This case was written by Professor Matko Koljatic from Pontificia Universidad Católica de Chile, Escuela de Administración, as part of the SEKN Case Collection. SEKN cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Maver Laboratories: Tapsin, building a brand in Chile
On the night of December 4, 2004, Alberto Albala, President and CEO of Maver Laboratories, was thinking about next year’s marketing challenges for his leading brand, Tapsin. He had just returned home from the National Stadium in Santiago, Chile, where a few hours before, on behalf of the shareholders and workers of the company, he had made a donation to the Teletón. The Teletón was an annual event carried out by the Teletón Foundation since 1978 with the goal of collecting funds for handicapped children. Everything had taken place at the National Stadium, in front of more than 80 thousand people and with a television audience estimated around 9 million people (more than 50% of the Chilean population). The event was broadcast on all of the country’s regular television channels.
Alberto thought that the Teletón had been an excellent marketing vehicle for Tapsin, a leading brand of analgesic and anti-flu products sold in the Chilean market. He felt that the strategy of investing in a campaign with social implications, along with a strong investment in advertising campaigns had helped make Tapsin a brand with high recall and credibility in Chile, as recent studies showed. However, over the past few years, sales had started to level off. He wondered whether to continue with the current strategy, given that other problems had surfaced: the increase in the sale of private-label brands at the large pharmacy chains and the practice by some competitors of
offering incentives for sales clerks of pharmacies, to increase sales of products.1 Maver had refused to use this practice, despite having learned that on many occasions when a customer asked for Tapsin, the sales clerk recommended the substitute product under promotion.
Alberto could not fall asleep. Over and over he asked himself: what should be done to continue gaining market share with Tapsin? Should we continue adding value to the brand through
1 In Chile, over-the-counter drugs (OTC) had to be sold in pharmacies. Even though they didn’t require a prescription, they could not be exhibited on the shelves and had to be sold by a person behind the counter. In general this person was a typical sales clerk and not a pharmacist. Therefore when you walked into a pharmacy on the shelves you saw products related to dental hygiene, beauty, perfume and food, and prescription and OTC drugs were behind the counter and usually out of sight. Http://www.businesschile.cl/portada.php?w=old&id=189&lan=es. Accessed 11/7/2005.
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advertising campaigns? Should we continue being associated with the Teletón? Should we start giving a commission to pharmacy sales clerks as it appears to have helped other laboratories increase their sales significantly?
Brief History of the Maver Laboratories
Maver Laboratories was created in Santiago, Chile, in 1923 and eighty years later was the leading Chilean laboratory in the production and sale of over–the-counter drugs (OTC). It was a family business with 304 employees in 2004. Alberto Albala ran the company along with his son Fernando Albala, who was the General Manager. They were descendents of the founder. Maver exported its products to Bolivia, Ecuador and Peru, selling through local distributors. In Chile, it had a product portfolio of 48 brands, with Tapsin, Disfruta and Armonyl being the best selling brands (see Exhibit
1). Year after year sales grew and Maver continued to increase its marketing expenses, making it one of the leading advertisers in Chile (see Exhibits 2-A and 2-B).
Maver was founded by Elías Albala, an immigrant from the Balkans who arrived to Chile in 1906. Elías was part of the first class from a recently created degree in Pharmaceutical Chemistry at the University of Chile. After graduation, he started his own business, developing pharmaceutical products and offering them to drugstores in Santiago.
The first product developed by Elías, in 1923, was a wafer called “LiWuPat” or also “Chinese wafer,” an analgesic formula with an acetyl salicylic acid and caffeine base. It was well received in the
market.2 The Chinese wafers were so successful that Elías had to add-on to the home garage, where he prepared his concoctions and where he built the first installations of the Maver Laboratories, named in honor of his wife. 3
After a series of successful new product launches, which started with the Chinese wafers and continued with other OTC drugs like cough syrups and anti-acids, Elías ventured into mass-consumed products related to hygiene and personal care. The first deodorant in the Chilean market, Dolly Pen, was introduced by Maver in 1962. It created a new category, although in time, the deodorant market was dominated by other deodorant brands of international companies such as Unilever, Colgate and Gillette.
In its first decades, Maver Laboratories not only sold its own formulas but also marketed products of foreign pharmaceutical companies, for example, Anacin for Wyeth Inc. and Eno Fruit Salt for Smith, Klein & Beecham, which Maver manufactured and sold in Chile through licensing agreements.
Some of these brands, like Anacin, experienced slow growth; it took Anacin almost 15 years to gain a significant position, in terms of market share, in the analgesic market. Due to limited funds available for marketing, because Maver was a relatively small company, for years the laboratory made low investments in media, taking advantage of the reduced cost of time slots in TV programs with low ratings, for example, after midnight. For that reason, Maver scheduled spots for Anacin in late night movies, with the idea that although the number of people who saw the commercials was
2 In 2004, eight decades later, the “Chinese wafers” ranked tenth among the sale of analgesics in Chile, with strong sales in rural sectors and small cities in the south of the country.
3 In Maver Laboratories they said that the name of the laboratory came from the acronym of the phrase, “mi amor verdadero es Rosa” (my true love is Rosa). Rosa was Elías´ wife and the mother of Alberto.
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low, in the long run, due to the frequency of the ads, they would be seen. Maver executives believed this low investment strategy was responsible for Anacin’s slow sales growth.
