Care, bln rub

2

Key trends for Russian beauty and personal care market*

* According to Euromonitor International, August 2013

• Natural and healthy products • Premium products, baby care, liquid soap dynamic • Retail develops store based chains • Special positioning even for mass products 4

General message of the Dove brand in Russia has distinctive features which should be preserved Features of the brand: • High quality • Mass but not cheap • “Consists by ¼ of cream, does not dry your skin” Pure beauty and self-esteem campaign: • Promote the natural beauty

• Expand brand conception: “Dove is not just soap” • Create brand awareness of Dove caring about women beauty 5

General approach for developing strategy

Discovery of new segments and development of current segments will become the main growth driver for sales Share in total: Volume

$

Mothers of teenage girls New clients (target audience redesign)

Mothers of babies Hotel contracts

Increase sales by 30% by 2015 Current clients (current segments development)

Liquid soap promotion

6

Combination of segment redesign and effective use of promotion and sales channels are two main parts of the strategy

Supply and demand should be fully satisfied through effective combination of promotion and sales channels

Demand To form the demand

Promotion channels

Supply

+

To make products accessible

Sales channels

Current clients (current segments development ) 7

New segments

Current positions for the target audience is a good basis for development in other segments

Target audience: women at the age of 25 to 45

15

20

25

30

35

40

45

50

Their characteristics: Do not strive after model-like appearance.

76% of them have children Appreciate products with natural origin Main interests: social problems, cooking 8

We recommend to make emphasize on the segment mothers and their teenage daughters who are the main followers of their moms Target audience has additional potential: mothers of teenage girls

12-18 years

15

20

25

30

Triggers of growth

*Team survey: 43 out of 50 respondents

35

40

45

50

• Over 85% of girls begin to use the

same cosmetic products as their mothers*

Long-term effect

• Dove brand gains loyal customers from young age

Penetration

• Awareness of Dove brand will

increase due to young users

9

Campaign will be targeted on mothers of young girls but will have impact on both mothers and daughters Message

Believe in your own unique beauty and guide your daughter to believe in hers Features Mothers (Influencers)

Daughters (Followers)

• 35-45 years

• employed • understand that their appearance is far from ideal • 12-18 years • pupils (financially dependent) • are influenced by their mothers very much • worry about their appearance

Main needs • to teach their daughters to feel beautiful despite their appearance differs from imposed standards

• to be confident with their appearance • to learn how to use cosmetics

10

Campaign will be targeted on mothers of young girls but will have impact on both mothers and daughters Message

Believe in your own unique beauty and guide your daughter to believe in her

Self-esteem project: examples of campaigns in foreign markets

Our next target segment is mothers with babies 2-5 years old Baby care remains one of the most dynamic categories in Russia

Main reasons to focus on baby products

Amount of sales, mln rub

+6% 6 903

2 347

7 328

2 496

• Baby care remains one of the most dynamic categories

7 701

2 641

Baby hair care Baby skin care

• Many parents willingly spend money on high-priced baby products offering high quality • Positive birth rate

4 556

4 832

5 061

2013

2014

2015

• Products positioned to be natural (like Dove for adults) are popular among babytargeted products

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

11

Baby-oriented products will be presented in three main categories

Baby soap bar

Opportunity to attract

Description of a product



Baby shower gel

Baby shampoo





• Is recommended by pediatricians

• Protects against skin • Natural ingredients are crucial for dryness baby’s hair

• Contains 1/4 moisturizing cream

• Hypoallergenic structure

• 100% tear free

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

12

Additional measures

High growth of liquid soap segment is a good opportunity to keep current customers and to create loyalty Long-term expectations for liquid soap are also favorable, while sales of bar soap are expected to decline 2 650

+16%

2 291

Forecast sales of liquid soap, mln.rub.

