US Business History, June 29, 2010

Procter & GambleFirst to understand the power of marketing.

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By Adrian

HistoryFrom candle and soap to a multinational empire

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William Procter

✤

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James Gamble

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Procter & Gamble

was candle and soap

Fact 1

1837

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Ivory Soap

✤ first introduced in 1879

✤ It Floats! since 1891

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Crest

✤ introduced in 1955

✤ contains fluoride (Fluoristan)

✤ sold as Blend-a-med in Europe

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Growing big

✤ starting from a small portfolio of well-recognized brands (e.g. Ivory Soap, Tide, and Crest)

✤ pioneer in market research and customer relations

✤ soap operas as a means of reaching target customers

✤ major acquisitions were Gillette (2005), Wella (2003), Clairol (2001), and Richardson-Vicks (e.g. Pantene, VIcks) in 1985.

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Procter & Gamble

has now over 300 brands22 of which are $1bln in annual net sales

or more

Fact 2

2010

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By Yuki

Brand Management

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McElroy and his memo

✤ began on May 13, 1931 with a memo by Mc Elroy -

✤ Neil H. McElroy invented Brand Management

✤ P&G’s CEO from 1948 to 1957, then US Secretary of Defense 1957-59

✤

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In-house Competition and Product Differentiation

One team for one brand

Developed one’s merit

Each has own originality in price & quality

Focus on target12

Influence of Brand Management

Brands drive out commodities

Not short-term sales, but long-term loyalty

To maintain loyalty….

- Consistency in value

- Keep balance b/w price & quality

- Must be improved

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By Kathryn

Corporate Social Responsibility

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Leader in employee benefits

Historically considered a leader in employee benefits Labor reform- 8 hour workdays (1918)- Guaranteed 48 weeks a year (1920s)- Required major distribution revisionsThe Great Depression- Minimal layoffs- President's voluntary salary cutHistoric Reform- Saturday half-day (1885)

- Profit-sharing bonus (1887)

- Became merit based (1888)

- Employee stock-purchase progra (1892)

- Disability and pension plan (1915)

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Great Power = Great Responsibility?

Supplier sustainability scorecard (2010)- Similar to Wal-Mart’s (2009)- Costly compliance for P&G- Assesses yearly improvements - Goal of influencing entire supply chainDawn Campaign - Large donations to Marine Mammal Center- Ongoing promotion

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Environmental sustainability

Water & energy conservationSolar energy in major plant

Reductions per unit of production since ‘02:- Water consumption: 52%- Energy use: 48%- CO2 emissions: 52%

- Waste disposal: 53%

Goal of $50 B ‘green’ sales from 2007-2012

‘Future Friendly’ Program

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Example:Coldwater Tide

Major energy footprint audit

Measured carbon output over all stages of products

Cost of energy use not bourn by P&G directly

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By Marco

Current Financial Crisis

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The Recent Crisis.Origins and Effects

✤ In 2009: Prices of crude oil reached $149 per barrel

✤ Credit Markets ceased to function normally

✤ 30 mln people lost their jobs worldwide

✤ Suppliers, retailers and distributors were badly affected. Some went out of business

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Impact and Strategies

Impact: - Consumer spending sharply declined and focused on essentials or more durable goods.- Limited effects because of Consumer Market Research .- Overall, the company was not much affected by the slump in general consumption because of its global reachStrategies:- Target low-income consumers- Expand and consolidate corporate presence in Third World marketsCash and Cost management- Innovation and marketing

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Results

P&G experienced a major setback in the early 2000s.

Managerial restructuring and better finance controls shield the company from worse scenarios.

Efficient Marketing and Consumer Mkt. Research made sales flexible and adaptive to consumer demand, even when it slumped.

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P&G is in fine financial state and

maintained strong recognition from the business world.

After Crisis

2010

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By Antoine

Market Research

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