CLOROX CASE

Please write a summary of the major issues in the case.

Clorox positioning itself on a market as premium branded consumer products mostly presented
in US market. Environmental sustainability and natural personal care are major bullets of
Clorox’s Centennial Strategy. In August 2010, Clorox reported fiscal year 2010 sales of 5.5
billion USD and progress against its Centennial Strategy annual targets and mostly exceeded
expectations despite the challenging business environment. Currently, Clorox has three “green”
brands. Brita comprised 4 present of sales in the 2010 fiscal year; Burt’s Bees also comprised
4 percent of sales. Green Works, Clorox’s line of natural cleaning products, is included as part
of home care, which constituted 17 percent of FY10 sales. Clorox is looking at boosting its
sustainable brands to both increase its sales in the green market, and its overall sales for the
company. Core Issues with Sustainable Brands One main issue Clorox is facing is the
misconceptions consumers have about its flagship brand, Clorox sodium hypochlorite bleach.
Clorox is currently making an effort to combat these misconceptions. They created “The Truth
About Bleach” series to inform consumers about the product. They also have increased their
corporate responsibility. Clorox established an Eco office in 2008. In November 2009, Clorox
announced it would convert its factories that used chlorine gas to high-strength bleach, a costly
transition. In September 2010, they announced that all the buildings at their Oakland
headquarters had achieved Leed Platinum Certification in Energy and Environmental Design-
Existing Building/Operating and Maintenance. Clorox now also issues annual corporate
responsibility reports informing the public about their sustainability efforts. Nonetheless,
Clorox is still combating these misconceptions, particularly among the consumer segments
they are trying to target with their sustainable brands. Other issue Clorox is having when
marketing their sustainable brands is which consumer segments to target. A Cambridge
research study in 2007 showed that 15% of the population had a “very strong” demand for
sustainable products, while 33% had a strong demand. Another study found that around 15
% of the population sample was “deep green” Clorox consumers—interested in sustainability
and acting on that interest. Out of six consumer groups, Clorox targets three groups. Clorox’s
primary target is “Emerging Eco-Guardians.” Less committed to sustainability than “Eco
Committed” (one of Clorox’s secondary targets), Eco-Guardians represent 20 percent of the
sample population of consumers. And Personal Purist with 12% of consumers is secondary
target.
By representing “health and wellness” and “environmental sustainability” representing the two
main trends on the rise, businesses can leverage themselves to these trends ways:
Making existing brands more sustainable and by investing in new sustainable brands (internally
or through acquisition). Morrissey went on about how Clorox is striving to do that with three
of its brands:
❖ Brita Water Filters, an existing Clorox brand, that concerns what goes “In Me.”
❖ Burt’s Bees Natural Personal Care Products, a newly acquired brand that goes “On Me.”
❖ Green Works Natural Cleaning Products, an internally produced new brand that goes
“Around Me.”
All of a sudden Company has Brita, Burt’s Bees and Green Works. So they only look like
sustainable. But by the end of the day Thy cannot position themselves as a sustainable leader.
Clorox need to be more integrated because rest of the company (not sustainable made up 90%
of their revenues. So that’s the big issue.
And here they need to decide whether to integrate their main brand to be green or not, to invest
more in sustainability development? Sure.
In addition, please address the following specific questions: (one single spaced page)
1. Which brands are you most optimistic about heading into 2011? Which are you
least optimistic about? Why? Use specific financial and growth data provided in
the case to justify your argument.
Three main sustainable brands:
❖ “Brita”, surely will be a flagship in a market of personal water filtration. Brita don’t have
any Clorox name or logo on its product or packaging – that’s good for positioning as an
independent brand. By 2002, Brita grew to 70% share of the high margin category of pitcher
filtration system. In exhibit 8 we can see Brita’s advertising campaign towards reduce usage
of plastic bottles and saving consumer’s money, annually around 1748 USD per household,
even being slowed through the recession Brita is still highly profitable and one of Clorox’s
the fastest growing brands. Water filtration & pure drinking water becoming more and more
important issue all over the world, so it’s a huge market to expand and invest.
❖ “Burt’s Bees” is a leading premium brand in the growing US 6.4 billion USD high margin
natural personal care segment, with a project annual growth rate of almost 8% through 2010,
Main issue with this brand to find new markets and to encompass new segments in the
market. Main problem brand faced through recession was pricing. In my opinion they should
not rely too much on this brand development.
❖ “Green Works” – first campaign was good with their strategy to put Clorox logo (well-
known brand for its cleaning quality) and not to separate from other cleaning products on a
shelf, Green Works brings only 2 billions USD in revenues. Looks kind of “Green
Washing”, among other chemical product that’s brings more income and not an eco-
friendly. To my mind next campaign company have to remove Clorox logo out for Green
Works product for advertising and positioning purpose along with their efforts to make all
their chemical business environmentally sustainable. Pricing strategy also need to be taken
into the consideration here.
From all those brands of Clorox company, most positive I’m about Brita – it’s very clear
that’s will be a success with market invasion, clear and understandable mission.
2. Should Clorox continue to leverage Green for growth? Why or why not? Back up
your arguments with specific data from the case as well as your own general
understanding of the marketplace.
Clorox should continue to leverage green for growth for several reasons. First, while the
company’s three sustainable brands represented just 10% of the overall revenue, they have
represented much of the company's sales growth over the past several years. While growth had
slowed considerably for Burt’s Bees and Green Works, it is important to be mindful of the
recession, which may cause misleading, negative results that are only temporary. There is also
general agreement that overall green and sustainable products have more room for growth
versus the company’s mature products. Additionally, the trend of sustainability is not merely
a US trend and it is not new; it is a global trend that is expected to be long-lasting, which is
supported by McKinsey research. Furthermore, The Cambridge Group research showed that
more and more consumers were changing their habits to buy products focused around
sustainability. 15% of the population showed very strong demand for sustainable products and
33% showed strong demand, meaning 48% of the population had significant demand for
sustainable products. What’s more, Clorox conducted a study that found that 53% of consumers
intended to buy products that were eco-friendly in the next year and 47% were willing to pay
a premium for these products. The research time and time again has shown that there is demand
for green, sustainable products. Thus, Clorox should continue to leverage green for growth.