TABLE OF CONTENTS

Introduction!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"

Industry Overview!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"

Client Pro!le!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!#

Competitor Pro!les!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!$

Comparative Analysis!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!""

Consumer Analysis!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"%

Sources!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"&

                                                                 

 ZzzQuil has found its way into the sleep aid industry with the help of its parent company, VICKS NyQuil. This analysis explores many different facets of the sleep aid industry. While

the client has to be fully informed on the ins and outs of ZzzQuil, it is also vital to understand the components of its competitors, both direct and indirect. Growth of a company is dependent on knowing the trends of the market, and understanding how to dominate and control the largest shares. While ZzzQuil is a relatively new company, the Vicks brand is not and understands the specifics of the healthcare

industry. The first section is the Industry Overview. This explores the history of the industry as a whole, detailing the advertising expenditures, product life cycle,

seasonality, potential growth, rules and regulations, and societal and cultural considerations. From there, the Client Profile is explored, providing information on the history of ZzzQuil, its sales, and target market. This highlights the marketing strategies up to date and any new developments. The analysis continues with the competitor profiles, both primary and secondary.

The Comparative Analysis then explores then categorizes the different ways in which ZzzQuil has competed with its competitors, including creativity, expenditures, share of voice, etc.

Lastly, the Consumer Analysis describes the target market, detailing the demographic, psychographic, and geographic variables. All of this together provides a detailed view of the industry in which ZzzQuil will be competing and how capable it is of doing so.

Size of Industry: The American Sleep Association reports that about 40 million Americans suffer from chronic sleep disorders. With most of these disorders being brought on by the use of electronic stimuli before bedtime, as the usage of devices increase, so do sleep issues that require attention. Restless nights followed by long, exhausting days have led a great deal of consumers to seek relief and physical and emotional rejuvenation from diverse and alternative products that aid sleep. The sleep disorder industry is experiencing a tremendous amount of growth.

INTRODUCTION AND INDUSTRY OVERVIEW

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Timeline:

Size of Industry:  The American Sleep Association reports that about 40 million Americans suffer from chronic sleep disorders. With most of these disorders being brought on by the use of electronic stimuli before bedtime, as the usage of devices increase, so do sleep issues that require attention. Restless nights followed by long, exhausting days have led a great deal of consumers to seek relief and physical and emotional rejuvenation from diverse and alternative products that aid sleep. The sleep disorder industry is experiencing a tremendous amount of growth.

Figure 1 shows the revenue within the sleep disorder industry from 2003-2014. The revenue continues to climb every year. The largest growth occurred from 2006-2007, when revenue increased by 19.6% from 2,678.2 million to 3203 million. Revenue for 2014 increased by

5.4% from last year, from 6,389.1 million to 6,736.8 million. Over the next five years to 2014, IBISWorld estimates that the number of establishments in the industry will grow at an average annual rate of 6.2% to 3,456 businesses. Moreover, revenue per location is expected to increase from about $1.6 million in 2009 to $1.9 million in 2014.

INDUSTRY OVERVIEW

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Identification of Competitors:  

• Unisom • Midnite • Ambien • Lunesta

ZzzQuil currently has two primary competitors: Unisom and Midnite. These products are viewed as primary competitors because they are advertised as an over-the-counter sleep aid like ZzzQuil. Each product is advertised to the same target market, to help remedy the same symptoms. Ambien and Lunesta are viewed as secondary competitors because they are prescription sleep aids. The products are all advertised to help the client achieve a good night's rest, but is not as easily accessible as ZzzQuil and its primary competitors.

Advertising Expenditures for the Product Category:    In 2012, the year ZzzQuil was introduced, the company spent more money on advertising than any other brand in the industry ever had. ZzzQuil's grand total for their first year was $38,754.40. This was 67.4% of expenditures on advertising within the industry. In 2013, competitors spend a great deal more on advertising. Midnite was the only brand to cut costs on advertising from 2012-2013, going from $12,601.60 to $2,470.90. ZzzQuil also raised their advertising expenditures to 81.5%, or $63,525.20. The total amount increases every year, especially as new competitors enter the market. In 2012 the grand total of advertising expenditures was $57,470.90 compared to $77,936.50 in 2013.

