PROCTER AND GAMBLE : MARKETING CAPABILITIES

HARVARD | BUSINESS | SCHOOL

WHAT IS

?

Procter & Gamble Co. , also known as P&G , is an American multinational consumer goods company headquartered in downtown Cincinnati , Ohio , the U.S. , founded by William Procter and James Gamble.

It holds one of the most powerful portfolios of trusted brands.

WHO ARE THE KEY

PLAYERS ?

•CEO A.G. Lafley • CEO Bob McDonald• CEO Durk Jager• CEO Jim Stengel• Claudia Kotchka, o Vice-president, Design unit• Marc Pritchard, o Global Brand Building Officer

WHAT IS THE CURRENT

SCANERIO - 2010

2010 Sales

Household CaresBeauty & Groom-ingHealth & well be-ing

WHY STUDY THIS CASE?

1. Know about the design , implementation & interpretation of product development & marketing strategies

2. Evaluate primary and unique communication strategies and money spending

3. Innovation , R&D and acquisition

OBJECTIVES

CASE ANALYSIS

Has good company

background

Enters new market with a mission and

decisions

Takes scientific approach to

connect with people

Brings in a design unit as a part of

marketing strategy

Shift from product based marketing to consumer-centric

marketing

Communication through direct & digital

marketing & sales promotion

Multibranding

Tries to move forward with an aim to reach 5 billion new consumers

Connect &

Develop

P&G MARKETING SECRET SAUCE :

R&D INNOVATION

• In 1887 – nephew of one of the P&G’s founders – who had chemistry degree – set up analytical lab - establishing one of the first corporate lab.

• Replaced the trial and error method and took a scientific approach – connected with company’s sales and marketing.

• First time products included Crest toothpaste (1995), Head and shoulders dandruff shampoo, Pampers disposable diapers (1961).

INNOVATION : VITALITY

• P&G pursued international expansion as early as the 1930s, and from 1945 to 1980 it began to enter markets in Latin America, Western Europe, and Japan.

• P&G’s approach to entering new markets was via “acquisition or joint venture on a small scale, and through trial and error, learn the formula for success before making a major commitment.”

• In 2010, P&G’s stated corporate mission was to build on its company purpose to improve the lives of its customers through continued innovation to reach “More Consumers, In More Parts of the World, More Completely.”

• Connect and Develop : A step towards innovation , research and development of products

WHAT DIFFICULTIES IT FACED...

(1) Net sales slowed to 2.6%

(2) Firm struggled to control costs, and its stocks slid from $118 to $52 over 18 months

SO THE STEPS TAKEN ARE...

MARKETING STRATEGY

• Historically, P&G had pursued a multibrand strategy, and it managed brands across a category carefully, with each getting individual support and satisfying a segment of the market.

• A new design unit was created for design innovation & strategy. A culture of design was introduced in P&G which complemented function-driven process.

• A consumer-centric marketing approach was followed which allowed customization on the basis of needs of people.

• The firm leveraged its products through multibranding , focused on “Return On Marketing Investment” and shopper marketing experience.

COMMITMENT TO THE

CONSUMER

• A lot of innovative approaches were introduced in product and market research that gained qualitative and quantitative information from the consumers , in-turn resulting in better products and positive buying behaviour.

• Word-of-mouth advertising was followed , especially in relation with females through campaigns like “Thank you Mom” & “Loads of Hope” which acted as a means of emotional branding.

• The pre and post purchase behavior towards products were measured by online grocer sites & Neuromarketing which helped in building one-to-one relationship with customers.

ADVERTISING

• It was the first company to sell its products directly to consumers through dramas , T.V commercials and operas instead of including wholesalers and retailers in the chain.

• To compete in less familiar markets , it developed “Media neutral” idea that could be advertised in different and relevant local languages.

• Lafley , Stengel and Kotchka aimed towards design and emotion driven-advertising along with benefits and function driven one.

SPONSORSHIP

•It sponsored the U.S. Olympic team in 2010 and raised its visibility as a worldwide sponsor for 2012 winter games in Russia and 2016 summer games summer games in Brazil.

• It engaged its consumers in fitness campaign through NFL sponsorship whereas the major campaign “Thank you Mom” still remained the best in touching everyone’s heart.

CELEBRITY ENDORSEMENTS

• P&G endorsed many celebrities and spokesmodels for its acquired beauty companies and products like CoverGirl cosmetics and Pantene shampoo.

• Gillette and Head & Shoulders ads featuring sportspersons were advertised through YouTube, T.V. , online and print media.

• P&G also pursued a host of promotion, sponsorship, and endorsement relationships as well as other nontraditional outlets, such as product placement in television and film.

MEDIA SPENDING

• During recession in 2009 , P&G shifted to coupons and in-store promotional activities to maintain its media presence while shifting ad costs.

• In 2010, P&G increased ad spending by $1 billion, with a 20% increase in media impressions; higher revenues led to an increase in dollars spent. McDonald, who became CEO in 2010, stated that P&G would maintain the same level of spending, while shifting dollars to digital advertising and other new media to broaden the audience.

DIGITAL MARKETING

• Digital media enabled niche experimentation targeted to specific customers, including online serials , video games, and YouTube channels for specific products.

• P&G launched its first mobile marketing ad campaign in 2006 . The campaign also released TV commercials and print advertisements, and had an online presence.

• P&G’s line of “My Black is Beautiful” products, introduced two web series in 2010 to showcase its products. This attracted a lot of views online . Collection sales and market share increased.

• P&G’s Old Spice television commercial and YouTube sensation, “The Man Your Man Could Smell Like,” gave P&G its greatest exposure in the online community and bridged the power of digital and social media.

• From mass marketer , P&G became one-to-one digitized marketer.

SOCIAL MEDIA

• In 2007, P&G launched two social media sites: Capessa for women on Yahoo! Health and the People’s Choice Community, associated with the People’s Choice awards.

• P&G used Facebook as a marketing supplement, not a replacement. It identified 2010 as the year to acquire Facebook friends, but the years beyond that were for figuring out how to use them.

• In 2011, when research showed that men were interested in work generally done by women in houses , P&G rounded out its earlier social media efforts with Manofthehouse.com, which featured household advice for men .

• Social media was a way to speak to its audience virtually.

INTERACTIVE COMMUNITY PROMOTION

• P&G used T-shirts having slogans and endorsed celebrities like Katrina Kaif to promote sale of products like Tide. The T-shirts were worn by celebrities and were sold online and proceeds went to hurricane affected families.

• A similar mass promotional activity was held in Times Square in 2006 , targeting holiday shoppers. It generated YouTube ads and attracted a lot of viewers , mainly youth.

• A large blue neon sign in the middle of a Broadway block read “Restrooms” and led people up an escalator into a lounge with flat-screen TVs, leather couches, a fireplace, and 20 shiny, spotless toilets. The ad was used to promote Charmin toilet paper, and tourists loved it.

Digital marketing with campaigns, Emotional, design and function driven marketing, R&D, consumer research and product performance.

DISCLAIMERCREATED BY SWAROOP CHANDWASKAR, NIT

RAIPUR DURING MARKETING INTERNSHIP UNDER PROFESSOR SAMEER MATHUR, IIM LUCKNOW