Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

Back Matter Video Cases © The McGraw−Hill

Companies, 2002

acceptance as alternatives and additions to traditional health

and wellness products. A 1998 Market Facts survey showed

the percentage of Americans who reported using herbal

supplements had grown from just 3 percent in 1990 to 37 per-

cent in 1998, and almost 80 percent of respondents felt

herbal supplements were safe to take. Herbal supplements

also have a number of logical synergies with Celestial’s exist-

ing products. Many of the same ingredients are used, and

herbal supplements can be sold through the same distribu-

tion channels.

Herbal supplements are promoted on the company’s Nat-

ural Wellness website (www.celestialseasonings.com):

We do our best to eat right, get enough rest, and exercise, and

the benefits are undeniable. But our health can be affected by

things we can’t control. Environmental toxins, emotional and

physical stress and simply getting older create concerns that show

up in many ways—as wrinkles, low energy, a flagging mood, and

more. We’re not defenseless, though. Nature, as usual, provides

what we need.

Clearly, Celestial Seasonings is appealing to specific target

market segments, like aging baby boomers and health-con-

scious consumers of all ages. In fact, whenever a new Celestial

product or service is proposed, the first question asked is

“What will Tracy think?” Tracy Jones is the company’s nick-

name for their primary target market: a 35- to 54-year-old,

college-educated, socially involved woman with a focus on

healthy lifestyle and household income greater than $50,000.

Tracy also is not a major viewer of television. Herbal supple-

ments are primarily targeted to Tracy and secondarily targeted

to other health-conscious consumers. With labels that talk

about “Tummy Mint” and “Tension Tamer,” these new herbal

supplements are designed to strike an emotional chord in

Tracy.

Launched with a $4 million dollar campaign and priced at

a premium, the herbal supplements line brought in 21 percent

of Celestial’s revenues in 1998. But just as things looked as

bright as a summer day in the Rockies, Celestial learned a clas-

sic marketing lesson. The market for herbal supplements

peaked at the same time two major competitors, One a Day

and Centrum, entered the market. Also, 1999 SPINS and AC-

Nielsen market research data indicated a variety of changes in

the herbal market. Green teas, medicinal blend teas, and Chai

were gaining sales, but previously popular single-herb supple-

ments, including St. John’s Wort and Ginseng, showed sharp

declines.

In response, Celestial restaged the herbal supplements line

in 1999 by dropping six products, reducing the advertising

budget, and doubling the number of capsules per bottle. Celes-

tial’s herbal supplements line still represents a major part of

company sales, but initial enthusiasm has mellowed, and the

marketing team has begun to look for new opportunities. Also,

companies specializing in herbal supplements face several eth-

ical and legal issues.

Almost 80 percent of American consumers believe that

herbal supplements are safe. However, as one FDA director has

stated, “Realize that the label term ‘natural’ doesn’t guarantee

that a product is safe. Think of poisonous mushrooms. They’re

natural.” Herbal supplements companies must abide by FDA

rules regarding claims of effectiveness of their products; they

cannot represent their products as medicines. Mike Gross,

Celestial’s regulatory expert, explains, “What it all boils down

to is that you cannot make any claim to cure, treat, prevent,

mitigate, or diagnose any disease state—or even mention a

disease! For example, you cannot say ‘for the treatment of

prostate enlargement’ but you can say ‘to keep your prostate

healthy.’ ”

One new direction under consideration at most consumer

goods companies is the Internet. Surprisingly, the Internet ini-

tiative at Celestial started in the Information Technology

division of the organization. Celestial started a modest web

storefront designed to educate consumers and sell seasonal

items and gifts from its mail-order catalog. Then the catalog

manager got onboard and the marketing group joined in to

build this alternative channel.

Part of the success of Celestial’s catalog and Internet sales is

attributable to the company kitchen! Started in 1973 as a free

lunch program for employees, outsiders began to drift in, want-

ing to buy products. As more and more customers visited the

factory, the idea of a factory tour gained favor. Between 1994

and 1999, over 350,000 people took Celestial’s factory tour,

creating a huge database for catalog and Internet marketing

strategies.

1. What kinds of synergies do herbal supplements have with
   herbal teas?


2. What environmental trends seem to be fueling sales
   growth for herbal supplements? What environmental
   trends pose threats to the sales and profits of herbal sup-
   plements?


3. What kinds of new products should Celestial Seasonings
   develop? What criteria would you use to evaluate new
   product ideas for Celestial Seasonings? Why?

Briggs & Stratton Corporation*

Briggs & Stratton is the world’s largest producer of air-

cooled gasoline engines for outdoor power equipment, mainly

for lawn mowers. The company designs, manufactures, markets,

and services these products—which are sold as components to

original equipment manufacturers (OEMs) in 85 countries.

Steve Briggs and Harry Stratton started the company in

1909 to produce a six-cylinder, two-cycle engine similar to one

Briggs had developed a few years earlier as an engineering stu-

dent in college. The engine turned out to be too expensive to

mass produce, so the partners turned their attention to design-

ing and producing electrical parts for automobiles—including

switches, starters, and regulators.

Later B&S acquired the patent for the Motor Wheel—a

gasoline engine designed to fit on a bicycle. It was a market

success and ultimately proved to be a good way to power sev-

eral other types of vehicles. In some parts of Asia it was even

used on rickshas.

To build on the success of the Motor Wheel, B&S looked

for new markets for engines. Its search led to the development

of a stationary utility engine for use on such products as garden

3

Video Cases 701

*This case and the script for the accompanying video were

prepared by Roger C. Shoenfeldt.