Stage in Product Life Cycle:    The sleep disorder industry is in the growing stage of the product life cycle. During the next 10 years, IBISWorld predicts that the industry's value will grow at an average annual rate of 10.8%. Looking at Figure 1, with technology on the rise, one can predict the revenue will grow rapidly in years to come. The industry is listed in the growth stage due to increased awareness of sleep deprivation and sleep disorders and the issues that follow. The industry's contribution to the overall economy is outpacing GDP growth. As more Americans become aware that sleep is as important as food or exercise, marketers will find greater opportunities for both traditional and alternative sleep aid products. For over the-counter sleep aids alone, the $759

INDUSTRY OVERVIEW 3  

                                                                 

million mark is expected by 2015. Seasonality: Looking at the quarterly Ad$pender report, Sleep Aid Industry advertising expenditures are sporadic through the years. Brands in the market in 2009 seem to spend more money in the second quarter, then spend less in the third, then raise expenditures again for the fourth quarter. Every year, expenditures are highest in the second quarter, April, May, and June, due to daylight savings. Some customers on sleeping schedules may find it difficult to fall asleep if it is still daylight outside. Expenditures are at their second highest during the fourth quarter of the year, October, November, and December, when many parts of the United States are experiencing winter months. Some clients may find it harder to fall asleep during cool and icy climates and possible holiday stress.

Growth Potential/Forecasts:  The Sleep Aid Industry will continue to grow drastically. According to the National Sleep Foundation, Americans live busy lifestyles, and often stay on a set sleep schedule, making it difficult to rest at night. Research has proven that the bright lights of electronic devices can make it difficult for their users to go to sleep. With technology on the upward spiral, this will only get worse. The National Sleep Foundation says the number of broadband connections is expected to grow at a rate of 3.8% annually throughout 2019. Americans are not likely to stop usage before they go to sleep, causing an increase in demand for sleep clinics and sleep aid medications.

Economic Environment: In cases of extreme insomnia, patients utilize insurance benefits for prescription drugs. When using over-the-counter medications, customers must pay out-of-pocket. The National Sleep Foundation states out of every four Americans suffer from occasional insomnia. Over-the-counter medications are more affordable and accessible to Americans without insurance benefits that may not be able to afford doctor visits. ZzzQuil is available at

INDUSTRY OVERVIEW

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most drug stores across the country. Legal/Regulatory Environment: In 1982, the Food and Drug Administration (FDA) approved diphenhydramine, the leading ingredient of ZzzQuil, as an over-the-counter sleep aid. The FDA operates under very strict rules and guidelines. They have issued a proposed rule intended to help consumers read and understand over-the counter drug product labeling and to more effectively apply the information in the labeling to safe, effective use of such products.

It is always important when taking over-the-counter medications that the consumer is aware of the ingredients so overdose does not occur. It is equally as important to discuss over-the-counter medications with a physician before taking a dose. The "Drug Facts" section on the back of the package is filled with useful information, such as dosages, ingredients, and a toll-free number to call in case of ay questions. ZzzQuil is not recommended for children under the age of 12. Social and Cultural Considerations: The public responds well to ZzzQuil advertising strategies, because so many are impacted and can relate to insomnia. A 2011 National Sleep Foundation poll found that 87% of Americans say they have experienced difficulty falling asleep, waking too early, waking in the middle of the

night, and waking up not feeling rested. There are so many factors that go into getting a good nights sleep that Americans are not aware of such as: caffeine intake, electronic device usage, and more. Only 57% of adults say they get adequate amounts of sleep during the week. ZzzQuil's website is very well laid out and easy to read for consumers to gather more information about the product and their issues. ZzzQuil is non-habit forming; so many consumers with the stereotype of getting addicted to sleep medications are willing to give it a try.

