William Wrigley Sr. was a soap manufacturer in Philadelphia. His rebellious son sold
Wrigleyâ€™s Scouring Soap from a basket on that cityâ€™s streets. After being expelled from school, William Wrigley sharpened his skills as a full time salesman for his father by selling to stores in county towns. However, William Jr. had ambitions of his own.
William Wrigley Jr. went west to Chicago in Spring 1891. His newly founded
firm sold his fatherâ€™s scouring soap to retailers. Wrigley Jr. offered baking powder as a premium to induce soap sales. When he discovered baking powder was more popular than the soap, Wrigley discontinued the sale of the soap. Later, Wrigley offered two sticks of chewing gum as a premium with the purchase of a can of baking soda. Again, he found that the premium was more popular than the product it was to promote. In 1892, his firm began a long and flourishing career in the chewing gum industry.
The chewing gum industry was difficult to enter because a dozen or more companies were already selling gum. But at age 29, Wrigley had the energy and marketing insight to succeed. He understood consumers and readily adapted to their tastes. He inspired his sales force, continued to offer enticing premium, used pioneering advertising, and understood the importance of national brands.
By the early 1900â€™s, Wrigley decided to concentrate on a spearmint-flavored gum,
as he began his expansion into eastern U. S. Cities. He eventually won over consumers through innovative advertising. He used the same means to enter the New York City market and, by 1910, had succeeded in making Wrigleyâ€™s Spearmint gum Americaâ€™s favorite. He also succeeded in establishing Juicy Fruit and Doublemint as very popular brands.
The company forged ahead, achieving a leading position in American markets with its three primary brands. However, World War II brought disruptions in the supply of top grade ingredients. Rather than risk its quality reputation, the company took Spearmint, Juicy Fruit and Doublemint off the civilian market. Until 1945, these brands were supplied only to the armed services. To maintain a presence in the pubic eye, Wrigley introduced Orbit chewing gum to the civilian market during World War II. The company launched a successful advertising campaign to keep the former brands alive with a picture of the old wrappers and the slogan, â€œRemember This Wrapper.â€ After the war, the three brands were reintroduced and surpassed their prewar volume.
During the 1970â€™s, several new brands were introduce to combat the competition
from sugerfree gums. Wrigley introduced Freedent (1974) for denture wearers;
cinnamon-flavored Big Red (1975), a sugerfree Orbit (1977) which later failed; and
Hubba Bubba bubblegum in 1978. Wrigley introduced Extra sugarfree gum in 1984 and
supported it with unprecedented advertising spending. It, too, became a profit leader and
the best selling sugarfree gum in the United States.
Amurol, the subsidiary that introduced Hubba Bubba, launched an outstanding
success in 1991. Shredded bubble gum, labeled â€œMichael Jordan Hang Time,â€ was a hit
with the younger markets and improved Amurolâ€™s earnings. Along with its sustained
growth trend, Amurol has also maintained a sound marketing strategy evolution. By
1996, the brand was working out a licensing deal with the cable channel Nickelodeon in
order to launch a Nickelodeon branded extension of its candy and chewing gum lines. The deal included the right to carry the TV networkâ€™s name in those lines of products. Similar to the case of Amurol, industry reportings indicated that the ratings of the Nickelodeon channel were experiencing sustained growth.
Since World War II, Wm. Wrigley Jr. Company has been expanding the scope
and reach of its operations in the U. S. market. Its four plants manufacture and distribute Wrigleyâ€™s core product lines and brands, established (Spearmint, Doublemint, Juicy
Fruit, Big Red and Winterfresh) Extra Sugar-Free (Spearmint/Peppermint, Cinnamon,
Original, and Classic Bubble Gum and Winterfresh) and Freedent (Spearmint,
Peppermint and Winterfresh), assuring a dominant position in the U. S. market.
Notwithstanding its dominant position, the company has also experienced the effects of a
more aggressive competitive environment in which sales of sugerfree products and levels
of distribution are major issues.
Early in its history, the company exported to other countries. Foreign production began in
Canada in 1910, and by 1939, plants were operating in Australia , Great Britain and New
Zealand. New types of products and flavors were produced to meet varying consumer preferences in international markets. Wrigleyâ€™s most popular product abroad was â€œP.K., â€ sugar-coated pellets.
After World War II, Wrigley intensified international expansion by opening sales
offices throughout Asia, Africa and Europe. The company manufactures its products on a
worldwide basis with 14 manufacturing factories â€“ four in North America, four in
Europe, one in Africa, and five in the Asia/Pacific region. Company sources also report a
new factory currently under construction in Russia. According to the presidentâ€™s letter accompanying the 1997 annual report, the size of the â€œoverseas business has nearly doubled in the five year period ending in 1997.â€ Wrigleyâ€™s products new enjoy a market coverage that reaches over 100 nations.
Wrigley defends all its markets fiercely with special attention to the United States, a
market that as of the end of 1997 represented almost $2 billion in retail sales for the company. Part of Wrigleyâ€™s strength is a constant quest for efficiency in production and
physical distribution. Yet, marketing in general, and advertising specifically, are the keys
to its defense. The firmâ€™s basic approach is to â€œpullâ€ products through the distribution channels with strong advertising and consumer demand. That is followed by in-store shelf and point-of-purchase displays to present the gums attractively. Wrigleyâ€™s sales representatives visit stores often to aid retailers with placement, filling and straightening of display fixtures.
