The U.S. Deodorant Market: A Competitive Profile

Abstract

This is the twenty-first paper—and the 22nd study--that follows the footsteps of twenty one studies that have tried to analyze the competitive profiles of U.S. consumer markets: Men’s Shaving Cream, Beer, Shampoo, Shredded/Grated Cheese, Refrigerated Orange Juice, Men’s Razor-Blades, Women’s Razor-Blades, Toothpaste, Canned Soup, Coffee, Potato Chips, Alkaline AA Battery, Facial Tissue, Toilet Paper, Paper Towel, Disposable Diapers, Sanitary Pads, Automatic-Dishwasher Detergent, Hand-Dishwashing Detergent, Household Liquid Non-Disinfectant Cleaner, and Heavy-Duty Liquid Laundry Detergent.Michael Porter associates high market share with cost leadership strategy, which is based on the idea of competing on a price that is lower than that of the competition.However, customer-perceived quality—not low cost—should be the underpinning of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets, a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. The middle class is the socio-economic segment that represents about 40% of households in America.Quality, however, is a complex concept, consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation, as a symbol of quality.The U.S. Deodorant Market had retail sales of $1,324million in 2008. It had five segments: Aerosol, Cologne Type, Rollon, Stick/Solid, and Remaining Deodorants. We have chosen the Stick/Solid segment because it was by far the largest with 2008 U.S. retail sales of $911 million, constituting 69% sales of this market.We have focused our attention on the 2.5-2.8 Oz size because it was the most popular.Using Hierarchical Cluster Analysis, we tested two hypotheses: (I) That the market leader is likely to compete in the mid-price segment, and that (II) Its unit price is likely to be higher than that of the nearest competition.For both 2008 and 2007, the data did not support Hypothesis I because Secret, the market leader, was a member of the premium segment.For 2008, the data supported Hypothesis II, because Dove (2.6 Oz), the runner-up, had a price lower than that of Secret, the market leader.For 2007, technically, the data did not support Hypothesis II, because the unit price of Dove (2.6 Oz) with a unit price of $3.36, was just a little higher than the $3.29 unit price of the market leader, Secret (2.6 Oz).So, we have determined, that for all practical purposes, the data did not negate Hypothesis II.We found that relative price was a strategic variable, as we have hypothesized.We also discovered three strategic groups in this market.A pattern is emerging in price-quality segmentation analysis. In thirteen of the twenty-two studies—that exclude Men’s Razor-Blades, Women’s Razor-Blades, Coffee, Toilet Paper, Paper Towels, Disposable Diapers, Sanitary Pads, Liquid Heavy-Duty Laundry Detergent, and Deodorants—the market leader was found to be a member of the mid-price segment, as we have hypothesized.Also, results in eleven markets supported Hypothesis II.