imc case analysis procter & gamble(b)

Integrated Marketing Communication

Integrated Marketing Communication Case Analysis: Procter & Gamble(B)

MANGESH PATIL| PAWAN JAGNIK | SUMAN KUMAR SAHA MAHTAAB KAJLA | NILA LOHITA | VARDHAN SINGH

Group II (IMC-A) Submitted by:


Company Introduction

Manufactured 90 consumer & industrial products

Total sales of $11.4 billion by 1981 of which 70% made in US (exhibit 1)

Eight major operating divisions organized by type of product – Packaged soap & detergents

– Bar soap & Household cleaning products

– Toilet goods

– Paper products

– Coffee

– Food Service & Lodging Products

– Special Products

Each division had its own brand management as well as its own sales, finance, manufacturing & product development line management groups


Light-Duty Liquid (LDL) Detergents

Annual factory sales of $850 million & volume of 59 million cases in 1981

Average consumer purchase cycle of 3-4 weeks Expected category volume growth of 1 % per year for next 5 years LDL market growth potential is very low due to substantial growth

in the use of Automatic dishwashers (ADWs) It had 3 major players P&G (42% share), Colgate Palmolive (24%),

Levers (7%) and the remaining 27% with generic and private labels

Market Overview

Performance segment (35%)

focusing on cleaning benefits

Mildness segment (37%) focusing on

benefits of mildness to hands

Price segments (28%) focusing on

low cost

3 major segments


P&G’s Product Portfolio

LDL Segment

Ivory Liquid P&G’s leading LDL brand

(15.5%) Highest trial levels Reduced promotion

frequency from eight 4 week events to 6 events in 1982

20% of promotion budget allocated to trade allowances

80% of promotion budget allocated to consumer promotion

Major focus (2/3rd) on price packs & minor focus (1/3rd) on coupon offers

Dawn Performance brand with

14.1% market share Unique benefit of superior

grease cutting capability 2/3rd of promotional events

were trial oriented coupon events while remaining 1/3rd were price packs

Joy Ranked 3rd in LDL category

with 12.1% market share Product benefit of

delivering shiny dishes by using unique “no spot” formula

50% promotional budget allocated to trial oriented coupon events & pre-priced events

Remaining 50% was allocated to price packs


Development of H-80

H-80, a high performance LDL with superior cleaning capability than other LDLs

Specially formulated to remove tough stains

Excellent product aesthetics & good packaging

Possibility of cannibalization from existing P&G LDL brands

Suggested target audience – female heads of larger households, aged between 18-35, heavy LDL users

Available in 4 sizes & at prices equivalent to P&G’’s established LDL brands


Assignment Question What factors and policies guide promotion planning for the LDL’s?


Factors & policies affecting promotion planning

Low involvement product

– LDLs are low involvement, daily use products

– Purchase mainly depends on top of the mind recall, product availability and sometimes price

– Lack of brand loyalty

– More advertising is required to generate pull from customers

Product category

– Advertising/Promotion also depended on which category the product belonged

– Depending on the category, the particular aspect of the category was emphasized during the promotional events

Launch of advertisements for new products/brands

– P&G generally did not advertise a new brand until it had achieved 70% distribution

– New products/brands demanded more advertising/promotional events in order to achieve maximum exposure


Factors & policies affecting promotion planning

LDL promotional events calendar (Schedule)

– Each LDL participated in at least 5 events annually

– Brand groups worked together to avoid simultaneous promotion of 2 or more of company’s LDL

– Scheduling played an important role as it helped in maintaining the attention of sales force & trade

– It also helped managers to minimize cannibalization due to consumers switching from one promotion to another

Allocation of budget

– Budgets were distributed under 2 major heads i.e. Advertising & Promotion

– P&G spent higher proportion of budget on advertising & lower on promotion

– Colgate or Lever spent more on promotions than advertising

– We might conclude that players with major market share spent more on advertising & smaller players spent more promotions

– Hence size/market share affected the promotion planning for LDLs


Assignment Question What factors must Garner consider in developing H80 promotion program?


Factors to be considered for H80 campaign

Goals & Constraints

– Budget should be lesser than $37 million.

– Getting the expected market share of 7% (Table B)

– Flexibility of scheduling with Ivory Liquid, Dawn and Joy

Positioning

– Positioning should be such that it clearly discriminates H80 with other existing brands

– Focus on high performance of LDL that provides superior cleaning factor that it removes tough strains

Cannibalization

– Already having a market share of 42% in the performance and mildness segments through their 3 popular brands – Ivory, Dawn & Joy.

– Launching another band in same segment would increase the risk of cannibalizing sales of existing brands


Factors to be considered for H80 campaign

Competitive Rivalry

– High level of competition in performance and mildness segments

– Established companies want larger piece of shrinking market

– Presence of small and private label brands in price segment with no/minimal marketing support

Distribution

– P&G generally did not advertise a new brand until it had achieved 70% distribution

– H80 was expected to achieve >~70% distribution 6 weeks after introduction

Target Segment

– The female heads of larger households, aged between 18-35, heavy LDL users should be primary target audience


Assignment Question Using Exhibit 18 format, develop a national promotion program for H80?


National Promotion Program

Please refer to the attached excel sheet for calculations


Calculations To minimize canibalization of P&G’s LDL brands, the 5 events selected are:

Event I: February and March

Event II: May

Event III: August

Event IV: October

Event V: December

Initially, a $2.70/ statistical case trade allowance has to be given in January, February and March to stimulate initial stocking. Cost for it= $(1.8*3/2)= $2.7 million (Using Table D). No. of average weeks volume = 8 * 3/2 = 12 (Using Table D)

A group promotion is also given which costs $0.1 million


Events

Event I: February and March

3 oz samples would be mailed to 50% households as done in case of Dawn. Cost for it is =$(0.53 *30.3/ 0.75 million) =$21.4 million (Using Table D and Exhibit 11)

No. of average weeks volume not applied in this case


Event II: May

• Single brand coupons would be mailed during this phase. Cost for it =$5.8 million (Using Exhibit 12)

• No. of average weeks volume not applied in this case

Event III: August

• Coupons can be distributed in BFD along with a Partial Liquidator premium.

• Costs for the BFD is given as $0.9 million (Using Exhibit 12) and for the Partial Liquidator is $ 0.4 million (Using Exhibit 16) No. of average weeks volume would not be applied in this case

Event IV: October

• A 2nd trade allowance of $2/ statistical case can be given along with a Price Pack of 20% off on the retail price for 22oz and 32oz. Cost for the Trade Allowance would be = $(1.8 * 2/ 2.7 * 1/2 )million = $ 0.66 million (Using Table D)

• No. of average weeks volume would be = 8 * 1/2 = 4 (Using Table D)

• Cost for the Price Pack= $( (1*40.8 /20) + (1.2* 29.2/ 13)) million =$4.7 million (Using Table D and Exhibit 14). 20% of $2.04(price per piece of 32oz) is 40.8 cents and 20% of $1.46 (Price per piece of 22oz) is 29.2 (Using Table C) No. of average weeks volume would be 10 weeks (Exhibit 14)

Events


Event V: December

• An In-/on-pack own brand refund offer having a response of 7% can be given for each 2 units purchased. Cost for it is = $(560,000 + 3₵ (on 6 million)) =$ (0.56+ 0.18)million =$0.74million (Using Exhibit 15 III)

• No. of average weeks volume would not be applied in this case

• The total cost for the Promotion Plan is estimated at $37.4 million

Events

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