The road to market leadership has not been without potholes however. In 1998, the company attempted to extend its brand by entering the herbal supplements market, rolling out a line of Celestial Seasonings herbal dietary supplements. Herbal supplements were rapidly gaining consumer acceptance as alternatives to more traditional health and wellness products. Herbal supplements also had a number of synergies with Celestial's existing products. Because the Celestial brand had high awareness levels and a favourable image, Celestial positioned their herbal product line as higher-priced and higher-quality than existing competitors.
Unfortunately, the market for herbal supplements peaked at the same time Celestial entered the market. One-a-Day and Centrum came out with herbal supplements around the same time and the growth of the herbal supplement market came to near halt by 1999. The Celestial Seasonings supplement pricing strategy was also flawed as price points started at twice that of the competition. In an attempt to save the flailing line, Celestial Seasonings was forced to cut prices by almost 50% to generate sales.
Despite serious losses in the supplement market during the late '90s, Celestial Seasonings core business of herbal teas remains strong and growing in both the US and Canada, as they continue to leverage strong brand loyalty while introducing new and interesting blends.
Read and view the video for the Celestial Seasonings Case, at the McGraw link:
Prepare a 3 page marketing analysis report, and cover the following marketing topics:
• Answer #1 and #3 of the ‘Questions For Discussion' at the end of the case
• What are the key marketing issues / opportunities in this case.
• Identify the root causes for these issues / potentials.
• Suggest possible alternatives
• Address possible pros and cons
• Recommend a plan of action to implement your marketing strategy.
ANSWER THE FOLLOWING QUESTIONS
1. What kinds of synergies do herbal supplements have with herbal teas?
2. What kinds of new products should Celestial Seasonings develop? What criteria would you use to evaluate new product ideas for Celestial Seasonings? Why?