INDUSTRY OVERVIEW

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History of the Client: ZzzQuil is a product of Vicks which was founded in 1890 in North Carolina by Dr. Joshua Vick and Lunsford Richardson. Originally owned by Richardson-Vicks, Inc., Vicks was sold to Proctor and Gamble in 1985. Zzzquil was launched in 2012. Proctor and Gamble was founded in 1837.

Sales: ZzzQuil has annual sales of more than $120 million and a 29.3% share of the

$411 million sleep-aids category, according to Nielsen data from Deutsche Bank. Zzzquil brought in $52,099,280 in sales for the year ending July 14, 2013. “It has grown to nearly 20% value share and is the #1 branded product in unit and dollar sales in the United States sleep aid category.” Because it was only launched in 2012, there are only two years’ worth of sales records. However, based on how well it has done so quickly, sales are projected to increase. Target Consumer Segments: Zzzquil is designed to reach someone who suffers with occasional sleeplessness. If their sleep disorder is not frequent or serious enough to seek a prescription drug, then OTC Zzzquil might be a good option. "Our research tells us that 25% of consumers suffer occasional sleeplessness, but only 15% buy

within the category today," a P&G spokeswoman said.

ZzzQuil wants to offer a non-

threatening product that will reach the other 10% who might be afraid of a possibly habit-forming prescription drug.

CLIENT PROFILE

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Four P’s of Marketing: Product: Zzzquil is marketed as an OTC medicine that reduces occasional sleeplessness and reduces the time it takes to fall asleep. It is available in liquid or in capsules. ZzzQuil focuses on the fact that it is a non-habit forming medicine that you do not need a prescription for.

Place: ZzzQuil is made in the United States. It can be purchased at local stores such as Wal Mart, Target, CVS,

Walgreens, etc. It can also be purchased online and delivered.

Price: ZzzQuil is very affordable. For instance, a standard 6 fl. oz. bottle can be purchased at Wal Mart for $4.47. Promotion: They use an advertising approach designed to appeal to everyday people. In one print add, they have a photo of a woman who looks satisfied and content, hugging her pillow with a caption that says “best friends”. They use the slogan “we all deserve a great night’s sleep”

in order to focus on the positive and not make their customers feel as if they have a serious sleep problem.

New Developments: ZzzQuil Chief Financial Officer Jon Moeller said that the company was preparing to “introduce a new and far superior method of addressing a chronic consumer issue”. According to Moeller the company plans to release "electronic sound generators for producing ambient sounds for promoting sleep, light-

CLIENT PROFILE

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therapy units and aromatherapy pads specially adapted for creating scents for electric vaporizers, electric fans, air purifiers and humidifiers”. Competitor Profiles: Based on the information given by AdSpender, ZzzQuil’s largest primary competitors are Midnite and Unisom. This is derived from the fact that they are the largest spenders on advertisement outside of ZzzQuil. They are the most well-known over the counter sleep aids outside of the VICKS brand itself. The four P’s of marketing are generally the same for both of the primary competitors in this situation. The product is simply a sleep aid. Although they both have a few different versions and the

ingredients may differ slightly, the overall point of the medicine is the same. The next “P” is Placement. Unisom and Midnite can be found in most major retailers, particularly at drug stores. Price is the third “P” and this averages about ten dollars for each product. This may vary depending on the specific type and amount desired, as well as the retailer by which is it sold. The last “P” stands for Promotion. The advertising for both of these products is very similar by nature. Everyone needs sleep, however these sleep aids seem to aim at young women in particular. Each of the four P’s are explained more in-depth further into the Competitor Profile.