Wrigleyâ€™s principal advertising medium is television. Chewing gum is brought by
a broad spectrum of consumers, and TV can reach the widest audience at the lowest cost
per capita. Commercials are placed between programs that have the widest cross sections
of viewers. The ads are correspondingly broad in their appeal. Two lesser used media are
transit advertising (on buses, in rapid transit cars and stations) and outdoor posters that have a strong visual impact.
Advertising consistently aims to portray a wholesome image for gum chewing and
for Wrigley brands. Its most memorable feature was created for 1930â€™s radio programs. Ads for Double-mint featured double pianists, double comedians, and so forth. Outdoor posters for the brand repeated the theme of twins in matching hats. The idea of twins proved to have universal appeal and is still featured in Double-mint advertising today. Wrigleyâ€™s advertising outlays are representative of an aggressive marketer. Controlling nearly half of the U.S. market, Wrigleyâ€™s advertising outlays have been among the highest in relation to dollar sales in the food industry. A striking example of this aggressiveness occurred in 1989. The American economy was starting to decline and leveling sales were expected from the gum industry. Wrigleyâ€™s response was to raise advertising expenditures from $134 million to $158 million in 1990. As of December 1997, advertising expenditures were over $280 million. Wrigley has been ranked in the Advertising Ageâ€100 Leading National Advertiserâ€ list for several years.
Three of Wrigleyâ€™s most outstanding campaigns in recent years were developed
by the BBDO agency: (1) creative and strategic positioning for cinnamon flavored Big
Red; 2) positioning for Extra sugar-free gum; and (3) the â€œno-smokingâ€ campaign for
Spearmint. The no smoking campaign received much critical attention as a substantial
change from Wrigleyâ€™s traditional whimsical campaigns. The multi-media campaign
introduced a simple straightforward message â€œIf you canâ€™t smoke, chew gumâ€ â€“ in print,
television, outdoor, and in-store formats. The ads feature smokers confronted with a
number of non-smoking situations (restaurants, airplanes, and the workplace) and offer Wrigleyâ€™s Spearmint gumâ€™s â€œpure chewing satisfactionâ€ as an attractive alternative. The competitive situation has caused the relationship between BBDO an agency and Wrigley to evolve accordingly. In April 1997, Advertising Age reported that Wrigley decide to change the compensation scheme for the agency (business with Wrigley was $130 million) from the traditional system to one based on the market performance of the brands advertised.
The View from the Top
A Wrigley executive scanning the view from the corporate offices in Chicago would seen
the gently rising Illinois terrain. The near-future prospects of the gum industry for the last
two year of the millennium would offer a similar view. Observers of the industry
believed that the foreseeable sales volume would rise only at the U. S. demographic rate
and Wrigley profits were expected to show continued , but slower growth. See Table 1 and Table 2 for financial results through 1997.
Table 1. Wm. Wrigley Jr. Company Financial Results 1987-1997 ($ in millions)
Year Sales Net Profits
1987 781.1 70.2
1988 891.4 87.2
1989 992.9 106.2
1990 1110.6 117.4
1991 1148.9 128.7
1992 1286.9 148.6
1993 1428.5 174.9
1994 1596.6 230.5
1995 1754.9 223.7
Cash 181.2 206.6
Accounts Receivable 165.1 176.0
Inventory 233.2 247.4
Other Assets 19.7 30.5
Taxes 11.0 16.4
Total 729.4 797.7
Accounts Payable 75.4 71.0
Accured Expenses 66.4 78.4
Dividends Payable 19.7 22.0
Other Liabilities 56.7 54.4
Total 218.2 225.8
Current Ratio 3.34 3.53
There are no signs of Wrigleyâ€™s long term strategy changing notably. When asked
about new ventures, one director was quoted as saying: â€œThe only thing Wrigley would consider as a new venture is something else in the gum business.â€ That is likely to remain the main principle guiding strategic marketing planning in the near future. However, competitorsâ€™ moves , efficiency rationalization moves and other internal pressures like reduction of tax credits are changing the typical composition of the companyâ€™s domestic business environment.
As the millennium approaches (the year 2000), the company faces the prospects
of increasing competition in the sugar and sugar free segments of the North American market, the need to rationalize product lines and promotional activities in both domestic and foreign markets, and the rising tend of business opportunities in the overseas markets. With these and other circumstances affecting the business situation, the marketing strategy for chewing gum products would need to be altered to accommodate this change â€“ an action that Wrigley executives should be considering now.
The case deals with the marketing strategy and decisions that Wrigley must make in late 1997 and 1998. Although Wrigley has performed well, there is some concern about slowing growth in the industry and for the last 3 out of 4 years earnings have been flat. This company is the mature stage of the life cycle and does not seem interested in any products but chewing gum.Read the case and identify what you consider to be the problem. step 1 â€“ state the problem. step 2 â€“ relate as many concepts as you can from to the case at hand. step 3 â€“ generate 3 alternatives that will solve the problem. step 4 â€“ identify and define criteria that will be use to evaluate the alternatives. step 5 â€“ evaluate the alternatives on each criteria step 6 â€“ state a solution.