I BUS 490 - P&G Team Packaging Case
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Transcript of I BUS 490 - P&G Team Packaging Case
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http://www.pg.com/translations/history_pdf/english_history.pdf
P&G
Packaging
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Presentation Topics• History• Background
– Environmental • Impacts
– Social • Stakeholders involved• Government policy
– Economic• Corporate overview• Industry analysis
• Solution– Environmental– Social – Economic
• Challenges
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History of P&G • October 31, 1837, Procter & Gamble was born– William Proctor, a candle maker from England, and
James Gamble, a soap maker from Ireland• 1859 sales reached $1million• 1862 supplied Union Army with soap and candles• 1879 Ivory• 1919 P&G sells directly to retailers • 1920-1930 sponsor radio programs – “soap operas”
http://www.pg.com/translations/history_pdf/english_history.pdf
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History of P&G
• 1930 acquire Thomas Hedley in England• 1931 Brand management is born• 1933 Synthetic detergent• 1946 Tide• 1947 Prell shampoo• 1955 Crest with fluoride• 1957 purchase Charmin• 1960 “Downy” fabric softener• 1972 “Bounce” fabric softener sheets• 1987 Celebrates 150th Year Anniversary
http://www.pg.com/translations/history_pdf/english_history.pdf
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P&G 1987:Repositioning Lenor Fabric Softener
Lenor Fabric
Softener
Promised to reduce
packaging on Lenor fabric softener by
85%
West Germany is the largest
fabric softener market in
Europe
Lenor refill package
Regulations
• Environmentally friendly• 75% if West German
households line-dried their laundry
• Lenor’s sales volume decline 7.5% annually and was predicted to continue
• Tight guidelines on packaging and promotion
• Retailers “10 commandments”• Government• Environmental
• 4-from-one concentrate• Laminated cardboard carton (similar
to milk carton)• Stan-alone soft plastic package
“doypack pouch”• Waste reductio
• Less packaging• Reusable
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Why?
Environmental• Shift from defensive
thinking towards proactive and successful approaches
Social• Understanding their
customer’s needs• Taking all stakeholders
into consideration
Economical• Stem eroding sales
volume and market share
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Once upon a time…
Environmental concerns spiked due to…..
Chernobyl
Limited lands
Scarce natural resources
Increasing waste outputs
Dense population sizes
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Lenors’s contribution to the problem
• 5% Softening ingredients and 95% water
• Packaging in hard, high density polyethylene plastic containers
• Focus more on Price/Scent vs Environmental
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Then the European Nation Took Action…
1986 survey of 11,8000 Western, 72% where concerned about problems such as acid, rain,
landfill capacity, and the greenhouse effect
Implemented Waste Avoidance Utilization, Avoidance, Utilization, and Disposal Act
By 1985, West Germans recycled more than ⅓ of waste...
The Blue Angel Program was implemented
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Lenor in Response
• Lenor applies refill pack• Receives great responses, however questions
the popularity if implemented nationally….• Concentrate Exist Today
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25 years later…What Happened?
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Scent Oriented Highly dense plastic packaging
What happens to all the plastic?
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Great Pacific Garbage Patch• 90% of the patch is Plastic• Around 95% originated from land
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Government/ Environmental
Customer Demand
Strongly desires scent
Need of durable packing
Price Sensitivity
Plastics non degradable
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Economics: Lenor Packaging CaseProctor and Gamble
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ECONOMIC PROBLEM
Between 1984 and 1986 Lenor’s sales volume fell 7.5% annually due to:
1) Aggressive competitive pricing 2) Eroding Brand Image3) Shrinking Market due to Environmental concerns.
