PROCTER AND GAMBLE- MARKETING CAPABILITIESA HARVARD BUSINESS SCHOOL CASE

P&G- AN OVERVIEWFounded in Cincinnati, Ohio in 1837 by two relatives due to they married sisters

1) William Procter - Candlemaker2) James Gamble – Soapmaker

High quality products boosted the national reputation

COMPANY BACKGROUND• Acquisitions : Charmin Paper Mill (1957), Folgers Coffee (1963)

• During 1960s : Pampers – Disposable Diapers Downy – Liquid Fabric Softeners Bounce – Fabric Softener Sheets

• During 1980s : Always/Whisper, Pringles, and Pantene Soft drink producer Crush International Limited Citrus processing company Frostproof Norwich Eaton Pharmaceuticals (1981) Richardson-Vicks (NyQuil and Vicks) G.D. Searle’s nonprescription drug division

PORTFOLIO OF P&G

Vision

"Be, and be recognized as, the best consumer products and services in the world"

MISSION

• "Procter and Gamble will continue to serve consumers by continuously innovating products that will allow us to be leaders in household and personal care, health care, and food products. To produce products with the utmost care to give nothing but quality to our communities. And to continue to grow so that we can maximize our shareholder's wealth" (Procter & Gamble. 2010)

CASE FACTS

Global Leader in Branded Consumer goodsHas 2 dozen $1bn brands known worldwideFirst company to advertise directly to consumers.2010, total sales=$78.94bnNet Income=$12 bnMarket capitalization=$186.63bn

MARKEING STRATEGIES

Cleaned colours safely

Contained bleach

P&G had pursued a multi-brand strategy, and it managed brands across a category carefully, with each getting individual support and satisfying a segment of the market. P&G’s detergent category illustrated this:

Fresh scent Premium brand

• P&G aims to partner with the world’s most innovative minds.

• Connect and develop helps inventors and patent holders to meet needs across P&G business.

P&G’S NEW APPROACH“CONNECT AND DEVELOP”

RESULTS OF CONNECT AND DEVELOP◦More than 35% of P&G’s new products

had elements that originated from outside the firm.

◦45% of P&G’s initiatives had key elements discovered externally.

◦P&G’s R&D productivity increased by nearly 60%

◦Innovation success doubled◦Drop in cost of innovation

LEVERAGING SECONDARY ASSOCIATIONS BY SPONSORSHIP

P&G SHIFTED FROM TV, PRINT

SOAP OPERAS,RADIO AND TV BROADCASTS

YOUTUBE CHANNEL….

TO DIGITAL AND DIRECT MARKETING

HOW DIGITAL MARKETING HELPS?

The data colllected along with information about online usage and grocery purchases, and frequent surveys of attitudes and lifestyle, helped P&G understand its marketing tactics performance.

EMOTIONAL BRANDING

CELEBRITY ENDORSEMENTS….

SOME ADVANCED TECHNOLOGICAL APPLICATIONS WERE

EYE TRACKING NEUROMARKETING EEG

• Integrating these new technologies in an attempt to gain more hard data on consumers dovetailed with P&G’s culture of performance-driven products, as the firm leveraged new and innovative ways to learn directly from consumers, while also building the opportunity to create more direct, one-on-one relationships with the target audiences.

SOME GAPS IN THE MARKETING STRATEGIES• MORE ON TV• P&G slowed its

digital promotions and focused its efforts primarily on television and print advertisements, along with its product websites.

• LESS ON SOCIAL MEDIA• Digital marketing

efforts were a large part Of P&G. But, In 2010, only 5 percent of P&G’s $3.2 billion was spent on online marketing.

P&g 2010 net sales

P&G- US SHIFTING Focus on differentiated market demand

Growth in the amount of brands and products

Change in market demand

Improve integration and decision efficiency

P&G- EUROPEAN STRUCTURE SHIFTING

• Issues• Profitability was directly related to country

managers instead of to brand managers• The local managers, were very resistant to

adopt global brands and make their own brands global

• Aim of the shift• Cross border cooperation• Changing the focus from country

management to product management

P&G- ORGANIZATION IN 2008Dismantling the Matrix structure, replacing by:

1. 7 Global Business Units (Profit responsible)

2. 7 Market Development Organizations (Market responsible and sales growth)

3. Global Business Services (Internal business processes)

Objective: Improve the speed to innovate

Looking for "Standardization & Globalization"

High growth expectations• Sales Growth: 6-8%• Profit Growth: 13-15%

WHY DID P&G ADOPT THIS STRUCTURE?• The necessity to ensure a long-term scalability across the

innovation• The prevention of a future failure acting as a risk-adverse

businessThe cost and performance dilemma • To improve the alignment and cut costs through The

exchange of ideas• The technological connection and fast transfer of technology

from one to another business

KEEP OR CHANGE THE STRUCTURE?• Keep the structure• Centralization is important, improve the resource efficiency• Don’t come back to complete Matrix structure• Reduction of the layers – Improve the process efficiency –• Long-term view focus on investing in innovation

• The structure needs more time to succeed • Implement a committee conformed by personal from different parts

of the structure forecasting the cost cutting• The statements were overestimated Alignment all employee to the

change – engage people

DISCLAIMER• Created by Shagun Kansal, IIT Roorkee during a marketing

Internship under Prof Sameer Mathur IIM Lucknow.