Title: Hobart Corporation

Introduction:

Four Short Analysis Papers will be due Weeks  5,  Sunday midnight (please upload to your student folder). Papers should be 1 to 2- pages with both an additional cover page and a references page. With a short paper, it is especially important to focus on answering the essay topic with clarity and conciseness. Your analysis should demonstrate an understanding of the topic as it is covered in the week’s text readings. Turnitin will be used to check for originality

Task(s):

Read “Hobart Corporation” on pages 282-283 in the course text. (see below these instructions for reading content)

Using the internet, search for articles that give examples of Hobart Corporation’s strategic market management. Search for recent articles describing the strategies and their results:

1. Prepare a Strategic plan for Hobart Corporation as discussed on page 282. Consider both internal and external analysis in preparing your plan. Identify Hobart’s SCA and its branding equity

2. Discuss the strategic goals and methods for this firm applying information that you identified in your library research. Consider the discussion questions on page 283 in preparing your response.

3. Cite the source and the edition of the periodicals that you have referred to for this assignment.

Deliverables and format:

Submit your answer in a Microsoft Word document.

Length: 1-2 pages

Font: Courier or New Times Roman: 12

Line Spacing: Double

 

 

CITATION for assignment reading material below: Aaker, D. A. (2013-10-11). Strategic Market Management, 10th Edition. [Vital Source Bookshelf Online]. Retrieved from https://online.vitalsource.com/#/books/9781119219378

 

CASE CHALLENGES FOR PART II

Strategic Repositioning

 

HOBART CORPORATION

While Hobart Corporation, a manufacturer of equipment for the food service (restaurants and institutions) and retail (grocery and convenience stores) sectors for more than a century, had developed a solid reputation for high quality and extremely reliable products, it wasn’t necessarily seen as an industry leader. It had credentials, however. In addition to being the largest firm in terms of sales, it also had broad coverage of the industry and its product categories and a respected service network, with some 200 locations and over 1,700 service vans. The better competitors excelled in a particular product category (refrigeration, for instance) or were well known in one of the industry sectors but lacked Hobart’s breadth of offerings.

Hobart was concerned with less expensive competing products that were made overseas. Most customers were continuing to buy Hobart products, but the threat was growing. Further, it was hard to create advertising and trade show material that would break out of the clutter. Breakthrough products that would attract attention were not easily generated.

In response to these concerns, Hobart sought to establish a different customer‐facing brand that would be the “thought leader” in the industry, not just the product leader. It wanted to be known for the best quality, “plus more.” The driving idea was to offer solutions to everyday issues its customers faced in their businesses—things like finding, training, and retaining good workers; keeping food safe; providing enticing dining experiences; eliminating costs; reducing shrinkage; and, for some, enhancing same‐sales growth. The firm systematically marshaled a knowledge base in order to address these problems.

This driving idea of solving everyday concerns led to a powerful brand‐building program around the tagline, “Sound Equipment, Sound Advice.” One element was a customer magazine called Sage: Seasoned Advice for the Food Industry Professional (later made available via the Internet at Sage Online). Sage’s in‐depth, objective treatment of customer problems and issues made it feel more like a newsstand publication than a corporate promotional tool. At industry trade shows, the Hobart company booth had an “Idea Center” where people could approach industry experts for sound advice about the problems they faced in their businesses. Hobart conducted seminars using leading experts; “The State of Collegiate Dining” was one topic. Internally, the leadership message was reinforced at department and company‐wide meetings and through internal newsletters.

Hobart also offered useful content about key issues on its Web site, hobartcorp.com. Visitors could find papers, question‐and‐answer sessions with industry experts, briefing documents, and other material updated on a weekly basis. This program grew to over 100 papers on technology, saving labor, reducing shrinkage, productivity, improving food safety, growing sales, and cost management. The brand lived on the Web and in other places as well, thanks to the strategic placement of Hobart content on many other sites frequented by people in the industry. Select elements of this Web content were converted to printed pieces and disseminated broadly.

Hobart shared more sound advice through speeches at key industry shows, events like the Home Meal Replacement Summit, and articles for trade magazines (for example, “Cold War: Smart Refrigeration Arms Restaurateurs Against Food‐Borne Illnesses” in Hotel Magazine). The goal of public relations became idea placement rather than product placement. Hobart also changed its approach to new product releases to emphasize how each product helps the customer deal with key business issues. For instance, rather than emphasize specific features like the recessed nozzles on the Hobart TurboWash, the firm communicated how easy it made the task of scrubbing pots and pans, thereby creating happier restaurant and food service employees.