Eno Fruit Salt, however, became a leading brand faster, because it was an innovation. In those years, anti-acid effervescent salts did not exist and chileans used baking soda diluted in water when they needed an anti-acid, which was uncomfortable and had a bad taste. This all changed with the launch of effervescent fruit salts, such as Eno. Also, the marketing of the product was innovative, i.e: it was the first brand to put billboards on the soccer field of the National Stadium.
The Birth of Tapsin
In the early 1990s, after various decades in which Maver managed Eno Fruit Salt, the international laboratory that owned the brand, decided to sell the product through its new chilean subsidiary and ended its licensing agreement with Maver.
The loss of the Eno license meant loosing a product that generated a large part of Maver’s sales, but also created excess capacity in the plant. To use this idle manufacturing capacity, Maver decided to develop its own brand of fruit salt under the Disfruta trademark. Also, in the search for other new products, during a trip to the U.S., Maver executives discovered that some anti-flu medicines were being sold in the same packaging as anti-acid salts. Although they realized that these anti-flu products had low sales— they were placed on the lowest level of shelves in drug stores and had few “facings”—they decided to try their luck with a similar product in Chile. So, in 1995, Maver launched
a product to help alleviate the discomfort associated with the flu, called Tapsin Limonada Caliente
(Tapsin Warm Lemonade), one of the hundreds of brands that the Maver Laboratory had registered.
One Maver marketing executive described the launch :
We created the formula for Tapsin Limonada Caliente, launched the product and ran a TV
ad that said, “Old recipes still in practice.” What where these old recipes? In Chile, when someone had a cold, the popular practice was to drink “tea with lemon.” Therefore, we showed in black and white a grandmother making tea with a teapot, and adding lemon and honey… then, suddenly, these images merged and were put into a colorful sachet. This was the old recipe still in practice: the new Tapsin was the modern warm tea with lemon for the flu. When I have a cold, or the flu, I put this “magical” powder in hot water and in a little while I feel better. In time, we changed the name to Tapsin Caliente (Warm Tapsin) to avoid making it
a generic medicine. Anyone can use the word lemonade, so we took out the word “limonada” and left it as Tapsin Caliente.
Later, in the mid ‘90s, Maver lost the marketing license for Anacin, its other most widely sold product. Maver executives searched urgently for the license of another international brand of
analgesics, and started negotiations with Johnson and Johnson, owner of the Tylenol brand, but could not reach an agreement.
After this, they decided to extend the Tapsin brand to analgesic tablets, the largest selling category in the Chilean Pharmaceutical market. Francisco Zegers, CEO of Zegers/DDB, the advertising agency for Maver, recalled:
One day Alberto called us very upset because they had lost the Anacin license. I suggested that they use the Tapsin brand…But he said, “How can you compare Tapsin with Anacin?
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Anacin is a brand and Tapsin is just a trademark that we invented, it does not have any value.” So we started convincing him that we could transform Tapsin into a brand, and make it an important one in the market. True, it was a big challenge, since it meant entering the analgesic market, a mass market, much larger and more competitive than the anti-flu products category. The task was to develop a valued brand.
Francisco Zegers described the development of the Tapsin brand for Maver:
We asked ourselves, how do you build a brand in a world where the brands are global or international and belong to big laboratories? What chance of success do we have? We knew we had to differentiate ourselves from Aspirina4 (the Bayer brand). We believed that if we just copied their approach, we were going to help them; we needed a different positioning. We said: “We should not have doctors in white in the ads. We have to change the style and open
up people’s minds to something different in their relationship with analgesics. We have to change the territory, to talk in a different way.” So, the question was, how do we make ads that are original and get people’s attention? We had to create a new way to look at analgesics, be innovative and establish a new relationship between consumers and medicines. Medicines are a fantastic thing for humanity, but they are treated as boring products, associated with knowledgeable people called doctors. We knew we had to develop a lighter relationship, more normal, between medicine and people…. speak in a different way.
The previous ideas fed the creative strategy developed for Tapsin. Francisco Zegers described the TV commercial for the launch of Tapsin analgesic tablets:
We made the first TV commercial to launch Tapsin tablets; we called it the Chinese commercial. A Kung Fu type guy came out holding a big boiling kettle and as he is walking, he hits his head on a beam… the kettle falls and he starts jumping around because of the pain. Then, a cheerful music is heard, the character starts to dance and the slogan “Tapsin, to relieve the pain” is super-imposed on the screen. It was quite silly, but it was a way to refresh the category and associate humor with medicines. In the end, we were saying: don’t worry, this is a tablet for headache pain and that’s it.
However, using the brand Tapsin as an umbrella for two products with very different uses, created confusion among consumers. Jaime Ben-Dov, Marketing Manager for Maver Laboratories, recalled:
The launch of Tapsin analgesic tablets was a complete failure. Everyone knew about the TV commercial with the Chinese guy, but sales were low. We went to the stores to find out why and talked with the sales clerks and the customers. We realized that many people were buying Tapsin tablets for the flu. Big mistake! Because it wasn’t developed for the flu. Tapsin in tablet form helps with headaches and fever, but it does not provide the same effects as Tapsin Caliente. Therefore, when winter was over, the sales for both Tapsin anti-flu and Tapsin analgesic fell. From then on, between 1998 and 2000, we advertised that Tapsin Caliente was for the flu and Tapsin tablets were for headaches. We even decided not to claim that Tapsin tablets would bring down fever because of fever’s association with the flu.