Unisom: The first and most prominent competitor is Unisom. This is a part of Chattem, A Sanofi Company. In 2013, it was the number one pharmacist recommended over-the-counter sleep brand. This, of course, was only one year after ZzzQuil had first made an appearance on the market, while Unisom has had a presence since 1978. Because of their heavy brand following, advertising is not as much of a

COMPETITOR PROFILE

                                                                 

necessary force for this company in comparison with many others. This does not mean, however, that they do not advertise. For many years, Unisom has competed with Midnite for the largest advertising expenditures. When ZzzQuil entered the market, both companies took a back seat to the VICKS brand.

Midnite: The other primary competitor is MidNite. This brand is under the company MEDA Consumer Healthcare. This is considered a primary competitor because of its extensive advertising budget. Midnite was the leading advertiser for two consecutive years before ZzzQuil entered the market. After they gained that competition in 2012, they still continued to have one of the largest advertising budgets of any of their competition. The prices are competitive with other brands although they consist of a smaller range. Midnite generally stays within about ten dollars, no matter the specific type used.

Target Market, Product, and Positioning: The target market is very similar for all of these brands. Simply put, everyone needs sleep. It is proven that teens are the most sleep deprived. However, they are not the most likely to buy over the counter sleep aids. Although sleep is vital to their performance, they do not tend to take it as seriously. This means that the target market for sleep aids is more toward adults. Although they tend to get more sleep than teens, they feel fatigued more often due to their life style. This resulted in them having listed “sleep problems” as their number two health concern.

The Unisom website states that 74 percent of American adults have sleep problems a few nights a week or more. It goes even further to state that 63 percent of women and 53 percent of men claim to have trouble sleeping. Because women tend

COMPETITOR PROFILE

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to take health more seriously, and the percentage rate as higher for women, the ads for both companies seem to be slightly more geared at women than men. MidNite’s website states that half of all adults age 18 to 64 have trouble sleeping. This statistics are similar and their marketing is almost identical.

Both brands show a tendency to advertise more toward young women. This demographic seem to be very health conscious, as well as being at a point in

their life in which they may have just started a new career or a family, both of which are incredibly taxing on sleep. Unisom products range from approximately eight dollars to eighteen dollars, depending on specific product and pill count. Both brands position the product in a way that makes consumers feel as if they need their product. Unisom does an especially good job at this. They make the consumer realize how vital their sleep is, and that they won’t perform as well without the aid of this medicine. While MidNite does not push idea as much as Unisom, they still do have an aspect of the fear appeal. This type of marketing promotes the idea that the consumer’s entire performance throughout the day, depends on the type of sleep you had that night. By this logic, they not only want better sleep, but they need it.

Secondary Competitors: ZzzQuil’s indirect competitors consist of prescription sleep aids. While over-the-counter sleep aids would like to take care of all ailments involving sleep, it is just not possible. Sometimes the problems are just too strong for what these brands can provide. It is possible and very likely that consumers will try multiple remedies, but if the product is not strong enough, the consumer will not use it, no longer making it primary competition. The prescription sleep aid brands that would be considered secondary competition would be the larger, more well-known brands. These include Ambien and Lunesta. These compete for the highest sales and advertising expenditures, making them the more rominent competition.

COMPETITOR PROFILE

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Summary Comparison of ZzzQuil vs. Competitors: Although ZzzQuil is a relatively new product, since its introduction in 2012, it is still the top brand in over-the-counter sleep aids. The main two competitors of ZzzQuil are Midnite and Unisom. These brands all target the same market and sell very similar products in chemical design. Competitive Expenditures:  Yearly: In 2012, Zzzquil spent the most money on advertising in comparison to its top competitors. Zzzquil spent a total of $387,544,000 across all media types. Unisom and Midnite, however, spent less money on their advertising campaigns. Unisom spent a total of $41,572,000 on advertising while Midnite spent $126,016,000. In 2013, Zzzquil spent a total of $635,252,000 for advertising across

all media while competitors spent significantly less. Unisom only spent a total of 5,654,000, and Midnite spent a total of $24,709,000 across various media types. Within the most recent past years, it appears that ZzzQuil is the top spender for adverting across different media types, with Midnite spending the second largest amount of money and Unisom spending the least.