Print advertising, once the prime brand‐building tool, played a lesser but still important role, focusing on key customer issues. For instance, one ad showed a sign at a bathroom sink reading, “Employees Must Wash Hands Before Returning to Work.” The text underneath the picture asked, “Need a more comprehensive approach to food safety?” and then described the solutions recommended by Hobart.

The Hobart program was impacted perceptions of the brand and propelled Hobart into a leadership role that lasted well over a decade until they were bought and integrated into a larger firm.

FOR DISCUSSION

  1. Why do chefs buy Hobart for their kitchens?
  2. What was the value proposition before the “Solid Equipment, Sound Advice” program? How did it change?
  3. What functional strategies did Hobart pursue?
  4. The new program soaked up resources, thereby reducing the effort to communicate new product innovations. Was that a wise decision? Which approach is more likely to support a quality image?
  5. How could competitors position themselves against Hobart’s value proposition?

Source: Adapted with the permission of the Free Press, a division of Simon & Schuster Adult Publishing Group from Brand Leadership, by David A. Aaker and Erich Joachimsthaler. Copyright © 2000 by David A. Aaker and Erich Joachimsthaler. All rights reserved.

Leveraging a Brand Asset

DOVE

In 1955, Unilever (then Lever Brothers) introduced Dove, which contained a patented, mild cleansing ingredient, into the soap category. It was positioned—then and now—as a “beauty bar” with one‐fourth cleansing cream that moisturizes skin while washing (as opposed to the drying effect of regular soap). Advertisements reinforced the message by showing the cream being poured into the beauty bar. In 1979, the phrase “cleansing cream” was replaced with “moisturizer cream.”

Also in 1979, a University of Pennsylvania dermatologist showed that Dove dried and irritated skin significantly less than ordinary soaps. Based on this study, Unilever began aggressively marketing Dove to doctors. Soon about 25 percent of Dove users said they bought the brand because a doctor recommended it, greatly enhancing the bar’s credibility as a moisturizer. By the mid‐1980s, Dove had become the best‐selling soap brand and commanded a price premium.

The first effort to extend the Dove brand occurred in 1965. The extension, into dishwashing detergent, survives but has to be regarded as disappointing. Because the leading competitor at the time, Palmolive, promised to “soften hands while you do dishes,” the hope was that the Dove cleansing‐cream message would translate into a competitive benefit. Instead, customers felt no reason to change from the well‐positioned Palmolive, and since Dove’s reputation for moisturizing and beauty did not imply clean dishes, there was simply no perceived benefit. After receiving weak market acceptance for the extension, Dove lowered the price, creating another source of strain on the brand. Fifteen years after its launch, the brand languished at a rather poor seventh in the U.S. market, with a share of around 3 percent. The dishwashing detergent not only failed to enhance the Dove brand, but it also undoubtedly inhibited Dove from extending its franchise further for decades.

In 1990 the Dove soap patent ran out, and arch‐competitor P&G was soon testing an Olay beauty bar with moisturizing properties, a product that rolled out in 1993. One year later, Olay body wash appeared and soon garnered over 25 percent of a high‐margin product category. Blindsided, the Dove brand team belatedly recognized that theirs was the natural brand to own the moisturizer body wash position. The firm had apparently missed the chance to be a leader in this new subcategory.

In response to Olay, the firm rushed Dove Moisturizing Body Wash into stores. The product did not live up to the Dove promise, however, and a reformulation in 1996 was only a partial improvement. In 1999, though, Dove finally got it right with the innovative Nutrium line, based on a technology that deposited lipids, vitamin E, and other ingredients onto the skin. The advanced skin‐nourishing properties provided enough of a lift to allow Dove to charge a 50 percent premium over its regular body wash. Later, Dove introduced a version of Nutrium with antioxidants (which have been linked to reduced signs of aging), which helped Dove to pull even with Olay in the body wash category. By leveraging strong brand equity, pursuing innovative technology, and being persistent, Dove was able to overcome a late entry into the market.

