Marketing Management

Poonam Sankhe

Procter & Gamble

Acknowledgement

I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals. I would like to extend my sincere thanks to all of them.

I am highly indebted to Mrs. Sadhna Singh for her guidance and constant supervision as well as for providing necessary information regarding the project & also for her support in completing the project.I would like to express my gratitude towards my parents for their kind co-operation and encouragement which helped me in completion of this project.

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Index

Introduction and History of Procter & Gamble Market Segmentation Marketing Mix Product Strategy Pricing Strategy Place Strategy Promotion Strategy Price Positioning: Channels of distribution Distribution network of FMCG Promotional Strategy SWOT Analysis

PASTEL Analysis Competitors of P&G in India Promotion of Integrated Marketing Communications

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o Introduction and History of Procter & Gamble

William Procter , a candle maker, and James Gamble, a soap maker, immigrants from England and Ireland respectively who had settled earlier in Cincinnati, who met as they both married sisters, Olivia and Elizabeth Norris, formed the company initially.

Alexander Norris, their father-in law called a meeting in which he convinced his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born.

In 1859, sales reached one million dollars. By this point, approximately eighty employees worked for Procter & Gamble.

During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products.

In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. William Arnett Procter, William Procter's grandson, began a profit-sharing program for the company's workforce in 1887.

By giving the workers a stake in the company, he assumed correctly that they would be less likely to go on strike.

The company began to build factories in other locations in the United States, because the demand for products had outgrown the capacity of the Cincinnati facilities .The company's leaders began to diversify its products as well and, in 1911, began producing Crisco, a shortening made of vegetable oils rather than animal fats .

As radio became more popular in the 1920s and 1930s, the company sponsored a number of radio programs .As a result, these shows often became commonly known as "soap operas “.

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The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Newcastle upon Tyne-based Thomas Hedley Co.

Procter & Gamble maintained a strong link to the North East of England after this acquisition.

Numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas.

The company introduced "Tide" laundry detergent in 1946 and "Prell" shampoo in 1950. In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as "Crest".

Branching out once again in 1957, the company purchased Charmin Paper Mills and began manufacturing toilet paper and other paper products.

Once again focusing on laundry, Procter & Gamble began making "Downy" fabric softener in 1960 and "Bounce" fabric softener sheets in 1972.

One of the most revolutionary products to come out on the market was the company's "Pampers", first test-marketed in 1961.Prior to this point disposable diapers were not popular .Although Johnson & Johnson had developed a product called "Chux". Babies always wore cloth diapers, which were leaky and labor intensive to wash. Pampers simplified the diapering process

Procter & Gamble acquired a number of other companies that diversified its product line and increased profits significantly .These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks, Noxell, Shulton's Old Spice, Max Factor, and the Iams Company, among others.

In 1994, the company made headlines for big losses resulting from leveraged positions in interest rate derivatives, and subsequently sued

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Bankers Trust for fraud; this placed their management in the unusual position of testifying in court that they had entered into transactions they were not capable of understanding.

In 1996, Procter & Gamble again made headlines when the Food and Drug Administration approved a new product developed by the company, Olestra .Also known by its brand name Olean, Olestra is a substitute for fat in cooking potato chips and other snacks that during its development stages is known to have caused anal leakage and gastro-intestinal difficulties in humans.

In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing Unilever into second place .This added brands such as Gillette razors, Duracell, Braun, and Oral-B to their stable.

The acquisition was approved by the European Union and the Federal Trade Commission, with conditions to a spinoff of certain overlapping brands.

P&G has agreed to sell its Spin Brush battery-operated electric toothbrush business to Church & Dwight. It also divested Gillette's oral-care toothpaste line, Rembrandt.

The deodorant brands Right Guard, Soft & Dri , and Dry Idea were sold to Dial Corporation . The companies officially merged October 1, 2005. In 2008, P&G branched into the record business with its sponsorship of Tag Records, as an endorsement for TAG Body Spray.

P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study.

For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another

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Market Segmentation

Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them.

Market segments allow companies to create product differentiation strategies to target them.