In these beginning years, Maver continued supporting its distribution and point-of-sale activities with frequent ads at hours and during programs of low ratings, taking advantage of the low cost of these time slots (see Exhibit 3). Jaime Ben-Dov explained:
4 Aspirin was referred to as Aspirina in Chile.
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We started doing something different in terms of our media strategy. We didn’t show our TV commercial at 10:30 p.m. on channel 13, with an audience of 3 million people at an
enormous cost, rather we scheduled it at the same time on channel 11 which was less expensive, with an audience of 350 thousand people, however we ran it 6 times. Also, there is something that I didn’t invent and that is very real, “zapping”, when people surf the TV stations during breaks with their remote control. Since the creation of the remote control, channel zapping is the most viewed channel in Chile and in the world. When the programs with high ratings show commercials, people go to the bathroom or to the kitchen or they change the channel. And if they changed the channel, they ended up seeing our Tapsin ads.
Zegers commented:
The new Maver media strategy was a brilliant idea of Jaime Ben-Dov. He discovered that when the highly-viewed channels started to show commercials, ratings fell and the ratings of other channels increased for a few seconds because people started zapping. So we asked ourselves, what happens if during this zapping the people find something interesting, so attractive that they stay for 20, 25 or even 30 seconds instead of 4?
At the end of the 1990’s, the advertising strategy for Tapsin analgesic changed by adding advertisements during a program with high ratings, Sábado Gigante (Great Saturday), a live show. Jaime Ben-Dov explained:
We focused on headaches and started using Mario Kreutzberger or Don Francisco5 of
Sábado Gigante as a spokesperson. I talked with him and said, “Mario, headaches, headaches,
headaches, and I convinced him to say that he used Tapsin for headache pain. During the show he said, “imagine, with my big head, for headaches I take Tapsin…”, until the people understood that Tapsin tablets were for headaches.
The Teletón Event
In 2000, there was another important change in the communications activity of Tapsin; it started sponsoring the Teletón, an event that began in Chile in 1978 with the objective of raising funds for handicapped children helped by the Teletón Foundation (see Annex 1). Mario Kreutzberger had hosted the event and organized the collection of donations since its beginnings, turning him into an emblematic figure.
The Teletón consisted of a series of promotional events that helped to sensitize the population to the work of the Teletón Foundation and the problems of handicapped children. The period of the Teletón promotion lasted for 60 days and ended with a 27-hour TV program dedicated to collecting donations, similar to the Telethon in the U.S. The event took place every year, except when there were political elections (because of the media clatter in those years), and was the primary source of
funds for the Teletón Foundation.
5 Mario Kreutzberger was a charismatic Chilean TV animator known as “Don Francisco”. His program, Sábado Gigante (Great Saturday) was originally produced in Chile; in 1986, 24 years later, it started being produced in Miami by the TV chain Univisión for the Hispanic speaking market in the U.S., while also being transmitted and widely viewed in other Latin American countries, among them Chile.
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From the first edition, the televised program of the Teletón was an unprecedented media phenomenon, since it united all of the communications media around this event, especially the TV channels, which all transmitted the program live. The most famous media personalities, singers, comedians and TV animators also participated free of charge. With the Teletón, Chile united in solidarity and the event turned into a country celebration. There was no other event that could unite the communications media, artists, 28 sponsoring companies and millions of people that donated funds for the mutual goal of helping handicapped children. The Teletón was, without a doubt, the most important communicational milestone that took place in Chile.
The trust of the public in Mario Kreutzberger was essential in the consolidation of this event, without social or political distinctions and founded in solidarity. That’s how by 2004, through 19 Teletons, 160 million dollars had been raised (see Exhibit 4). In each Teletón a financial goal was set, which generally increased from year to year, depending on the needs of the Teletón Foundation. In every event, they reached the goal. Moreover, in some Teletons, like in 2004, they had collected much more than the established amount. The goal of 19 million dollars had been beat, reaching 23.6 million dollars of which 77% came from individuals, while 23% was donated by the 28 sponsoring companies.
The funds collected during the Teletón came from two sources: the donations made by the Chilean people nationwide during the 27-hour TV program in branch offices of the Banco de Chile (the largest Chilean bank) and donations from the sponsoring companies (see Exhibit 5). These companies contributed a fixed amount to the Teletón Foundation, in exchange for promotions and advertising at discounted rates during the 60 days previous to the Teletón campaign and during the transmission of the televised event. Sponsoring the Teletón was interesting for companies, since in addition to the reduced advertising rates offered by TV channels for spots placed during the program, the most famous Chilean TV media personalities participated in TV ads for the sponsoring companies´ brands. During this time, these celebrities volunteered for the Teletón and didn’t charge for publicity, promoting the event for the Teletón Foundation, or for participating in the televised program. The donation amounts were stipulated in a contract signed by the Teletón Foundation, Mario Kreutzberger and the sponsoring company.
