Week #6: The Cleopatra Case

As the air turned colder and the first snowflakes of the season arrived (yes, there were snowflakes in Detroit!), it seemed appropriate to stay inside, make some coffee, and enjoy the reading this week.  I found the textbook and course pack material on value-based pricing versus cost-based pricing to be extremely intriguing.  The idea of creating and starting with a product and its cost, setting a price to be profitable (often just adding a set margin), and then marketing/advertising the value to customers is one that is very familiar to me.  On the other hand, value-based pricing is new to me – beginning by researching customers’ perception of value (or true economic value), finding a way to produce the product at a reasonable cost to generate a profit, and ending with the product.

Cleopatra Soap

Turning to the other key reading this week, let me now transition to the Cleopatra case.  I believe the major issues from the perspective of the product itself are the perfume and the perceived harshness of the soap.  From the customer research data, it seems that within the group of people that have tried Cleopatra soap, there is a great divide between people who like the smell and perceived mildness, and people who perceive the soap to have too strong a smell and be too harsh.  The product may have been perfect for French consumers, but the French Canadian market could be vastly different.  Also, the soap was placed in the skin care segment of the market, and the consumer research results display those attributes (“good for the skin” and “moisturizing your skin”) for Cleopatra to be mid-pack in the results at best.  In addition, 76% of respondents only used the soap on their body and not their face, leading to the conclusion that they thought the soap was too harsh to use on their facial skin.

From the pricing perspective, the soap was priced at the top of a highly-competitive, price-sensitive market.  The “price is too high” was the number one dislike in the consumer research results and “being good value for the money” scored equally poor.  Moreover, when asked the question “Why haven’t you tried Cleopatra?”, the third most popular response was “Too expensive”.

Moving on to the market research, I believe there were a couple major oversights here.  First, the market research was performed in Toronto and the soap was marketed in Quebec.  The two markets could be very different.  Secondly, the research was specific to the product and not surrounding the potential customer.  The research could have focused on what attributes potential customers wanted, or felt were desirable, in skin care soap. 

Finally, once the product did make it to market, it was not widely distributed and available to customers as shown in the consumer research results.  Furthermore, when it was available at a retailer, it was placed on the bottom shelf – very far away from its closest competitor, Dove.

From an organizational standpoint, there was a strong difference of opinion between Steve Boyd, the Group Product Manager for Canada, and Ken Johnson, the Product Manager for Soap.  Ken Johnson did not support the launch of Cleopatra, and was in favor of creating a “national” brand for the Canadian market, while Steve Boyd thought the launch was a great idea and wanted to support his colleagues in New York by showing them that Cleopatra could do as well in Canada, or better, than in France.  Complicating things further, the Assistant Product Manager, Stan House, supported the launch of Cleopatra… in part because he knew Steve Boyd was convinced it would be successful.  In the end, Steve Boyd was higher in the organizational structure than Ken, and made the decision to proceed.

So did they make the correct choice to introduce Cleopatra in Quebec?  Well, yes and no.  Yes, I believe it was a good decision to introduce the soap into the Canadian market.  But… I believe the differentiation and positioning of the soap should have been supported by more targeted pre-launch research.  As introduced, I believe it was the wrong pricing, wrong placement, and possibly the wrong product for the intended target market.  I’m also convinced that the promotional aspects were incorrect – Cleopatra’s brand awareness results are far behind Camay Dove, and Palmolive.  I think Cleopatra soap would have been much more well received if it was priced at the same level as Dove.  The product placement on store shelves is key, and Cleopatra needed to be directly next to its competitors.  The target segment should have been more fully researched, and all aspects of the product (especially the perfume strength) and promotional activities focused at that segment.  In conclusion, I think Colgate-Palmolive should continue to offer Cleopatra in the Canadian market, but they need to severely alter their current strategies to take into account the recommendations above.

Even though this case took place in the mid-80’s, I believe it is still relevant in today’s marketplace.  Many companies continue to make the same mistakes that Colgate-Palmolive made in this case.  There will always be organizational differences of opinion, poor research data, and optimism that opposes any negative data.

Saturn Astra

At General Motors, we have made some bad choices (in hindsight) in the not-so-distant past that display some of the same characteristics as in the Cleopatra case.  The Opel Astra, a sales hit in Europe, was introduced to the North American market as the Saturn Astra.  The vehicle never resonated with customers here because of its poor ride quality (no potholes in Europe=no problem), small engine (predicated by high fuel prices in Europe, but not up to the 0-60 mentality in the US), and hatchback body style (most popular in Europe, but negative implications in the US market).  We repeated this with an Australian vehicle, the Holden Monaro come Pontiac GTO in the US market.  Once the vehicle went through the necessary changes to meet US crash standards, the result was a comically-small trunk and cramped back seat due to the fuel tank relocation.  In addition, some aspects of the vehicle were never changed, such as the radio’s volume knob that was on the wrong side ergonomically (although correct for the Aussie right-hand-drive market).  In conclusion, yes, I think companies today are still open to making some of the same mistakes that took place in the Cleopatra case.  The key is learning about them and from them, and being to recognize when they are happening in the future!