Each brand must be positioned for its target segment and a single Procter and Gamble brand cannot have one positioning for all of P&G’s segments

As of July 1, 2011, the company structure is categorized into two "Global Business Units" with each one further divided into "Business Segments" according to the company's 2011 Annual Report. Dimitri Panayotopoulos is Vice Chairman of Global Business Units

Beauty segment Grooming segment Health Care segment Snacks & Pet Care segment Fabric Care & Home Care segment Baby Care & Family Home Care segment

Companies that make multiple products in multiple product categories are delivering quite different sets of benefits to quite different target segments. As a result, they cannot create and support a single brand that can hold multiple positions in the minds of different targets. P&G’s main competitors such as Unilever, Colgate-Palmolive and Johnson & Johnson follow a similar multi-brand strategy.

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Marketing Mix

The marketing mix is a business tool used in marketing and by marketing professionals. The marketing mix is often crucial when determining a product or brand's offering, and is often synonymous with the four Ps: price, product, promotion, and place; in service marketing, however, the four Ps have been expanded to the Seven Ps or eight Ps to address the different nature of services.

In recent times, the concept of four Cs has been introduced as a more customer-driven replacement of four Ps. And there are two four Cs theories today. One is Lauterborn's four Cs (consumer, cost, communication, convenience) another is Shimizu's four Cs (commodity, cost, communication and channel).

Product Strategy Product classification – service consumer good Product differentiation- form , features , performance , reliability Superior technology CSR initiatives Attractive packaging Catchy taglines Established as a brand itself

Pricing Strategy

Optional – feature pricing Product- line pricing Cost- plus pricing Competitive pricing Distribution pricing

Place Strategy In store placement strategy Already existing strong links in urban area Rural penetration

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Develop marketing channels as strong and penetrated so that it would gain access to remote areas

Strategic location of warehouse Increase wholesale dealers in small towns so that they can go to the

nearby villages National coverage would be dealt with by increasing the company’s

warehouses and creating C&F agents in the smaller cities

Promotion Strategy Media Radio Hoardings Consumer promotion Fragrance oriented and eco friendly Newspaper Various promotional offers P & G is spending 30-35 % of its sales in Advertisement and

Promotion which is highest in the industry, HUL expends only 15% of sales on Advertisement and Promotion.

Price

Costs of the products are subject to fluctuations, particularly due to changes in commodity prices, raw materials and cost of labor, foreign exchange and interest rates. Therefore, success rate of the company is dependent, in part, on its continued ability to manage these fluctuations through pricing actions, cost savings projects, sourcing decisions and certain hedging transactions. It must also manage their debt and currency exposure, especially in certain countries, such as Venezuela, China and India. They need to maintain key manufacturing and supply arrangements, including sole supplier and sole manufacturing plant arrangements. They must implement, achieve and sustain cost improvement plans, including our outsourcing projects and those related to general overhead and workforce optimization. Successfully

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managing these changes, including identifying, developing and retaining key employees, are critical to their success.

Positioning:

The place the product occupies in consumers’ minds relative to competing products. Typically defined by consumers on the basis of important attributes. Involves implanting the brand’s unique benefits and differentiation in the customer’s mind. Positioning maps that plot perceptions of brands are commonly used.

Differentiation can be based on

Products Services Channels People Image

Positioning and Branding Strategy

Developing the Strategy through use of the Creative Work Plan1 Key Fact:A single piece of known information relating to the brand which is agreed to be the leading factor influencing or describing the brand performance. It may be information about the brand itself, the competition, the customer; innovation etc. but it must be a single fact.

2 Problem the advertising must solve:This is a consumer problem. It describes the awareness, perception or behavior of the prospective user which has resulted in the Key Fact and which we wish to change.

3 Advertising Objective:Usually, simply the counterpart to the problem, although there are a great many distinct options. E.g. "Persuade consumers to try my brand" Or "use more of my brand." Or "use my brand in a different

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way." Persuade them that my brand is a viable alternative to brand x".

4. Strategy:

a) Prospect Definition-Both demographics and psychographics.b) Principal Competition.-Not just a list of competitors but a description of the segment from which we wish to obtain businessc) Promise-The single most persuasive agreement one can advance for the brand framed with the customer and the competition in mind.d) Reason Why-The strongest piece of support for the promise. Occasionally there may be more than one piece of support but never a liste) Tone/Character-The tone that messages should convey to provide personality to the message and bring it alive. This is not executional.As you can see, the format is very simple. However, like everything at Procter & Gamble, the use of the simple tool is handled by experts in the field. That is what makes the tool so effective.

Channels of distribution

The path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor. A distribution channel can be as short as a direct transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as wholesalers, distributors, agents and retailers. Each intermediary receives the item at one pricing point and movies it to the next higher pricing point until it reaches the final buyer. Coffee does not reach the consumer before first going

through a channel involving the farmer, exporter, importer, distributor and the retailer. Also called the channel of distribution.