The initial motivation of Maver to become a sponsoring company of the Teletón was pragmatic. In the words of one of its executives: “entering the Teletón was good business.” Jaime Ben-Dov explained the decision:
When we started advertising in Sábado Gigante and the sales of Tapsin analgesic took off, we asked ourselves, what’s going on? We realized that when Don Francisco said, “I take Tapsin for headaches,” people understood that it was for headache pain. So we asked, What can we do to continue working with Don Francisco? In the beginning we thought about using him as the spokesperson for our brand, but it wasn’t possible, because he was already commited to work for a telecommunications company. Then the chance to enter the Teletón emerged and to use Don Francisco in the advertisements. Given our relationship with Mario Kreutzberger in Sábado Gigante, he agreed to film commercials for Tapsin, to be showed during the Teletón. This is how we were able to associate even more the Tapsin brand with Don Francisco. How many times? During the 60 days of promotions for the Teletón, with a high frequency media schedule (see Exhibits 6 and 7).
Jaime Ben–Dov commented on the first time Tapsin participated in the Teletón in 2000:
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When I met with Ximena Casarejos, the Executive Director of the Teletón Foundation, I said: “let’s do something different, we’d like to stand out from the other companies that sponsor the Teletón.” That’s when together we thought about the famous “activities” of the
Teletón, initiatives that invited people to participate more directly during the broadcasting of
the television program. The Foundation needed a Gait Analysis Laboratory to help diagnose, through the use of infrared cameras, the causes of limping in handicapped children and allowed for micro surgeries in the precise area of the problem. The Gait Analysis Laboratory was state of the art equipment and had a cost of 245 thousand dollars. The “activity” was to gather 5 thousand people in the National Stadium, singing with their guitars a popular traditional Chilean song, “Si vas para Chile” (If You’re Going to Chile). If the target was met, Tapsin donated the laboratory… and the 5 thousand people arrived. Tapsin made the donation at 11 pm —one hour before the closing of the TV transmission, when all of Chile is waiting to see if the Teletón reaches its goal. What I wanted to achieve in one year, I did in one day: the whole country watching how this fabulous brand donated a much needed equipment to the Teletón.
According to Francisco Zegers, the Teletón offered sponsoring companies an exclusive opportunity to position themselves as a socially responsible company:
For example, Banco de Chile, a hundred year old bank, is viewed as a reserved, stern, focused on the upper class company. When they began to collaborate with the Teletón, they rank first in “top of mind” regarding solidarity. It has helped the bank a lot; proof of this is that other institutions have replicated the same model, because the formula works very well. It’s a fluid alliance, transparent, with a very clear reward. Other sponsoring companies like CCU, Soprole and Papelera have also benefited from the Teletón.
However, Zegers also thought that the alliance with the Teletón had its costs:
There is always the possibility of getting lost among all of the various brands. The expenses
of the Teletón are quite high and you run the risk of throwing your money away. One year we experienced an important loss because Maver made a donation of 120 thousand dollars on behalf of another one of its product: Disfruta. There wasn’t an additional advertising campaign, therefore no association… we threw the money out the window. This experience helped us define how to work with the Teletón.
Others, however, were skeptical about the participation of various brands in the Teletón. In the beginning, the sponsoring companies experienced an immediate increase in sales, however later this stopped and the benefit was more about the prestige of being associated with the event. Ben-Dov commented:
In the first years, during the 80’s, the products sponsoring the Teletón sold out in the supermarkets. This caused a reaction among the competing brands who during the 60 days before the event offered promotions, contests, and raffles, which watered down the impact of the Teletón on sales. The people stopped buying products to support the Teletón and started to go to the bank and make direct donations. I believe that a large part of what the Tapsin brand is today has to do with the work we’ve done with the Teletón. Tapsin is the brand that invests the most in TV ads during the Teletón, and it is the brand that talks the most about the Teletón during the 60 days before the event. We’ve helped the Teletón a lot. We have market reseach studies that show that consumers describe the Tapsin brand as having a “social halo,” they relate it with the Teletón.
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This relationship, in the opinion of the Maver executives, made it impossible not to participate in the Teletón. Beyond the benefits of being associated with the Teletón, leaving meant giving competitors an opportunity to enter. Francisco Zegers described it in the following way:
Yearly we evaluate our participation in the Teletón. We feel that it has helped us build and differentiate our brand, and blocked the entry of Bayer´s Aspirina. With the Teletón you know when you enter but you don’t know when you will leave. The decision to leave has its costs, mostly because you build a space for your product—in our case an analgesic—and people associate your product with the Teletón. If you leave another analgesic can join.
However, in 2005 there was a problem: there wouldn’t be a Teletón, because of the presidential and parliamentary elections. This decision was made because in the past, during election years, the results of the Teletón were meager, as both events took place during the first week of December and the 60 days prior coincided with electoral campaigns.
The Tapsin Foundation
Another important milestone for the brand was the creation of the Tapsin Foundation in 2002, under the wing of its star brand, with the goal of getting closer to the community, associating the brand with socially responsible causes during the rest of the year, and not only during the Teletón. Thus, in its statues, it was established that the objective of the foundation was to “promote the development of people, families, groups and communities through educational and cultural programs.” Its Board of Directors was the same as that of Maver Laboratories and it used the same decision-making style as the company. Just as in the laboratory, the President of the Board who was also the largest shareholder, made the decisions. He was the one who ultimately determined which activities the Foundation would finance. As Alberto Albala indicated, the mission of the foundation was “to help our fellow beings.”
Fernando Albala explained the Foundation’s creation in the following way:
We realized that if we were going to enter the social world, we could not just use the Tapsin name, because Tapsin sounded too commercial. That’s how the Tapsin Foundation came about.