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Lenor in East Germany
• Dominated East Germany with 37% Market Share
• Selling Lenor’s Iconic Blue 4 liter Bottle• Consumers Differentiate product on
Price/Scent• Price Wars drove average profit margin from
12.7% in 1984 to just 2.5% in 1986• 98% store penetration by 1987
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Volatile Elements: Packaging/Shipping Fuel
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Rethinking a Titan
• New Packaging vital for P&G’s Bottom line
• Must become more environmentally sensitive in order to appeal to the East German Market
• Implications for their 5 Billion Consumers worldwide
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Economics: Beyond Stockholders
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A solution for P&G’s packaging
Bioplastic
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Plastics
• Moldable type of organic polymer• Petroleum based• Two types: – Thermoplastics
• Become a liquid when heated• Can be molded & cooled many times with no degradation• Softer than thermo-set• Easier to recycle than thermo-set
– Thermo-set plastics• Can only be molded once• Bulky short molecules• Decomposes after being re-heated
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Manufacturing PlasticsEnvironment
• In 2007:– 92,835 million pounds - thermoplastic – 4,838 million pounds – thermoset
• Energy:– Oil used to make plastics is 4% of total oil
consumption (87.2 million barrels a day)– 4% only accounts for plastic feedstock selling
plastics
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Manufacturing PlasticsEnvironment
• Energy:– Plastics industry in the United States consumes
about 6% of all the energy used by American industries
– In 1998, rubber and plastics product manufacturers used 320 trillion Btu
– 320 trillion Btu is approximately $3.5 billion• Co2 Emissions:– In 1994, U.S. plastics industry was responsible for
4.7 million metric tons of carbon dioxide emissions.
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Manufacturing PlasticsEconomic
• Plastics facilities in the U.S. 18,585• Employees of the plastics industry 1,130,300– Worker wages of the plastics industry
$28,356,100,000• U.S. plastic sales $378,830,000,000• Exports from the U.S. $43,040,000,000• Imports to the U.S. $37,580,000,000
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Manufacturing PlasticsSocial
• Health risks associated with plastics do not come from plastics themselves but from additives like plasticizers– Certain plasticizers have found to be both
carcinogenic
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Bioplastics
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What are they made of?
• Bioplastics are plastics made out of biopolymers– biopolymers are polymers that come from a
biological source.• Bioplastics can be made using plant, animal, or
bacterial sources:– wheat, corn, rice, potatoes, barley, and sorghum.– Natural oils from soy and palm – Bacteria– Genetically engineered organisms
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Starch Based Bioplastics
• Account for 80% of the bioplastics market– Pure starch can absorb water from the air and degrade. – Organisms can also metabolize pure starch, as it is a
carbohydrate. – The fact that starch disintegrates in liquids makes it ideal for
drug capsules. – Used to make:
• plant pots• drinking cups• disposable shopping bags• Cutlery• coated cardboard• diaper foil.
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf
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Environmental Implication of Bioplastic
Strengths• Cheaper than plastic productions• Emits less carbon dioxide.• Easily recycled
Weakness• P&G products are not well known for
having green laundry products. Rusty since the 90s
Opportunities• New green perception from customers• Will becoming a major well known
pioneer for using biodegradables
Threats• Gets contaminated when petro plastic
mix in• Has potential to effect food supply
Bioplastics
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THE ECONOMICS OF BIOPLASTICS
Can a Packaging shift appease the economic segment of the Triple bottom line?
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Current Realities
• 3.49 million barrels of oil a day are converted into plastics.
• 99% of plastics come petroleum. Ethylene, propylene and Styrene are extracted directly from crude oil.
• Current rigid plastic containers such as the Lenor 4 li. and 1 li. Concentrate will take millions of years to biodegrade.
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Economic Uncertainty
• Yet the environmental and social benefits are meaningless if bio plastics are economically unfeasible.
• PLV is 20% more expensive than current petroleum based plastics.
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• How will bioplastics impact dependence on and consumption of fossil fuels?
• How will a switch to bio plastics negatively effect primary commodity markets?
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• In 2009 the United States Generated 30 million tons of plastic waste.
• 11 million tons was durable plastic such as that used in the packaging for Lenor’s 4li and 1li. Fabric Softener.
• Only 7% of all plastic waste was recovered for recycling.
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Bioplastics: Scorecard
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P&G Corporate Goals
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P&G’s Lifecycle Assessment