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Distribution network of FMCG:-

 

P&G keeping broaden the market by slashing its no. of distributors down to one-tenth of its size.

85% of its sales come from the top 30 towns & its current volume did not justify a large distributor network.

So P&G will now have one distributer who will operate like super stockist. Which help to replenish its distributors more frequently and reduce their average stock level.

P&G keep growing on ROI (Return on Investment) which resulted in each distributer trying to extend its reach to push up volumes.

With a limited number of distributers, P&G will also not need to invest in C&F agents.

P & G follows wholesale format of distribution for Vicks. P&G is giving 6% margin to the distributor

 Promotional Strategy

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MANUFACTER PLANT

C/F

DISTRIBUTOR

OUTLETS/ SHOPS

END CONSUMER/ USER

“Thank You, Mom” Campaign

P&G's corporate campaign kicked off in April with its first ``Thank You, Mom'' TV spot.

It also has a dedicated ``Thank, You Mom'' Facebook page and app that allows people to send ``Thank you'' messages to their mothers.

P&G is sponsoring more than 150 global athletes. P&G is sponsoring a few athletes like boxer Mary Kom and runner

Kavita Raut, giving their mothers a chance to see them perform and hopefully win at London this year.

P&G expects the campaign to drive $500 million in sales.

SWOT Analysis

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Other threat controversies of the past

Price fixing Toxic shock syndrome and tampons Animal testing Other product Logo controversy Former P&G logo

PASTEL Analysis

Political/Legal statement

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With the U.S economy currently expiriencing a recession other countries may not be far behind. Japan, Britain, Spain, Singapore which together represent about 12 percent of the world’s economy are equally vulnerable as fallout from the U.S worsens their economic weaknesses. Even emerging markets including China are likely to suffer from exports to the U.S diminish.

The developing slump has put pressure in the Japan, U.S and the euro region to follow the lead of federal reserve chairman Ben S. Benmake who in the 1st

quarter of 2009 accelerated interest rate cuts in the U.S with an emergency move to lower the bench mark by 3 quarters of percentage point

The effect of the U.S recession which according to the IMF represents about 21 percent of the total economy is spreading via multiple channels. There is less spending by american consumer and companies are reducing demand for imported goods. The meltdown of the U.S.subprime mortgage market has pushed up credit cost worldwide and forced European and Asian banks to write down billions of dollars in holdings. Tumbling U.S.stocks prices are also dragging down market elsewhere.

ECONOMICS SEGMENT :-

The United States, the country with world’s largest economy, is currently in an economic ressession. Since the recession began in December,2007. The real Gross Demostic Product (GDP), the total value of goods and produce in a year and a basic reason of an economy’s performance, dropped in at an annual rate of more than 6% in the fourth quarter of 2008 . Federal Reserve Chairman Ben Bemanke said condition in the labour market and declines in the value of housing along with tight consumer credit conditions will continue to hold consumers back spending more until the experience a losening of conditions that impact them directly . Demanke said economy activity abroad is also an important consideration in how soon the U.S. economy rebounce. He states “ the steep drop in U.S. exports that began last fall has been a significant drag on domestic production and any improvement on that front would be helpful”.

Socio –cultural segment

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Women from the major target groups for house hold, personal products and consumer goods companies. Several P&G consumer products, such as skin care and beauty care , are adressed directly to women. Other products such as food and beverages, home cleaning and detergents are adressed to women as the primary decision makers or influencers.In addition to the media choice companies have decided on the types of programme they sponsor. So as to attract the target of their audience.

Technological segment

Organizations are rapidly trying to incorporate the Internet into their supply chain practices. Global competitive pressure

And heightened share holder expectations have accelerated the rate of Internet adoption. Electronic markets are websites where buyers and sellers converge to advertise, bid for products in auction, post catalogue information procure inventory and manage inventory procurement of industry specific products such as paper, metal, chemicals, agriculture and industries. These market act as hubs where buyers can procure direct goods and suppliers can market their products.

Micro and Macro Environment

Competitors of P&G in India

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All the Micro and Macro Environment features have been covered in this project

Promotions and Integrated marketing Communications

Integrated Marketing Communication (IMC) is a term that emerged in the late 20th century regarding application of consistent brand messaging across myriad marketing channels. The term has varying definitions depending upon the source cited. These definitions continue to form an ongoing discussion in marketing - and therefore are included here for review, as the differences in these discussions can play a part in how IMC is viewed and utilized.

