The Clorox Company: Leveraging Green for Growth

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Case Study

The Clorox Company:

 Leveraging Green for Growth

Case Summary:

Clorox, a leading multinational manufacturer and marketer of consumer and professional goods, saw the arrival of Don Krauss, CEO, as a means to pursue a new company strategy to achieve growth. Shortly after his arrival in 2006 the company defined their new “centennial” long term goals to extend existing brands to adjacent categories, entering new sales channels, and increasing penetration in countries where Clorox already did business. More specifically, the initial goal was to follow megatrends in wellness and environmental sustainability in the United States and globally.

After fielded research in 2007 highlighted the growing demand among potential customers for sustainable products, Clorox started developing a strategy to pursue those potential customers by offering new products on a large scale, in part, under the Clorox name. With 15% of the U.S. population expressing “very strong” and 33% expressing “strong” demand for these products, Clorox attempted to fill that demand by marketing three brands/product lines: Brita, Burt’s Bees, and Green Works.

With great initial success from 2006 through 2009 (see Exhibit 2 & 3) the three product lines, along with Clorox’s traditional brands, started experiencing slow sales. This prompted leadership to reconsider their stance on pursuing the growing market niche in favor of higher return on investment in other areas. As a part of this decision the company has to evaluate its current strategy and align it with its new centennial strategy, while maintaining growth and profitability. The following questions must be answered in order to determine what course the company should take.

Key Questions to Address:

Should Clorox lean into its existing sustainable brands or look for other opportunities that were on trend? To adequately answer this question, one has to acknowledge that A) Clorox has already heavily invested into the sustainability production, B) there is continuous growing demand among, and C) sales numbers are in part due to the recent economic slowdown. The case describes great demand with ~44% of surveyed potential buyers planning on using more natural household products, 53% planning on buying more eco-friendly products; 47% are willing to pay up to 25% more for these products. The demand and ability to purchase these products goes well beyond previous years, due to financial hardship presenting a future business opportunity. Growing companies, such as “Method” and “Seventh Generation,” are already successfully targeting this market with double digit year over year growth. The question should rather be “how” and not “if” Clorox should lean into its existing sustainable brands. Clorox should evaluate the expansion of the Brita, Burt’s Bees and Green Works product lines. Pursuing other opportunities instead of increasing sales on these highly demanded products would be risky, at best. Alternatively Clorox could also try to extract higher profits by offering organic products at a premium price, which their primary and secondary target markets might be willing to pay .