The Dove body wash efforts influenced the brand’s soap business, which was flat until the mid‐1990s (and, in fact, declined in 1996). The introduction of the body wash corresponded to a 30 percent growth surge in Dove soap from the mid‐1990s to 2001, evidence that the energy and exposure of the Dove brand helped even though the product was somewhat waning during much of that period. In addition, the Nutriumsubbrand, established in the body wash category, was

employed to help the soap business. In 2001, Unilever introduced a Dove Nutrium soap (positioned as replenishing skin nutrients) that was priced about 30 percent higher than regular Dove.

Another battlefield, entered in 2000, was the rather mature category of deodorants—even though dryness, the key benefit, seemed contradictory to the Dove promise of moisturizing, and the target segment was younger than the typical Dove customer. Despite these apparent risks, Dove introduced a deodorant line with uncharacteristically bold advertising (for example, one tag line was “Next stop, armpit heaven”). As it turned out, the deodorants were named as one of the top 10 nonfood new products in 2001, garnering over $70 million in sales with close to 5 percent of the market, making Dove the number‐two brand among female deodorants. The “one‐quarter moisturizing lotion” positioning, effectively communicated as protecting sensitive underarm skin, generated a Dove spin on dryness that differentiated the product line.

In spite of this win, P&G’s Olay again beat Dove to a new market in the summer of 2000, this time with disposable face cloths infused with moisturizers. It took Dove about a year to respond with its Dove Daily Hydrating Cleansing Cloths. With the body wash success behind it, however, the Dove brand was well suited to compete in this category.

The next product extension was Dove Hair Care, whose moisturizing qualities were directly responsive to one of the top two unmet needs in the category. The product’s branded differentiator, Weightless Moisturizers, is a set of 15 ingredients designed to make the hair softer, smoother, and more vibrant without adding any extra weight. After achieving top‐selling status in Japan and Taiwan, Dove Hair Care entered the U.S. market in early 2003 with a massive introduction campaign, joining a product family used by nearly one‐third of American families. Two years later it introduced Dove Body Nourishers Intensive Firming Lotion, formulated with collagen and seaweed, intended to give the user firmer skin after two weeks.

These extensions contributed to a dramatic sales success. The brand’s business grew from probably around $200 million in 1990 to over $4 billion by some estimates in 2013 (the bar itself was enjoying substantial growth in sales). Geographic expansion also contributed. Dove’s presence increased to nearly 80 countries, far more than in 1990, with particular strength in Europe (where it gained 30 percent of the cosmetics and toiletries market), Asia‐Pacific (25 percent), and Latin America (11 percent).

In 2005, with no major geographic expansion or brand extension in sight, Dove looked to another route to add energy. The result was an advertising campaign (first created in the United Kingdom) featuring “real women” with real dress sizes instead of ultra‐thin models. Dove branded campaigns to educate and inspire girls to adopt a wider definition of beauty and to achieve a higher self‐esteem level supplemented by the advertising. The new direction for the brand was based in part on a global study involving 3,200 interviews that revealed that only 2 percent of women thought themselves beautiful, 50 percent of women thought their weight was too high (60 percent in the United States), and two‐thirds of women felt that the media and advertising set an unrealistic standard of beauty. The campaign received enormous exposure in the media with over a thousand stories, most but not all positive (some felt it would be ineffective, others pointed out that Unilever was still using models for its other products, and still others thought Dove was promoting obesity). It generated a 10 percent sales boost.

Another initiative was aimed at girls who are too often held back by low self‐esteem and anxiety about their looks. Dove’s social mission was to encourage girls to develop a positive relationship with beauty, helping to raise their self‐esteem and thereby enabling them to realize their full potential. There are a variety of programs to promote the development of body confidence among girls using support of their families and communities. Over 8.5 million young people in 26 countries have received help from 2005 through 2012.

In addition, Unilever has a men’s product named Axe (called Lynx in some countries), which was introduced into the United States in 2002 as a spray deodorant and now covers shampoo, shower gels, aftershave, and other products. The Axe brand was built around the humorous premise that beautiful women would go crazy over a man (or even a male mannequin) if the Axe spray had been used. The advertisements and promotions were widely perceived as sexist and even degrading. Some pointed out that Unilever was hypocritical to claim some kind of feminine champion when they have the Axe brand so blatantly being the opposite of the “real women” concept.

Citation:

 Aaker, D. A. (2013-10-11). Strategic Market Management, 10th Edition. [VitalSource Bookshelf Online]. Retrieved from https://online.vitalsource.com/#/books/9781119219378