The first definition for integrated marketing communication came from the American Association of Advertising Agencies (also 4A's) in 1989, defining IMC as "an approach to achieving the objectives of a marketing campaign through a well-coordinated use of different promotional methods that are intended to reinforce each other." The 4A's definition of IMC recognizes the strategic roles of various communication disciplines (advertising, public relations, sales promotions, etc.) to provide clarity, consistency, and increased impact when combined within a comprehensive

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communications plan. Basically, it is the application of consistent brand messaging across both traditional and non-traditional marketing channels.Components of Integrated Marketing Communications

IMC weaves diverse aspects of business and marketing together. These include:

Organizational culture Four P's Advertising Online/internet marketing E-commerce Search engine optimization (SEO) Search engine marketing (SEM) Mobile Marketing Email marketing Content marketing Social Media ( Facebook, Twitter, LinkedIn, Google +, Foursquare,

Pinterest, Youtube, Wikipedia, Instagram) Sales & customer service Public Relations Promotions Trade shows Corporate philanthropy

The following excerpt has been taken directly from their website

Our Foundation

Taken together, our Purpose, Values and Principles are the foundation for P&G’s unique culture. Throughout our history of over 170 years, our business has grown and changed while these elements have endured, and will continue to be passed down to generations of P&G people to come.

Our Purpose unifies us in a common cause and growth strategy of improving more consumers’ lives in small but meaningful ways each day. It inspires P&G people to make a positive contribution every day.

Our Values reflect the behaviors that shape the tone of how we work with each other and with our partners.

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And Our Principles articulate P&G’s unique approach to conducting work every day.

We always try to do the right thing. We are honest and straightforward with each other. We operate within the letter and spirit of the law. We uphold the values and principles of P&G in every action and decision. We are data-based and intellectually honest in advocating proposals,

including, recognizing risks.Leadership

We are all leaders in our area of responsibility, with a deep commitment to delivering leadership results.

We have a clear vision of where we are going. We focus our resources to achieve leadership objectives and strategies. We develop the capability to deliver our strategies and eliminate

organizational barriers.Ownership

We accept personal accountability to meet our business needs, improve our systems and help others improve their effectiveness.

We all act like owners, treating the Company’s assets as our own and behaving with the Company’s long-term success in mind.Passion for Winning

We are determined to be the best at doing what matters most. We have a healthy dissatisfaction with the status quo. We have a compelling desire to improve and to win in the marketplace.

Trust

We respect our P&G colleagues, customers and consumers, and treat them as we want to be treated.

We have confidence in each other’s capabilities and intentions. We believe that people work best when there is a foundation of trust.

We Show Respect for All Individuals

We believe that all individuals can and want to contribute to their fullest potential.

We value differences. We inspire and enable people to achieve high expectations, standards and

challenging goals.

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We are honest with people about their performance.The Interests of the Company and the Individual Are Inseparable

We believe that doing what is right for the business with integrity will lead to mutual success for both the Company and the individual. Our quest for mutual success ties us together.

We encourage stock ownership and ownership behavior.We Are Strategically Focused in Our Work

We operate against clearly articulated and aligned objectives and strategies. We only do work and only ask for work that adds value to the business. We simplify, standardize and streamline our current work whenever

possible.Innovation Is the Cornerstone of Our Success

We place great value on big, new consumer innovations. We challenge convention and reinvent the way we do business to better win

in the marketplace.We Value Personal Mastery

We believe it is the responsibility of all individuals to continually develop themselves and others.

We encourage and expect outstanding technical mastery and executional excellence.We Seek to Be the Best

We strive to be the best in all areas of strategic importance to the Company. We benchmark our performance rigorously versus the very best internally

and externally. We learn from both our successes and our failures.

We Are Externally Focused

We develop superior understanding of consumers and their needs. We create and deliver products, packaging and concepts that build winning

brand equities. We develop close, mutually productive relationships with our customers and

our suppliers. We are good corporate citizens. We incorporate sustainability into our products, packaging and operations.

Mutual Interdependency Is a Way of Life

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We work together with confidence and trust across business units, functions, categories and geographies.

We take pride in results from reapplying others’ ideas. We build superior relationships with all the parties who contribute to

fulfilling our Corporate Purpose, including our customers and suppliers, universities and governments.

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