The Lessons to Be Learned from Zicam


There are two important lessons to be learned from Zicam. The first is that effectiveness leads to repeat purchases. Zicam customers believe that the product really works, and therefore they keep buying it over and over again. Many of these customers are so convinced that Zicam works that they not only use it themselves but tell others about it. Clinical studies have shown that these customers have a good reason for their confidence. This research shows that Zicam users can actually get over a common cold in just two days, compared to seven to fourteen days for the average person without it.

Another important lesson to be learned from the Zicam story is the importance of marketing. The saying ˜ ˜build a better mousetrap and people will beat a path to your door obviously did not apply to this product. The company s initial placement into distribution of this new product that represented a very effective new way to reduce the severity and duration of the common cold almost failed because there was no marketing. There are undoubtedly many very effective and well-designed new products that don t go anywhere because they are not properly marketed. Effectiveness alone is not enough.

It wasn t until Zicam was publicized in USA Today that the product started moving off the shelves . Further sales results clearly demonstrated that sales grew dramatically as a result of additional advertising. New product introductions based on solid market research findings further stimulated the growth of the brand. You can have an effective product, but you must also invest the money and make the marketing effort to make it known.

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Summary Marketing Plan for: Zicam Cold Remedy Nasal Gel Matrixx Initiatives, Inc. [1] 1999

MARKETING PLAN SUMMARY

  1. BACKGROUND. In 1999 a new product was launched under the brand name Zicam that claimed that it could actually reduce the duration and severity of the common cold. At the time of this writing, Zicam has achieved distribution in approximately 90 percent of the nation s drugstores and 60 percent of the grocery stores, and it is being sold by all of the major mass merchants , including Target, Wal-Mart, and Kmart. Its sales have been increasing on average 48 percent a year, and that growth rate is continuing. Clinical studies have shown that Zicam users can get over a common cold in just two days, compared to seven to fourteen days for the average person without it.

  2. CONSUMER CLINICAL TRIALS. Subjects were recruited at four sites in the Los Angeles area. The study included 213 subjects, who were randomly assigned to receive either the zinc nasal gel (Zicam is based on zinc) or a placebo. Only subjects who had had cold symptoms for twenty-four hours or less were enrolled in the study. The results were amazing. The duration of each patient s cold was defined as the number of days from entry into the study to the complete resolution of symptoms. The zinc nasal gel had a significant effect in shortening the duration of the symptoms. The mean resolution time was 2.3 days for the patients who received zinc and 9.0 days for the controls. There were no significant side effects, other than a few subjects reporting a slight tingling or burning sensation .

  3. MARKETING PLAN ELEMENTS

    1. Brand name. The entire Matrixx Initiatives, Inc., product line uses the Zicam brand name. Company management believed that Zicam was a good name because it was unusual, and therefore memorable. The name actually came from the technical features of the product. ˜ ˜Z is the chemical designation for zinc, and ˜ ˜icam was included because the product is effective in blocking the icam receptors in the body. As line extensions were added under the Zicam brand name, names were created that simply described the functions of the product. For example, the allergy relief products were called Allergy Relief, and the cold remedy products were called Cold Remedy. The idea was to use the Zicam brand for all the products, then clearly tell the consumer the purpose of each specific product.

    2. Product line. The initial Zicam product launched in 1999 was a nasal spray that actually reduced cold symptoms very quickly and shortened the length of the cold. The Zicam gel matrix was patented, and the patent was good until 2018. In 2000 the Zicam product line was expanded with a unique formulation allergy product, and in 2002 the company engaged in a major new product effort. A total of five new products were launched in 2002.

    3. Packaging. The design of the Zicam packaging was a very important part of the overall marketing mix. It was critical to communicate to consumers that this was a product that actually shortened the cold. One way this was done was by placing the statement ˜ ˜actually shortens the cold in a prominent location on the label. The bottle itself was also an important part of the packaging design. For cost reasons, the company decided to go with an existing bottle rather than designing one from scratch. It had to find a special pump designed for a gel. It also selected a very upscale bottle that functioned well and sent the right message to the consumer.