Most of the requests for help came from acquaintances or as suggestions from the marketing department. Jaime Ben-Dov commented:
I have become more sensitive and enthusiastic with the activities of the Foundation. After the Teletón in 2000, the directors of the Calvo Mackenna Children’s Hospital asked for a donation of Hawaiian Tropic sunscreen—a product for which we have the license—for children with cancer who have skin problems. When we went to make the donation, we were saddened to see the conditions of the waiting area in the hospital. It was miserable. The poor children, in addition to being sick, they had to wait for long periods of time in an inhospitable and cold area. Therefore I contacted a young interior designer who, together with our group of maintenance people from the laboratory, remodeled the waiting area. We also donated toys and video games. It turned out really great. It was such a motivating experience for me that I suggested to my brother-in-law, the Pediatrics Director of another children’s hospital in Santiago, that we remodel their waiting area, and we did.
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A key strategic element was choosing the name of the Foundation, as pointed out by Fernando Albala:
We never considered a name other than the Tapsin Foundation, because we wanted to strengthen the Tapsin brand in the community and gain the goodwill of our customers. Maver was not known at a local level and it didn’t make any sense to create a Maver Foundation.
Ben-Dov emphasized the previous:
It was about enhancing the goodness of the Tapsin brand in the mind of consumers. It is long-term seed planting work, because it may not have any immediate effects but eventually customers are going to give back with their preference.
Even though the laboratory made donations to the community before the Foundation was created, donations on behalf of the Tapsin Foundation were handled more formally (see Exhibit 8). In fact, before the Foundation, each donation was a mere expense for Maver. Ben-Dov commented:
One advantage of the Foundation is that the funds received from Maver are entitled to a tax break. Maver registers them as an expense and 50% of the amount can be deducted from taxes. Also, by having a foundation, you can look for other companies to collaborate financially and develop projects together.
The Foundation financed activities as they were presented. As Alberto Albala explained, “We respond to the various requests as they arrive. We analyze each situation that Jaime Ben-Dov presents, one by one.”
Ben-Dov added:
On day I was in bed, around 11:30 pm, watching the news, and they announced that due to a fire at the zoo a giraffe died and they were collecting money to import another one. I called Fernando and suggested that we make a donation. He called Alberto and received the go ahead. That same night we made a donation.
Ben-Dov himself commented on the Foundation’s operational changes over time:
In the beginning we didn’t have a budget, as the requests were presented Alberto reached into his pocket. Today we have a budget of around 50 thousand dollars a year. And if the money runs out in two months, the other requests have to wait until the next year. Maver transferred funds when the Tapsin Foundation was established and we’ve been managing these funds.
Additionally, a Brand Manager of Maver Laboratories considered that among the future challenges of the Foundation was to align its activities with its specific mission. She shared her opinion:
Currently, we have a series of activities, but without a clearly defined objective. However, we could streamline and sponsor activities directly related to health and education.
Regarding Tapsin and internal marketing, she added:
Frankly we never planted the idea that the Foundation could have a positive effect with employees. Up until now it has been a project of the board and managed by them. Maybe they have not thought about using it in this way because they don’t see a need to improve the
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internal climate, which is really very good. I can say that because I have worked in other companies: here the people work with pleasure because they feel valued. We don’t even have a union, because it hasn’t been necessary.
Extending the Tapsin Brand
In time, Maver had launched new product extensions, among them: Tapsin Caliente Plus Día (Warm Tapsin Plus for the Daytime), Tapsin Caliente Plus Noche (Warm Tapsin Plus for Nighttime), Tapsin Período Menstrual (Tapsin for Menstrual Periods), Tapsin Infantil (Tapsin for Children), Migra Tapsin (Tapsin for Migraines) and Tapsin SC (Tapsin Capsules for Headaches). According to Fernando Albala, the Tapsin brand is an umbrella for a multitude of different branches and subcategories, similar to the strategy followed by Tylenol in the U.S. (see Exhibit 9).
The market share of the Tapsin family of analgesic products was growing in comparison to other products sold by Bayer under the Aspirina brand, as the information reported by the IMS auditors, a market research firm that measured the sale of medicines to the public, showed (see Exhibits 10-A
and 10-B). Additionally, a brand tracking study done in early 2003 by Adimark, another market research company, showed progress regarding the advertising recall of the Tapsin brand between 1998 and that year (see Exhibits 11, 12 and 13).
In the same Adimark study, Tapsin had experienced a similar trend (as to that of brand recall) in the evaluation of brand quality by adult consumers. In this research of the best analgesic brands, in general, Tapsin and Bayer´s Aspirina appeared as the two leaders in recall and image. Also it showed a relatively good image for ibuprofen, a compound different from acetil salicilic acid and acetaminophen6, very effective for headaches, that was gaining a high level of recall (see Exhibits 14,
15 and 16). This implied that even though ibuprofen was in the early stages of diffusion, it could be a significant entrant in the Chilean analgesic market. Chilean sanitary regulations required a brand to be associated with specific compounds; therefore the Tapsin name could not be extended to a product with other formulations, such as ibuprofen.
In the Chilean market, Bayer had recently launched Actron Rápida Acción (Quick Action Actron), an analgesic and anti-inflammatory that did not require a medical prescription, with 400mg of Ibuprofen, indicated for relief of body aches and pains, such as: muscle, joint, back and menstrual. According to the Bayer website, Actron Rápida Acción worked faster than traditional tablets because it came in a soft gelatin capsule and contained liquid ibuprofen which was absorbed quickly by the body and arrived faster to the area of pain.
