Arm & Hammer's product diversification and market expansion strategy

Brand analysis: Arm & Hammer

Brand analysis

Arm & Hammer is a familiar household brand name for a common chemical. That chemical is sodium bicarbonate, (NaHCO3), or sodium hydrogen carbonate. It is also known as baking soda and bicarbonate of soda add is a soluble white anhydrous or crystalline compound, with a slight alkaline taste resembling that of sodium carbonate. It is found in many mineral springs and also produced artificially (Answer.com Web site). In fact, Arm & Hammer baking soda is a derivative of trona, a naturally occurring mineral mined only in Wyoming.

Common uses include as an antacid for indigestion and heartburn. It is used in the anhydrous form to absorb moisture and odoers. IT can be used, as well, for cleaning, scrubbing and stain removal; these properties have made it popular as an ingredient in tooth preparations (Answer.com Web site).

History of the brand

The Arm and Hammer brand is more than 150 years old, and is currently owned by Church and Dwight Compnay Inc. Until 1970, the oly product Arm and Hammer sold was baking soda; that year, Arm and Hammer laundry detergent was marketd for the first time. Currently, that product is among the top five powder detergent brands (Weisz 1994). As far as its baking soda packaged product per se, the brand would have to be considered a very mature one. On the other hadn, Church & Dwight have sought and found new markets for the substance and have made it into a "product differentiator" when added to the products made by other companies, including mouthwashes and so on (Weisz 1994).

One-pound bags of Arm & Hammer brand baking soda were first sold in the United States as a baking ingredient in 1846. Consumers rapidly discovered other household uses for the product, hwoever, because its chemical properties allow it to neutralize odors; it can also act as a mild abrsive because of its physical structure (Weisz 1994).

Church & Dwight is considered a mid-size company, but unlike others of simiar size, it has not had a problem finding a niche in the global economy. In fact, it has carved "a sizeable niche for itself via internal growth and acquisitions" (Household & Personal Products Industry 2004). Along with its original products, baking soda and detergent, this niche activity helped corporate sales rise by 1% in 2003, with net income jumping 21%. "The company said that laundry, specialty products and international sales were higher than in 2002, while deodorizers were flat, and cleaners and personal care sales dropped. By segment, domestic household product sales totaled $645 million, domestic personal care sales were $187 million and consumer international sales were $37 million" (Household & Personal Products Industry 2004).

One of the drivers of the company's strong showing in the laundry arena was that both its powder A& H. And Xtra liquid detergents "benefited from expanded distribution (especially in the fast-growing mass channel) as well as changes in fragrance and packaging, which provided a boost to on-shelf presence" (Household & Personal Products Industsry 2004). In addition, Church and Dwight had introduced a line of disposable cleaning pads under the Brillo name; offerend a new hair-release ingredient in its baking soda-based carpet deodorizer, and: extended its baking-soda-based cat litter base with a new flushable product (Household & Personal Products Industry 2004).

Brand equity

Any brand that has remained virtually unchanged in the American marketplace for 148 years would have to be considered one that enjoys extraordinary customer loyalty. Weisz demonstrated Arm & Hammer's brand loyalty when she quoted several customers concerning their reasons for making a product choice. One, a NewYork City attorney, claimed his Arm & Hammer baking soda toothpaste was as important to him as his favorite power tie because he believed it freshened the breath better than any other toothpaste. As it happens, many people agree with him concerning the efficacy of baking powder in toothpaste; such toothpastes -- Arm & Hammer's and others -- accounted for 25% of the $1.4 billion toothpaste market in 1994 (Weisz 1994).

A therapeutic effect on oral health derived from baking soda has not been proven. However, consumers "like flavor of baking soda toothpastes, which are less sweet, and say it makes their mouths feel clean and fresh. Of course, people used plain baking soda to clean their teeth years before baking soda toothpastes came on the market. Its value "was reaffirmed by one's grandmother,' said Brett Shevack, president of Partners & Shevack, the agency for Arm & Hammer products (Weisz 1994).

In addition, Arm & Hammer has maintained an all-natural image for 148 yeas a well, a fact which has helped it 'infiltrate' products fromom many other companies from Procter & Gamble to Colgate (Weisz 1994).

There is usually a backlash against excessively popular ingredients in consumer products, and that has happened with baking soda, also, according to Weisz, with DenMat's Rembrandt Brushing Gel using the words "Baking Soda-Free" as a marketing tool (1994). However, that is unlikely to tarnish Arm & Hammer's image or fortunes very much.

Analysis

It is apparent that, for at least 150 years, Arm & Hammer has been virtually the only major player in the baking soda business per se; it has been able to parlay that strenghth into effectively niche marketing its main product as an additive or enhancer to other products. At the end of 2004, Church & Dwight Company, Inc., reported net income for the third quarter of $27.4 million, or $0.42 per share, and $0.11 per share increase, or a healthy 35%, over the previous period a year earlier. In fact, except for accounting mandates regarding their adquisition of the remaining 50% interest in Armkel LLC, the net income per share would have been even higher.

For fourth quarter 2004, Churhc & Dwight was looking at increasing its marketing spending over the same perioed a year earlier, primarily to step up marketing for Arm & Hammer Enamel Care ™ tootpaste, a new patented product combiing cleaning and whitening with fluoride and caclcium to fill tooth surfaces. It also planned on enhancing marketing budgets of its non-baking soda brand items, such as Trojan ® Warming Sensations ™ condoms.

It is likely that Arm & Hammer baking soda will continue to enjoy a good market; it is still the only major baking soda on grocery shelves in the United States. However, because of its new position as a product enhancer, both for its own proprietary items and as an additive to the products of other housheholod and personal care companies' products, the future appears to be as bright as the past 150-plus years have been.