PG Ariel Ultra EuroBrand Strategy

8/7/2019 PG Ariel Ultra EuroBrand Strategy

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P&G Europe: Ariel UltrasEuro-Brand Strategy

Group 2Stephane Willaert

James Matthys-Donnadieu

Brian Haeck

Annick BollandRob Roelandts

Ilker Temir


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Production Cycle

Product Cycle in 1970s

Distributed R&DDifferent prices from samesuppliers

Manufacturing at multiple sitesMultiple formulas for the sameproduct


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Euro-Branding Timeline

1970 1980 1990

Kingdom of GMs

Unsuccessful

Pampers Experiment

Some success of

Euro-Branding

Centralization

The Compact Challenge

Ariel Ultra


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The New Ariel Ultra

Old Ariel Ariel Ultra

Country specific formulas (with or

without phosphate)

One formula (without phosphate)

Various densities Fixed density

Different perfumes in different countries One perfume

A wide range of package sizes and

designs

European-wide, much less range of

package sizes and designs

Outcome is a highest common factor European product


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The Strategy

Convert the market to compact detergent or create a niche?

15%

30%

Ariel Powder Vizir(Liquid)

Ariel Ultra(Compact)

Pricing


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Launching Strategy

The German LaunchLaunched in May 1989 2 kg size compact, fully equivalent to a regular 3 kgPriced between regular detergent and premium liquidPrimary focus on environmental friendlinessSecondary focus on performance

The French Launch

Planned for September 1989 3 kg size compact, promoted as roughly equivalent to a regular5 kg. Same for 5 kg size compact, promoted as equivalent of 8 kg

Focus on environmental friendliness


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Competitive Preemptive Strike

In July 1989, Unilever launchedSkip Micro

Skip Micro Ariel UltraP&G Competitive

Analysis

Removed fillers from regular

phosphate based Skip

New European-wide design

with higher performance

Skip Micro has poorer

performance than regular Skipor Ariel

Using a 2.2 = 5 slogan. Planned to position 3 kg instead

of 5 kg regular

Much larger dose of Skip Micro

is required than Ariel Ultra for

an equivalent job

Skip Micro 2.2 kg was pricedlower than Skip regular 5 kg

Planned to position Ariel Ultrain mid-premium (15% extra)


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Unilevers Strategy

Destroying the Compact Detergents

Competitor knew that their product was

inferior. So they wanted to induce consumer

to try compact and reject it, thereby, damaging

the valuable segment P&G had hoped for

First Mover Advantage

Competitor was buying time, using a quickly developed,

lower quality product to gain first-mover advantage, but

planning to upgrade the formula as quickly as possible


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What To Do

QUESTIONS:

1. How should P&G respond toUnilevers Skip initiative in France?

2. To what extent this response will

challenge Euro-Brand approach?3a. What are the benefits of a (unified)

pan-European product/brand?

3b. What are the drawbacks of a (unified) pan-European product/brand?

3c. Which elements of the product/brand benefit most from a pan-European

approach? Which least?

3d. How consistent should Procter and Gamble have sought to be on the

degree of Europeanness or localness?

3e. How successful was Procter and Gamble in the development process?


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Country Overview

France

Germany

ETC

Eismann Italy

Spain

Ariel UltraDelivery team

Higher costBut ecological

Holland

UK

3kg 4kg 5kg


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Pan-European Brand

Advantages

Economies of scaleBrand consistency and reliabilityBetter control on organizationQuicker product development time & time-to-marketCoordinated roll-out and product life cycle managementShift R&D focus to innovations and new productsImprovements to products after launch is easierEasier benchmarking with competitorsIncreased customer awareness and recognition

d


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No possibility of adapting local needsNo/Limited possibility of tailor made responseto local competition

May lead to frustration at GM level They arenot in control anymore

Potential lack of involvement in localsubsidiaries

Inherent problems of matrix organizationsHigher product costs due to highest common factorBrings challenges to thorough market testing Increased riskMay kill creativity

Pan-European Brand

Disadvantages

d


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Pan-European Brand

Who Benefits

R&DProcurementManufacturingOverhead support functions

Economies of Scale!

P E B d


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Pan-European Brand

Who Doesnt Benefit

Marketing!


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Europeanness vs Localness

We think P&G should follow a glocal strategy, seeking the

optimal local and global balance.

Key aspects in this optimal balance:

Europe-wide common product features and aspectsProducts with a potential for EuropeanizationTrends in legislations and being proactive

(i.e. phosphate)

Cost/Benefit analyses of non-Europeanizableproducts


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Success of Development

We think that P&G was successful.

Demonstrated high level ownership

Cross functional project teamEarly involvement (=commitment) of subsidiary marketing departmentsKeeping stakeholders informed (GMs via marketing)Country visits Meyers and MurrayPremium pricing vs replacement of existing product


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How Should P&G Respond?

We think P&G should do the following:

Emphasize quality equivalence with Ariel standardEmphasize the environmental theme differentiatorAllow 2 kg boxes in French market (available in Germany)2 kg of Ariel Ultra is still 24% cheaper than 5 kg of Ariel standardwithout changing 15% premium pricing

Overall Strategy:

Emphasize key propositions: Compactness and environment friendlinessEmphasize quality equivalenceDo not point out premium pricing


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Our Conclusion

No effect on Euro-Branding:

The environmental theme stays the same

2 kg packaging already exists in Germany and can be EuropeanizedPricing policy unchanged

Overall, there is no change in value proposition!


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Questions


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A


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Annex

German GM Notes

Phosphate legally banned => ok with non-phosphateLaunch may 89Focus environmental against Henkel

GeneralDistrust Euro-Brand strategy because it ignores regional differences in buying

behaviour

If ETC strategy fails, results and responsibilities will show up in regional bottom line

A


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Annex

European President Notes

In favour of one formula conceptNo further comments found.

But:

-Likely to support one formula and one package if this is creating value(reducing costs, increasing sales, taking market share or all)

-Likely to prefer balanced matrix power distribution to political strongholds

A


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Annex

Italian GM Notes

Phosphate legally banned => ok with non-phosphateGeneral

Distrust Euro-Brand strategy because it ignores regional differences in buyingbehaviourIf ETC strategy fails, results and responsibilities will show up in regionalbottom line

Anne


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Annex

Spanish / Portugese GM Notes

Phosphate legally allowed => non phosphate is too expensiveGeneral

Distrust Euro-Brand strategy because it ignores regional differences in buyingbehaviourIf ETC strategy fails, results and responsibilities will show up in regionalbottom line

Annex


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Annex

Headquarters Notes

No comments found

But:

-Likely to support one formula and one package if this is creating value(reducing costs, increasing sales, taking market share or all)-Likely to prefer balanced matrix power distribution to political strongholds

Annex


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Annex

Ariel Ultra Delivery Team Notes

Want to launch pan-European by September1989Time pressure => only one formula can be developedWould prefer unified formula and packaging as this reduces complexity andspeeds up the rollout

PG Ariel Ultra EuroBrand Strategy

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