The Future of Tapsin
Working together with its advertising agency Maver executives had introduced the Tapsin brand with simple and humorous advertisements, which together with the products efficacy had made many consumers loyal to the brand. The increase in sales had made advertising investments grow as well. Some of the TV commercials had even won rewards in creative advertising contests and the brand was included in Chile’s Marketing Hall of Fame in 2004.
6 Referred to as paracetamol in Chile
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Together with the above, the advancement of Tapsin’s market position was attributable to the Laboratory’s management style, Jaime Ben-Dov commented:
Quick and centralized decision making could have also been key factors in our success. We’re a small ship on the same route as a transatlantic. When we face an obstacle, we’re quick to turn and avoid it because the captain is at the wheel (Alberto), while a transatlantic is much slower, with several hierarchical levels that have to communicate before an order to turn is implemented.
However, despite having achieved Tapsin’s positioning as the most credible and prestigious brand in the country7, in 2004, things were changing. Tapsin’s sales were leveling off. Maver executives were concerned. Fernando Albala explained:
There is a concentration of large pharmacy chains8 which have registered an alarming growth in their own brands. Our products are at a disadvantage because the pharmacy employees receive incentives to promote private-label brands (see Exhibit 17-A).
Ben-Dov added:
Up until now, thanks to the strength of brands like Tapsin and Aspirina that invest heavily in brand equity, private-label pharmacy brands (in the case of analgesics) have only 10% of the market. However, there are less important brands, like Kitadol and Panadol, which offer outrageous margins to the pharmacies through promotional offers and are being treated like a private-label brand. If we include products whose strategy is volume, not branding, this percentage is higher (see Exhibit 17-B).
The system of commissions for pharmacy sales clerks included not only private-label pharmacy brands and could be used by any brand. Jaime Ben-Dov commented:
Any product that gives the pharmacy chain more than a 60% margin can become a promotional product for a couple of weeks, where the sales clerk is instructed to offer it to clients or try to exchange other products for it. The results are astonishing. There are cases of brands reaching 1000% sales growth in one week. It’s clear that this system increases sales volume, but at a low margin, since the laboratory has to offer important discounts to the pharmacy who later gives a commission to the sales clerk.
Until now, Maver had decided not to use this practice and had maintained firm in its strategy to add brand value through advertising campaigns and socially responsible activities like the Teletón. Ben-Dov explained:
Tapsin is a tremendously successful brand, based on a strategy that has allowed us to win the heart of the consumer, without selling illusions, because we all know the product works. To pay a commission to a pharmacy clerk to offer my product or to substitute another will last until the sales clerk receives a better offer. Under this scheme the brands don’t generate any loyalty in the minds of the people. Even though this system of commissions is permanent, it
7 Study done by Collect, market research, and Achap, an association of ad agencies, in 2005. http://www.economiaynegocios.cl/noticias/detalle_documentos.asp?id=76047. Accessed 11/9/ 2005.
8 In Chile, more than 90% of the retail pharmacy market —OTC and prescription drugs—was occupied by three pharmacy chains (Cruz Verde, Farmacias Ahumada y Salcobrand) among which the market was divided fairly evenly. Http://www.businesschile.cl/portada.php?w=old&id=189&lan=es. Accessed 11/7/2005.
085 Maver Laboratories: Tapsin, building a brand in Chile
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doesn’t work in the long run. We must persist in investing in brand equity, and continue to bet on creative advertising, and above all, on social responsibility through the Teletón and the Tapsin Foundation. It’s the only way to sustain what we’ve done with Tapsin.
However, among the Maver executives there were those who felt that some of the resources used for advertising could be used to give commissions to pharmacy sales clerks. One executive commented:
We’ve made an important investment in advertising year after year, and despite that, the sales of Tapsin have started to stagnate. We must use other strategies that allow us to, at least, maintain our market share. I believe that a good alternative is to use part of the funds designated to create brand equity through advertising, for incentives for pharmacy sales clerks (see Exhibits 17-B and 17-C).
Alberto finally fell asleep. He had analyzed the various alternatives for facing the problem of Tapsin’s sales and had made a decision. Now he had to discuss it with his executives.
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Annex 1
Teletón Foundation
The Teletón Foundation was a private non-profit organization, whose objective was to raise funds to satisfy the needs of the Sociedad Pro Ayuda del Niño Lisiado, an institution dedicated to the
integral rehabilitation of handicapped children and youth. The Teletón Foundation owed its creation
to the initiative of Mario Kreutzberger, who, from the beginning, maintained a continuous participation in the development and promotion of its activities, especially in the annual event known as “The Teletón,” which was the foundation’s primary funding source.
The Sociedad Pro Ayuda del Niño Lisiado was a private non-profit organization created in Santiago (the capital of Chile) in 1948, with the objective of rehabilitating children with illnesses that invalidated their neuromuscular system. It was primarily financed through membership dues, donations and state subsidies. In 1978, thirty years after its creation, the Sociedad had a special school for handicapped children, a rehabilitation institute and a boarding school with an orthopedics workshop. These three buildings were located in different parts of the city of Santiago.
