THE

MARKET IS PRICE SENSITIVE

TO: CLAIRE BEATON (BRAND MANAGER OF CLEANSPRITZ)

FROM: HARRISON ANASTASIO

SUBJECT: PRICE IS A PRIORITY

DATE: 3/22/16

Executive Summary
CleanSpritz, a home cleaning product of MJ Brenner, has had sales decline about 7.5% for five
consecutive years and this is believed to be related to the trend in price sensitive consumers and
environmental conscience consumers. Vice President of Strategy has requested that its advisory
team outline several alternatives that would turn CleanSpritz sales around. The alternatives are
1) Re-launch an existing 3:1 concentrated formula with heavy promotion focusing on the
environmental benefits, 2) Add to the product line a stronger, 4:1 concentrated in a lightweight,
recyclable pouch for 32 oz. bottle refills, 3) Add to the product line a stronger, 4:1 concentrated
in a dissolvable packet for 32 oz. bottle refills and 4) Make no short term changes and consider
re-launching the 99% biodegradable spay. Marketing research found in this paper suggest that
alterative 3 would be the best plan of action and this paper will explain in more detail.

Key Issues
Revenues have been dropping for five consecutive years for one of MJ Brenner’s products,
CleanSpritz, due to numerous reasons. Consumers have become more price sensitive after the
2008 financial crash and has resulted in consumers buying cleaning products less often. Some
consumers have also shifted to more ‘green’ products due to their concerns on health risks.
Another issue is that retail stores have been using the CleanSpritz, and products alike, as a ‘loss
leader’, as an advertising tactic to attract consumers into its stores and offering a higher priced
all-purpose cleaner would dissatisfy retailers.



Environmental Analysis
In recent years, individuals have been concerned with health from food consumption to cleaning
products. This demand in greener products has caused house-cleaning-product companies to
accommodate consumer demand. Greener products have increase from 16 in 2006 to 164 in
20101. Consumers have shown greater interest in the overall environment and the impact
household cleaners have on the environment. In addition to that, consumers have said they
would be more willing to try concentrated products because of the benefits it would have to the
environment. However, consumers’ willingness has not reflected the consumers buying
behavior. According to Figure 1, a consumer’s likelihood to buy a greener product when ever
possible has dropped 15% between the years 2008 and 2011.

Figure 1: Consumer Usage Study on Household Cleaners

Although consumers are more concerned, more aware, and more willing to buy greener
products, they perceive price to be more important which has prevented consumers from
behaving the way they believe. Between 2007 and 2011, private labels and small independent
brands of all-purpose cleaners showed the highest revenue gains2 and this was because private
labels were offered at a lower price than brand names. The lack of differentiation besides prices
has also sparked a price war which has not helped MJ Brenner’s revenues.




Company Analysis
The main marketplace for CleanSpritz is supermarkets, which consisted of 36% of its sales
volume3. 65% of diluted sales were also purchased at supermarkets and concentrated products
were purchased only 45% at supermarkets. Future more, concentrated products were

purchased at warehouses 35% of the time and Warehouse stores is where consumers go to get
discount prices. Supermarkets also report that they only receive about 2-3% of profit from house
cleaning products4 and that is why sales volume is very important to them. Supermarkets also
use house cleaning products as a ‘loss leader’ to attract consumers into its stores5. Supermarkets,
CleanSpritz main marketplace, wants the products to be price as small as possible so they can
continue using it as a promotional tool. Everything points to having lower priced products,
however if CleanSpritz wants to introduce a recyclable pouch or a dissolvable bag they would
have to risk the chance of losing control of its product because they would have to trust third-
party companies to produce them.

Assumptions
Over the years there has been unclear emotions about green products. Consumers are more
concerned with the environment but at the same time they weigh price to be more important.
Assuming that consumers continually put price first, companies will continue to fight over price
which will bring revenues down. However, if we assume that priorities change, and the
environment becomes more important, consumers would be more willing to pay the extra price
for the added-value and CleanSpritz would have to redesign its distribution strategy.


Alternatives
After reviewing the information given in the paper, there are four possible alternatives that
would improve CleanSpritz revenue around. The options are 1) Re-launch an existing 3:1
concentrated formula with heavy promotion focusing on the environmental benefits, 2) Add to
the product line a stronger, 4:1 concentrated in a lightweight, recyclable pouch for 32 oz. bottle
refills, 3) Add to the product line a stronger, 4:1 concentrated in a dissolvable packet for 32 oz.
bottle refill and 4) Make no short term changes and consider re-launching the 99% biodegradable
spay.

Recommendation
Each alternative has its respected benefits but after reviewing all the alternatives, option 3 is the
best alternative because it offers low prices, contains environmental features, can be used as a
tool to strengthen the brand name, and it is safer to assume that price will continue to be more
important than the environment. Although consumers would like to change their behavior to
help the environment they still continue to find the cheapest alternative when it comes to
cleaning supplies. Introducing a 4:1 concentrated would drop prices lower and give consumers a
motive to buy the product.
The decision to choose the dissolvable bag over the recyclable pouch is because of the
satisfaction results from prior testing. A consumer panel stated that the dissolvable bag had 95/5
in favorable/unfavorable comments unlike the pouch that had 80/20 favorable/unfavorable
comments. Since alternative 3 has a better image, consumers would be more satisfied with the
product and, in turn, the company brand which should lead to brand loyalty.
Alternative 1 would have a larger contribution margin per product but overall sales would drop
and other products would be cannibalized which would affect the overall revenue.




1 This information was gathered from the Harvard Business Case
2 This information was gathered from the Harvard Business Case
3 This information was gathered from the Harvard Business Case
4 This information was gathered from the Harvard Business Case
5 This information was gathered from the Harvard Business Case