Steven PerdochMatthew DymitCarrie Loera

Dan McGowanElana Muradova

Strategic Management, Spring 2012

History

Founded in 1837 William Procter and James

GambleIncorporated in Ohio on May 5,

1905

In the beginning…

Proctor and Gamble came to be by manufacturing soap and candles.

After the invention of the electric light bulb, the demand for candles fell significantly, thus causing the newly formed P&G to cease their production.

During the Civil War, the government began to order mass quantities of soap from P&G for the Soldiers’ use—this significantly led to P&G’s return to the market and their second chance at rising in the business world.

Organizational Structure

Acquisition Summary

Between 1905 (Incorporated) – 2010, P&G invested in 34 acquisitions

Periods of frequent acquisitions occur in the 1930’s, 50’s, 80’s and 90’s.

Some of the larger acquisitions include:– Charmin, Clorox, Crush, Revlon, and Gillette

P&G Today

Products sold in > 180 Countries On the ground operations in 80 countries Organized into 2 Global Business Units (GBU’s)

Health Care

Grooming

Beauty

Beauty & Grooming

Fabric and Home Care

Baby and Family Care

Snacks and Pet Care

Household Care

&

P&G: Who we are.

http://www.youtube.com/watch?v=tAT-cFFGNQg

Health Care

Segment includes products in oral care, feminine care, respiratory, toothpaste, OTC drugs and other personal care categories

Health Care - Overview

14% of Net Sales in 2011 Products sold in drug stores

supermarkets, and massmerchandisers

Mature market Name Brand & Private Label competitors

Health Care – Core Competencies

Strong, Dependable, High Quality Products– Strict internal standards and guidelines to comply

with FDA– Most recent recall was early 2010 - Vicks– Vicks 4-Hour Nasal Spray (wrong expiration date)

Health Care Research Center– Promote innovation and bring new products to the

market quicker

PGT Healthcare

Threats

Intense competition– Private labels are much cheaper

Company % - 2010 % - 2011 % ChangeWyeth Labs, Inc. (Pfizer) 25.17 25.87 0.7Reckitt Benckiser 26.82 24.23 -2.59Private label 24.78 22.17 -2.61Procter and Gamble Co. 13.59 19 5.41Other 3 3.31 0.31Novartis Consumer Health 2.61 3.02 0.41Blacksmith Brands 0.65 1.12 0.47Health Care Products 1.36 0.73 -0.63Boiron-Borneman 1.13 0.55 -0.58Qualitest Products 0.9 0 -0.9

Top Cough Syrup Makers - Market Share

Baby Care and Family Care

• Segment includes diapers, baby wipes, paper towels, and toilet paper

Baby Care & Family Care Key Info.

• 19 % Of Net Sales• Products sold in supermarkets, convenience

stores, hotels,motels,and other industries • Baby Care and Family Care competitors

Beauty Segment

This segment includes cosmetics, fragrances, hair care, and skin care products

Beauty Segment

Beauty accounts for approximately 34% of P&G’s product portfolio.

24% of Net Sales & Net Earnings– Head & Shoulders, Olay, and Pantene are some of

the biggest brands within this segment.

P&G Beauty in The Marketplace

P&G’s beauty products are highly recognizable; brand differentiation is a strength.

Product availably is great; products are sold at practically all domestic retailer chain and drug stores.

Proctor & Gamble is associated with tried and true, trusted products.

Beauty SegmentCompetition and Growth

Competitors– Unilever– L’Oreal– Private Labels

3% Net sales growth from 2010– 24% of P&G’s Net Sales are from the Beauty

segment

Threats to Beauty Segment

Greatest threat to P&G’s Beauty Segment is the Threat of Rivalry– Unilever, L’Oreal, Private Labels

Mature Market Threat of Buyers and/or Suppliers?

– Relatively low, due to the working relationship between both categories and the trust created in order to maximize that relationship.

Suppliers are even involved in P&G’s creative process in developing new products.

Fabric and Homecare

Segment contains products including laundry cleaning products and fabric conditioners; home care products, including dishwashing liquids and detergents, surface cleaners and air fresheners; and batteries

Fabric care dominates the market with over 30% of the global market share

Global home care market share is over 15% across the categories in which we compete

Fabric and Homecare (Cont.)

Proctor and Gambles largest, and most profitable division - 30% of net sales

Has been increasing steadily - 6% in 2011 Mature Market Market made up of Brand name and Generic

brands

Snack and Pet Care

This segment includes food products and pet food products

Smallest segment

Snack and Pet Care Overview

Least profitable P&G business segment 4% of P&G’s net sales in 2011 Pringles was the only existing snack brand* Pringles owned 3% of US Snack Food

Production Industy’s market share Utilizes Eukanoba and Iams to appeal to all

types of pet owners

Threats

Lack of presence in the industries Mature market Fierce competition Extension would require major investment into

creating new products and brands Competition has more industry-focused

product lines

Recommendations

Disinvest/Sell off Snack & Pet Care Business Segment

Least profitable business segment (4% net sales ’11)

Pringles sold for $2.7 Billion Iams and Eukanoba (value?) Increased focus on profitable business

segments Increased opportunity to innovate in successful

segments

Growth in Developing Markets

FY '00 FY '05 FY '120%

10%

20%

30%

40%

50%

60%

70%

80%

90%80%

77%

63%

20%23%

37%

P&G Sales Growth: 2000 to 2012

Developed

Developing

% o

f T

ota

l Co

mp

an

y S

ale

s

Company-wide initiative: Acquire 1 billion additional consumers by 2014/2015

Demographic/Socioeconomic Trends

Population is forecasted to grow 700 million people by 2020 (Think of all those diapers?)

95% of this growth will come from developing markets

Wealth and Per Capita income increasing Plan of attack?

– Expand geographically and fill in the “White Space”

Improve Productivity in All Areas

Cost of Goods – Reduce RM costs

Long-term contracts Increase # of Suppliers?

– Reduce excess inventory– Develop partnerships (PGT Healthcare)

Research & Development ~ $2 billion annually– Continuous improvement– Product Innovation

Open Innovate Connect + Develop

Continue to nurture the Open Innovate: Connect + Develop method of research and development.

What is OIC+D?

Connect + Develop

“Today, open innovation at P&G works both ways — inbound and outbound — and encompasses everything from trademarks to packaging, marketing models to engineering, and business services to design. It's so much more than technology.” -Bruce Brown, CTO

Why is OIC+D Important?

$2 Billion Brand

Joint Venture from Competitor

Collaboration

Ultra-fast product-to-market delivery

$2 Billion Brand

Marketing Opportunities

Proctor and Gamble wants to cut $10 Billion in expenses

In 2010 P&G spent $2.2 million on Television advertising

While many of its advertising campaigns boost sales is it too much?

Focus on digital marketing & social media and spend more efficiently

http://www.youtube.com/watch?v=PvYP_d2S1Pg

Top 10 Advertisers in 2010

Thank you… Any Questions?