In 1978, Mario Kreutzberger contacted the board of directors of the Sociedad and persuaded them to try to raise one million dollars through a fundraising campaign. This is how the first Teletón event took place, and raised enough money to create a rehabilitation center for children (Instituto de Rehabilitación Infantil) in Santiago. After this first experience, where a group of people were hired to organize the event, the Teletón Foundation was created to realize this periodic fund-raising campaign, in general once a year, for the Sociedad Pro Ayuda del Niño Lisiado.
That’s how by 2004, through funds collected during 19 Teletón events, they had built, equipped and maintained 9 rehabilitation centers throughout the country (in Santiago, Arica, Iquique, Antofagasta, Valparaíso, Coquimbo, Concepción, Temuco y Puerto Montt), all of which contained sophisticated equipment that allowed for high quality rehabilitation treatments. Patients not only received medical assistance, but also part of their alimentation, transportation, and participated in artistic and athletic activities. The rehabilitation was designed to integrate them into the various tasks at home, school, work, and in the community. These centers were managed by the Sociedad Pro Ayuda del Niño Lisiado and attended free of charge more than 22 thousand patients each year between the ages of 0 and 24, approximately 64% of all of the children in Chile that had a handicap due to a birth defect, complication during pregnancy or accident. Of these, 60% were below the age of 4 and 65% came from poor families.
The Teletón event, in addition to the Teletón Foundation, was the most important effort that had been carried out on behalf of handicapped children in Chile. Because not only did they help with rehabilitation but also with producing an attitude in the country more in favor of the rights and dignity of handicapped people.
Even more, the example of the Chilean Teletón had crossed frontiers. With their guidance, other nations of the continent had adopted this form of helping the handicapped. In 2003, Colombia, Perú, Ecuador, Paraguay, El Salvador, Panamá, Costa Rica, Bolivia, Honduras, Guatemala, México, Brazil and Uruguay also had their own Teletón and formed part of the International Organization of Teletons (Oritel).
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Exhibit 1 Leading Brands of Maver Laboratories in 2004.
Brand Product Line
Tapsin Analgesic and Anti-flu
Disfruta Anti-acid Effervescent
Disfrutab Anti-acid Tablet
Adelgazul Natural Weight Loss
Oral Fresh Oral Hygiene and Fresh Breath
Nenegloss Diaper Rash Cream
Armonyl Light Sedative
Dolorub Analgesic and Anti-inflammatory
Caristop Mouthwash to Prevent Cavities
Oralgene Oral Antiseptic
Obleas Chinas Analgesic
Hawaiian Tropic Sunscreen
Mediklin Facial Hygiene
Vapolatum Decongestant
Source: Maver.
Exhibit 2-A Sales, Personnel, and Advertising Expenses for Maver Laboratories, 1993-2004 (in thousands of dollars).
Year # Employees Total Sales Total Advertising Expense*
1993 103 6,958 NA
1994 NA 8,114 NA
1995 NA 14,254 NA
1996 NA 14,270 NA
1997 NA 16,169 NA
1998 164 17,680 18,193
1999 175 21,516 18,679
2000 213 23,042 25,261
2001 235 26,145 33,877
2002 267 25,688 49,734
2003 275 24,842 36,305
2004 304 28,568 25,904
*Corresponds to regular rates without a discount. Includes TV, cable, newspapers, magazines, public events and the subway. Source: Maver.
Exhibit 2-B Advertising Expenses for Tapsin Products, 1998-2004 (in thousands of dollars).
Year Tapsin Anti-flu Tapsin Analgesic
Headache
Tapsin Analgesic
Menstrual
Total Tapsin*
1998 1,601 1,978 0 3,579
1999 1,788 2,923 0 4,710
2000 1,987 4,271 801 7,059
2001 4,150 6,629 2,958 13,737
2002
2003
2004
4,526
3,841
2,298
11,896
13,421
9,444
2,096
1,569
1,698
18,518
18,831
13,440
*Corresponds to regular rates without a discount. Includes TV, cable, newspapers, magazines, public events and the subway. Source: Maver.
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Exhibit 3 Advertising Expenses Tapsin vs. Aspirina, 1996-2004 (in thousands of dollars).
Year Tapsin Analgesic
Headache
Aspirina
1996 136 358
1997 1,536 3,316
1998 1,978 5,074
1999 2,923 3,694
2000 4,271 6,362
2001 6,629 6,865
2002
2003
2004
11,896
13,421
9,444
7,738
7,990
6,541
* Corresponds to regular rates without a discount. Includes TV, cable, newspapers, magazines, public events and the subway. Source: Maver.
Exhibit 4 Donations received during the Teletón Event, 1978-2004 (in thousands of dollars).
Year* Amount Collected
1978 2,665
1979 3,724
1980 4,524
1981 5,191
1982 5,174
1985 2,291
1987 2,030
1988 2,905
1990 3,424
1991 4,812
1992 7,518
1994 9,009
1995 13,595
1996 13,395
1998
2000
2002
2003
2004
Total
12,728
11,826
14,785
17,684
23,628
160,908
* The Teletón event was not realized during the years missing on the chart. Source: Teletón
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Exhibit 5 Companies that Sponsored the Teletón in 2004.
Brand Product Category Company
188 Telefónica Mundo Long Distance 188 Telefónica Mundo
Azaléia Shoes Azaléia Chile S.A.
Banco Chile Financial Services Banco de Chile
Belmont Cooking Oil Watt’s S.A.