2013

2017

Promotion of the liquid soap and new business model gives Dove unique opportunity to win Russian market of liquid soap

Tying: sets of branded dispensers and liquid soap bags Branded soap dispensers • Loyalty • Image preserving

+

Special soap bags • compatibility • tied good • easy to use

Dispensers provide exclusive image of the brand and inspires to buy only Dove liquid soap 13

To strengthen penetration and indirectly stimulate sales it is recommended to sign a supply contract with Azimut Hotels: Benefits for Azimut Hotel: •

Dove is world-known brand => increase Azimut’s customer loyalty

•

We supply products to Azimut at low cost – our primary goal is market penetration

Benefits for Dove: Azimut Hotels is growing Russian hotel network; year’s occupancy about 2 000 000 people across the country •

Supplying Azimut hotels with bath and shower products will significantly increase market penetration 14

Promotion and sales channels

Effective combination of online and offline marketing will help to attract new segments and to keep current customers Offline marketing (costs, rub)

Online marketing (costs, rub)

9 mln

141 mln Websites

TV

8 mln 21 mln

Social networks

Print

~210 mln 5 mln

Context ads 25 mln Billboards

0.5 mln Blogs

Approximate costs for marketing (2014) 15

Risks and Timeline

Integration plan

Initiatives

Q2

Q1

2014

Q3

Q4

Baby care

Creation of new products Production launch Advertising Testing and amendment Sales promotion

Girls care Advertising Testing and amendment

Hotel Search available hotels Formation of contracts

Procurement

Liquid soap Production customization development

integration 16

New strategy is prone to a number of risks, but they are manageable and can be mitigated Risk Evaluation Matrix

High

7 1

5

Medium

2 6

4

Low

Significance

Controlled risks

3 Low

Medium

1

People won’t buy dispensers

2

People will not refill with genuine Dove soap

3

Teenage girls prefer youth cosmetics

4

Risk of being a brand for “fat girls”

5

Hotels won’t sign contracts with Dove

6

Mothers can choose specific baby products

Uncontrolled risks

8 High

Possibility of appearance

7

Slow economic growth and continuing inflation

8

Consumers trend to save money

17

Expansion and development of existing segments and introduction of new products will provide achievement of ambitious goals by 2015 Key steps for reaching the goal of increasing sales:

Increase in sales during 2014 Economic effect, mln units +31% 305 6

1

6

21

• Mother & daughter campaign • Baby products

39

• New model of liquid soap

232

2013 Mothers Babies Hotels

Liquid Market soap growth

2014

• Distribution in hotels

18

The strategy was developed by the “Dark Horse” team

Dmitry Vlokh

Alina Verbenchuk

GSOM SPbU Master in Corporate Finance

GSOM SPbU Master in International Business

• Changellenge >> Spb 2012 Winner • MCC Sky 2013 Semifinalist • EMC Company Scholar

• GSOM SPbU Case Club Leader • V. Potanin Foundation Scholar, Russian Economy Fund Scholar • MCC Sky 2013 Semifinalist

Oleg Sokolov

Dmitry Vladimirov

GSOM SPbU Master in Technology and Innovation Management

GSOM SPbU Master in Corporate Finance

• MCC Sky 2013 Semifinalist • V. Potanin Foundation Scholar • V. Potanin Foundation Grant

• MCC Sky 2013 Semifinalist • 1st National Scientific Congress ITMO – 2012 Participant

7

Appendix

Finance Dove Sales, units 2013 Deodorants for women

24 673 670

growth of sales, %

Dove Sales, mln rub 2014

2013

32 207 672

Deodorants for women

2014 581

722

30,5%

growth of sales, %

6 769 735

8 944 772

Roller deodorants

367

463

Sprays

17 903 935

23 262 900

Sprays

214

259

Hair care for women

56 580 103

93 334 174

Hair care for women

1 460

2 028

Roller deodorants

growth of sales, %

65,0%

growth of sales, %

Masks

1 174 116

1 779 551

Conditioners

9 689 992

12 427 605

Conditioners

45 715 996

79 127 018

143 342 230

169 732 869

Shampoos Skin cleansing for women growth of sales, %

18,4%

24,2%

Masks

38,9% 27

34

374

480

Shampoos

1 059

1 514

Skin cleansing for women

2 329

3 000

growth of sales, %

28,8%

Liquid soap

4 864 420

6 660 343

Liquid soap

113

147

Shower gels

33 052 833

42 450 266

Shower gels

310

402

105 424 977

120 622 260

1 906

2 451

7 405 613

8 735 321

699

1 198

Bar soap

Skin care for women growth of sales, %

18,0%

Bar soap

Skin care for women growth of sales, %

71,4%

Creams

5 044 776

5 845 153

Creams

319

536

Lotions

2 360 837

2 890 168

Lotions

380

662

232 001 616

304 010 036

5 069

6 948

TOTAL, units growth of sales, %

31,0%

TOTAL, units growth of sales, %

37,1%

19