    4. Pricing strategy. When Zicam was introduced, its price was $10.99, whereas the price of the average cold remedy was $5.29. Thus, Zicam cost almost twice as much as the average cold remedy. This price was mainly based on the company s financial requirements. The company simply added to its production costs the margin needed to cover all of the marketing costs and trade margins. The product also carried an unconditional guarantee. The premium price of Zicam sent a signal to consumers that this was not an ordinary cold remedy. It could also be cost-justified against the competition if the consumer took the time to do the financial analysis. For example, a competitive zinc lozenge sold for about half the price, but it was good for only one cold. Zicam was good for two colds, and some people had actually been able to stretch it to three or four colds.

    5. Sales and distribution methods . The objective was to obtain distribution for Zicam in all the major retailers that carried cold remedies. This was to be done by using a network of brokers in each local market. This strategy was very effective for the brand once the publicity began . At the time of this writing, Zicam was in all of the major mass merchandisers, such as Wal-Mart, Kmart and Target. It also had 90 percent distribution in drugstores. Food store distribution was about 60 percent and growing.

    6. Advertising copy strategy. The primary television advertising copy strategy for the cold remedy was ˜ ˜Zicam gets rid of your cold three times faster. This was the only message in the thirty-second television commercials. At the time of this writing, the company could not claim that Zicam would prevent a cold. The sixty-second television commercials also introduced the swabs and Extreme Congestion Relief. The print campaign focused on introducing the allergy and decongestant products.

    7. Advertising media strategy. The decision was made to use primarily television advertising for the cold remedies because of the ability to make visual demonstrations through this medium. The media plan included one thirty-second television commercial run on morning network stations and two sixty-second direct-response commercials on cable television. A print campaign was used for the allergy and decongestant products. The media strategy for the cold remedies was to start advertising in mid-October and finish in mid-March. This would result in these products being advertised only during the cold season .

    8. Sales promotion. Sales promotion was not used during the introductory launch of Zicam, and price discounting to stimulate sales is still not a primary tool. The company really wants to sell this unique product at full price. However, a one-dollar coupon was included in a Sunday freestanding insert for the first time in November 2002. The main objective of the coupon was to build awareness of the brand, not to give a price break.

    9. Publicity. The media were informed of the results of the clinical research, which showed about a 75 percent reduction in the severity of a cold. USA Today picked up the company s news release and made it a front-page story. Because of the USA Today article, store sales of Zicam took off and new retailers started calling up asking for the product. Distribution quickly went from only two retail chains to national distribution.

    10. In-store merchandising . Off-shelf displays were an integral part of the marketing plan for Zicam. Matrixx offered the trade a wide variety of Zicam displays, including gravity feed units, large wing displays, floor-mounted displays, and an eight-unit counter display. The company tried to get as many off-shelf displays as possible up during the cold season.

  4. FINANCIAL PROJECTIONS. Zicam has been very successful up to this point. It has gone from simply an idea to a nationally distributed brand that is known by over 25 percent of American households. It has also been able to maintain an annual growth rate of more than 45 percent. At the beginning of this cold season, Zicam had a 25 percent consumer awareness, which leaves 75 percent of households that must be made aware of the product. There is a lot of room to grow, and Zicam is willing to keep pouring on the marketing effort in order to achieve this growth.

  5. CONTINGENCY PLANS. The management of Matrixx Initiatives is aware of the current competition for Zicam and the possibility of future competition. The main competition at this point is from zinc lozenges. There are several brands of zinc lozenges currently on the market, as well as a growing number of private-label brands. Matrixx s competitive strategy against these zinc lozenges is to promote the greater benefits of Zicam relative to those of the lozenges. The company has clinical proof of the effectiveness of nasal applications of zinc, and it believes that this is much more effective than oral application with a lozenge. The company is also aware of the possibility that the competition will develop a competitive nasal application of zinc. Matrixx has a patent on the Zicam gel matrix that is good until 2018. Management believes that this patent will protect the company from the competitive development of another product that is as effective as Zicam.

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[1] Zicam is a registered trademark of Matrixx Initiatives, Inc., and is used with permission.




Powerhouse Marketing Plans(c) 14 Outstanding Real-Life Plans and What You Can Learn from Them to Supercharge [... ]aigns
Powerhouse Marketing Plans(c) 14 Outstanding Real-Life Plans and What You Can Learn from Them to Supercharge [... ]aigns
ISBN: 735621675
EAN: N/A
Year: 2006
Pages: 172

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