Bilz y Pap Soft Drink Compañía Cervecerías Unidas S.A.(CCU)
Cachantún Mineral Water Compañía Cervecerías Unidas S.A.(CCU)
Colún Dairy Products Colún
Confort Toilet Paper Compañía Manufacturera de Papeles y Cartones S.A
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Exhibit 6 Sales of Tapsin Products, 1996-2004 (in thousands of dollars).
Year Tapsin Anti-flu Tapsin Analgesics
Tapsin Analgesic
Menstrual
Total Tapsin
Sales
% Sales
Tapsin/Total
Sales Maver
1996 368 20 - 388 3%
1997 987 385 - 1,372 8%
1998 1,778 800 - 2,578 15%
1999 3,247 1,951 - 5,198 24%
2000 4,723 3,532 137 8,392 36%
2001 6,366 4,390 476 11,232 43%
2002 5,040 5,040 433 10,513 41%
2003
2004
5,746
5,823
6,320
7,049
522
591
12,588
13,463
51%
47%
Source: Maver.
Exhibit 7 Gross Rating Points (GRPs) for Tapsin Products, 1998-2003.
1998 1999 2000 2001 2002 2003
Anti-flu 1,488 2,579 4,228 6,527 4,997 6,644
Analgesics 3,033 5,930 6,215 16,121 14,296 21,648
Total 4,521 8,509 10,443 22,647 19,293 28,292
Source: Time-Ibope; Target : HYM/ABC1C2C3/25-99 years.
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Exhibit 8 Donation History of Maver Laboratories and the Tapsin Foundation, 2000-2004.
Donation Year Amount (US$)*
Remodelling of children´s waiting area at the Hospital San Borja Arriarán
Decoration of the waiting area and other areas for children with cancer Hospital
Calvo Mackenna (**).
Teletón
Gait Analysis Laboratory for the Teletón
2000
2000
2000
2000
21,690
5,000
90,000
209,000
Minivan to transport children with cancer for Fundación Niño y Cáncer de
Valparaíso
2001 11,680
Donation of medicines to the Hospital of Easter Island and a show for children
Teletón
Creation of Tapsin Foundation, Year 2002
2001
2001
5,000
200,000
Program “Yo te salvo, Tu me salvas” (***) 2002 53,000
Elías Albala Franco Scholarship (****)
Fundación Niño y Patria (Children and Mother Country Foundation)
Teletón
Sponsorship of Oritel Chile 2003 ( Organization of Latin American Teletons)
2002
2002
2002
2003
2,830
20,020
167,000
8,340
Elías Albala Franco Scholarship
Donation of a van for the schools of the Lampa municipality.
Macul Cuida Tu Vida (*****)
2003
2003
2003
5,660
5,840
3,330
Latin American Seminar of Pharmeceutical Chemists 2003 16,680
Implementation of a movie room in Hospital Calvo Mackenna (**) 2003 8,340
Fundación Niño y Patria
Teletón
2003
2003
20,020
88,000
Donation of study material for a school in Estación Central 2004 2,500
Elías Albala Franco Scholarship 2004 8,500
Mini documentaries of the Teletón 2004 11,680
Book “ Los Derechos de los Niños” (The Rights of Children)
Donation of three school libraries
Total Donations
2004
2004
41,700
8,340
1,014,150
*December 31, 2003 exchange rate: 1US$=599.42 Chilean pesos. ** A public hospital for children. *** An educational program that consisted of training 100 policemen and 200 school teachers in Santiago in mouth-to-mouth resuscitation. **** Corresponds to a scholarship for a student with good grades and scarce financial resources, studying Pharmaceutical Chemistry in the University of Chile. This scholarship is given annually to a third-year student and covers the rest of their studies. ***** A series of activities to promote the good health of the people in the Macul district in an agreement made with the municipality. Source: Maver.
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Exhibit 9 Tapsin Family of Products.
ANTI-FLU
Adults
Tapsin Caliente Día Powder/Lemonade Flavor
Tapsin Caliente Noche Powder/Lemonade Flavor
Tapsin Plus Caliente Día Powder/Lemonade Flavor
Tapsin Plus Caliente Noche Powder/Lemonade Flavor
Tapsin DN Día Green Capsules
Tapsin DN Noche Blue Capsules
Children
Tapsin Infantil Chewable Tablets
Tapsin Infantil Drops
Tapsin Niños 6-12 Years Chewable Tablets
ANALGESICS
Headaches
Tapsin Tablets
Tapsin SC Capsules
Tapsin Nocturno Tablets
Tapsin 2 Soft Capsules
Tapsin 2 Forte Soft Capsules
Migra Tapsin Tablets
Arthristis Pain and Artrosis
Artri Tapsin Tablets
Menstrual Pain
Tapsin Período Menstrual Tablets
Source: Maver.
Exhibit 10-A Sales Growth of Tapsin Products vs. Aspirina (Bayer).
Market Share 2002 2003 2004
% Aspirina 61 59 54
% Tapsin 39 41 46
Source: IMS.
Exhibit 10-B Sales Growth of Tapsin Products vs. Aspirina (Bayer).
Brand Growth
(base 100: 2002)
2002 2003 2004
Aspirina 100 102 99
Tapsin 100 110 130
Source: IMS.
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Exhibit 11 Top of Mind Adult Analgesics in Chile, 1998 - 2003.
