Reference no: EM131423987

Eclipse Gum Company

In June 2000 Paul Chibe, senior marketing manager for the breath-freshening portfolio for Wm. Wrigley Jr. Company, sat in his office in the company’s landmark Wrigley Building on North Michigan Avenue in Chicago. He had a week to finalize his recommendation for Eclipse gum (see Figure 1), which had posted disappointing results in its first year. Chibe remembered how the challenge had motivated him when he joined the company two months earlier, replacing the brand manager who had developed the launch plan: “I was confident I could get Eclipse on the right track.”1 On this Friday afternoon, however, Chibe was feeling the weight of his responsibility to decide how to turn around the struggling brand. His desk was covered with marketing research reports and his mind was buzzing with all the opinions he had heard in his discussions with Wrigley and agency executives about the brand’s future. He began reviewing the reports and the notes from his conversations and began to prepare his recommendation.

Company Background

In 1891 William Wrigley Jr. was selling soap and baking powder in Chicago when he noticed that the sticks of chewing gum he was giving away as incentives were more popular than the merchandise he was trying to sell. He soon formed the Wm. Wrigley Jr. Company and developed his own line of gums, including two brands of stick gum that became company icons: Wrigley’s Spearmint and Juicy Fruit. Another iconic brand, Doublemint, was introduced in 1914. His efforts in product development and advertising successfully broadened chewing gum’s appeal.

William Jr., who ran the company until 1932, and his son, Philip, who succeeded him until 1961, were innovators in advertising; the father coined the familiar advertising maxim “Tell ‘em quick and tell ‘em often,” and Philip expanded the company’s advertising to include sponsoring radio programs and placing ads in the “funny pages” of newspapers. The company was taken public in 1919, and the family invested in the Chicago Cubs baseball team, as well as in real estate on Santa Catalina Island, near Los Angeles. During World War II, the company stopped producing its flagship products because it could not obtain the ingredients necessary to maintain product quality, but it continued advertising the brands. Once the war was over, Wrigley once again dominated the market for chewing gum, and demand for Doublemint, Juicy Fruit, and Wrigley’s Spearmint quickly surpassed pre-war levels. William Wrigley III (known as William) took control of the company in 1979, upon the death of his father, Philip. After the end of the Cold War the gum business grew so dramatically in Eastern Europe that Wrigley’s plant in France was running three manufacturing shifts per day to meet demand. During the 1990s the company expanded rapidly in Asia. By the end of the decade, the majority of Wrigley’s sales came from outside the United States and Wrigley opened new manufacturing facilities in China and Russia. In 1987 Wrigley decided to pre-price (i.e., print the retail price on the package) its single packs of gum. Prior to that, retailers—especially convenience stores—frequently had increased the selling price well above suggested retail prices, which led to better margins for the retailers but declining unit and dollar sales for Wrigley and the trade. In response, Wrigley pre-priced its top-selling sugar brands at 25 cents for a five-stick pack. Retailers strongly resisted the move, but Wrigley’s position as the number-one gum company and consumer demand for its established brands overcame their resistance. On March 8, 1999, William, who had been CEO for nearly thirty years, died suddenly and unexpectedly. The board selected his son, William Wrigley, Jr. II (known as Bill Jr.), as his successor.

Developing a Solution

As he started his new job, Chibe was told by several Wrigley executives that the brand would never be successful and should be dropped. Others cautioned him to be conservative and to testmarket all changes to the brand before rolling them out nationally. Chibe declared that rigorous analysis had to take precedence, and he began collecting data to help him understand why Eclipse was failing in the market and what needed to be done to make it a success. A couple of researchers at the advertising agency suggested to Chibe that the product might be part of the problem; almost everything else related to the launch of the brand was “tried and true” marketing that had worked for other Wrigley brand launches. With a 79 cents pre-priced tag for a single pack, Eclipse even enjoyed a ten-cent price advantage over Dentyne Ice, which was priced at 89 cents. Chibe ordered blind product tests comparing the Eclipse launch flavors to similar flavors of Dentyne Ice (see Table 6). Table 6: Blind Product Test Scores Eclipse Spearmint vs. Dentyne Ice Spearmint Eclipse Winterfresh vs. Dentyne Ice Winterfresh First order hedonica 6.8 : 7.3 7.3 : 7.3 Paired comparison Overall preferenceb 51% : 49% 52% : 48% Best breath freshening 46 : 48 50 : 48 Freshens quickly 46 : 51 42 : 54 Eliminates odors 40 : 54* 41 : 56* a The nine-point Hedonic scale (1 = Dislike extremely, 9 = Like extremely) is the most widely used measure of food acceptability. b Percentages in paired comparisons will not sum to 100 when one or more respondents does not indicate a preference. * Indicates a statistically significant difference. Source: Company data.

Requirement

Write one page about the background Eclipse Gum Company?

What the wrong turn they did and whats the solution they used to successful the company?