Henkel KGaA-DETERGENTS DIVISION Harvard Case Solution & Analysis

Statement of the Problem:

“Henkel KGaA has to make an important decision regarding the launch of its successful international brand Persil in ITALY and/or Spain, and would these changes in the domestic market of these countries be fruitful or not.”

Recommendation:

The company owns a fair share of the market in Italy and Spain with its domestically running detergent products. The detergent products that are owned by the organization are creating an adequate amount of revenues for the operations of the company.

The market dimension in the countries is entirely different from the international market and the washing trends are perceived differently by the consumers as well. The company will have to understand the need of the consumer market before taking any decisions as the company will have to go through some serious consequences. The company will have to deal with both the countries differently as the traditions and washing trends are immensely different from the each other.

In Italy, detergents that are colored blue are preferred over other detergents as the national Italian soccer team’s short color is blue. The color preference in the market cannot be ignored as the needs and the expectations of the customers are strictly defined and are to be met on their terms. The strong competitor of Henkel, P&G has already tried entering the market of Italy by its flagship product in the detergent segment of their product portfolio.

Despite the international success of their product, the launch of Ariel in Italy was not successful and the company had to face a huge loss due to the unmatched consumer behavior preferences. Henkel is already operating successfully in the Italian market with its detergent product named Dixan. The detergent brand of Henkel in Italy is a preference choice for the consumer in the Italian market. Dixan is able to obtain a specific share of the market as it fulfills the traditional requirements of the territory.

The color of the detergent is blue as well and the product is performance oriented as well. Italian market is a performance-with-bleach market. Dixan has all the characteristics for being successful in the Italian market and replacing it with the internationally acclaimed product of the company “Persil” would not be a decision that will extract revenues in the Italian market as it clearly does not fit the consumer needs.

The company can focus on launching the product in the Italian market without pulling Dixan out, the changing needs of the consumer cannot be predicted and a time might come in the future when the consumers start preferring a detergent that is white in color and prefers on washing the clothes with care without the usage of bleach. The transforming needs of the consumers can be met in the future by the launch of Persil, but right now replacing Dixan, which accounts for an astonishing 50% of the market in Italy would be a decision they might regret in the future.

In Spain, the trends are different and the consumers prefer detergents that are more focused on performance rather than the color of the detergent. Henkel had acquired a star product in the market of Spain by the name of “Wipp.” Wipp is a detergent that is majorly focused upon performance rather than performance-with-bleach detergent. In addition to this, the laundry done in Spain is done by washing clothes in cold water and a detergent with attributes if Wipp completely fits the consumer need as well.

The market share acquired by Wipp is comparatively less than the market share acquired by Dixan in Italy. Replacing Wipp by Persil can be a much more feasible decision as compared to replacing Dixan with Persil. The Spanish market is a much more diversified market and is willing to accept a detergent according to the performance efficiency of the product. Launching Persil and continuing Wipp in the Spanish market can be a viable option for Henkil as the changing needs of the consumers are to be taken into account by the giants of detergent segment. Persil has more chances of being successful in the Spanish market compared to Italy.Henkel KGaA-DETERGENTS DIVISION Case Solution

ANALYSIS

SWOT

Strengths:

Henkil has been in the global market since decades and the brand has a strong image in the consumer minds. Brand enjoys a large market share in the global market. The operations of the group are not limited by any border; the company is successfully operating in the international market due to strong brand recognition...................

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