Year 2012

Figure 2: Chart displays ZzzQuil and competitors Ad Expenditures

Quarterly: In 2013, Zzzquil spent more money in the 3rd quarter. The company increased spending from the 1st to 3rd quarter, but decreased the spending during the 4th quarter. In the 3rd quarter of 2013, Zzzquil spent a total of $185,764,000, but in the 4th quarter, decreased to $146,81,900. This information is illustrated in Figure 3.

Zzzquil Quarterly Ad Spending

Figure 3: Chart displays Quarters vs. Ad Expenditures in 2013 for Zzzquil.

$0

$10,000

$20,000

$30,000

$40,000

UnisomMidnite

Zzzquil

$0

$4,750

$9,500

$14,250

$19,000

1st Quarter2nd Quarter

3rd Quarter4th Quarter

COMPARATIVE ANALYSIS

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Dollars  (000)  

                                                                 

Media Mixes and Share of Voice:

According to the data from Ad$pender, magazine advertising is the primary advertising medium used by the top over-the-counter sleep aid companies. In 2013, OTC sleep aid products spent a total of $272,978,000 in magazine advertisements. Of the total amount, ZzzQuil spent $224,255,000 in 2013. In comparison, OTC sleep aid product companies only spent $156,214,000 on network television advertisements.

Magazine advertising spending increased from $170,168,000 in 2012 to $272,978,000 in 2013. In 2012, advertising between network TV, cable TV, and magazines was relatively at the same amount. OTC sleep aid competitors spent $130,945,000 on network television

advertising, $115,938,000 on cable television advertising, and $170,168,000 on magazine advertising. This trend is significantly different from advertising spending in 2013. Magazine ad spending was significantly higher that network and cable television advertising.

Figure 4: Pie Chart of 2012 Media Mix

Figure 5: Pie Chart of 2013 Media Mix

Interestingly, in 2012 ZzzQuil spent less money on magazine advertisements and allocated more money to cable television and network television. ZzzQuil spent $78,089,000 on magazine ads while spending $128,635,000 on network TV ads. However, in 2013, ZzzQuil spent the most money on magazine advertisements. Consumer Analysis:

41%

28%

31%

2012 Media Mix

46%

27%

26%

2013 Media Mix

CONSUMER ANALYSISCOMPARATIVE ANALYSIS

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This specific group showed the highest indexes and percentages of people suffering from insomnia and sleep disorders. Health Attitudes: People suffering from sleeplessness frequently educate themselves and gather information on their particular sleeping disorder. This group is more likely to research different medications to determine which brand or type of medicine is right for them. They consider themselves more susceptible to getting sick and often take preventive medicine. This group is more likely to ‘read the small print’ in magazine and newspaper ads, as well as carefully examine the ingredient list for over the counter medication. They’re comfortable with registering on a website to better their knowledge of their health condition. They’ll gather information from almost any reliable source whether it’s doctors,

websites, newsletters, etc. This is a self-educated and knowledgeable target market. When it comes to the health conditions of people suffering from insomnia/sleep disorder, it is taken very seriously and is researched vigorously.

Life Attitudes: This target market has tendencies to be more progressive, less religious, unhappy, depressed, anxious, continuously worrying, etc. Media Attitudes: This target market is more likely to rely on television to keep them informed than any

other source of media. Being that they are an educated group, they have trust in newspapers, particularly the local ones. However, there’s overwhelming data suggesting that they hate all types of advertising. They especially hate television commercials, labeling them annoying and typically avoid them by either changing the channel or muting their TV. Radio is a non-factor when it comes to this target market because of the introduction of satellite and MP3 adaptable stereos.

Nonetheless, a major percentage of people suffering from sleeplessness would consider themselves ‘TV addicts.’

SOURCES

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