procter & gamble
TRANSCRIPT
Report onProcter & Gamble
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Introduction
Procter & Gamble Co. (P&G, NYSE: PG) is a Fortune 500, American multinational corporation headquartered in Cincinnati, Ohio, that manufactures a wide range of consumer goods. As of 2011, P&G is the 5th largest corporation in the world by market capitalization and 14th largest US Company by profit. It is 10th in Fortune's Most Admired Companies list (as of 2010). P&G is credited with many business innovations including brand management, the soap opera, and the Connect + Develop initiative.
According to the Nielsen Company, in 2010 P&G spent more on U.S. advertising than any other company; the $2.62 billion spent by P&G is almost twice as much as that spent by General Motors, the next company on the Nielsen list. Cannes International Advertising Festival named P&G 2011 Advertiser of the Year.
Procter & Gamble is a giant in household products, and the company, which defined many marketing strategies they now take for, granted. It was the first company to advertise nationally direct to consumers (in 1880) and it literally created the concept of "soap opera" by sponsoring radio and television dramas targeting women. Other inventions included the first Fluoride-based toothpaste (Crest), the revolutionary synthetic detergent Tide, and the first disposable nappy, Pampers. P&G found life in the first years of 21st century more difficult than it may have expected, with earnings below expectations and a series of management shake-ups as a result of under-performance. The group got back on track during 2002 with the purchase of Clairol and Wella and a renewed focus on core products. Following dynamic performance in 2003 and 2004, P&G demonstrated the strength of its recovery with the announcement in 2005 that it had agreed a deal to acquire legendary personal care products rival Gillette. Advertising Age estimated global measured advertising expenditure of $9.4bn in 2007, making P&G the world's #1 advertiser. Click here to access the Adbrands profile (subscribers only); or subscribe to Adbrands.net here. Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary, which identifies key strengths and Thicknesses.
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History
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 persuaded 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 correctly assumed 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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Objective
Broad Objective
They will provide branded products and services of superior quality and value that improve the lives of the world's consumers, now and for generations to come. As a result, they tried to find out the marketing Strategy of Procter & Gamble and analyze their operational activities.
Specific Objective
To compare with the competitors advantages
To identify their Thicknesses
To come up with innovative products
To give the best service
To fulfill customer’s needs and demands
Company
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Three billion times a day, P&G brands touch the lives of people around the world. Their corporate tradition is rooted in the principles of personal integrity, respect for the individual and doing what's right for the long-term.
Purpose
They will provide branded products and services of superior quality and value that improve the lives of the world's consumers, now and for generations to come. As a result, consumers will reward them with leadership sales, profit and value creation, allowing their people, their shareholders and the communities in which They live and work to prosper.
Values
They attract and recruit the finest people in the world. They build Their organization from within, promoting and rewarding people without regard to any difference unrelated to performance. They act on the conviction that the men and women of Procter & Gamble always will be Their most important asset.
Integrity
They always try to do the right thing. They are honest and straightforward with each other. They operate within the letter and spirit of the law. They uphold the values and principles of P&G in every action and decision. They are data based and intellectually honest in advocating proposals, including
recognizing risks.
Leadership
They are all leaders in their area of responsibility, with a deep commitment to delivering leadership results
They have a clear vision of where they are going. They focus their recess to achieve leadership objectives and strategies.
Ownership
They accept personal accountability to meet their business needs, improve their systems and help others improve their effectiveness.
They all act like owners, treating the Company's assets as their own and behaving with the Company's long-term success in mind.
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Trust
They respect Their P&G colleagues, customers and consumers, and treat them as they want to be treated.
They have confidence in each other's capabilities and intentions. They believe that people work best when there is a foundation of trust.
Passion for Winning
They are determined to be the best at doing what matters most. They have a healthy dissatisfaction with the status quo. They have a compelling desire to improve and to win in the marketplace.
They Show Respect for All Individuals
They believe that all individuals can and want to contribute to their fullest potential.
They value differences. They inspire and enable people to achieve high expectations, standards and
challenging goals. They are honest with people about their performance.
They Are Strategically Focused in Their Work
They operate against clearly articulated and aligned objectives and strategies. They only do work and only ask for work that adds value to the business. They simplify, standardize and streamline their current work whenever possible.
Innovation Is the Cornerstone of Their Success
They place great value on big, new consumer innovations. They challenge convention and reinvent the way they do business to better win in
the marketplace.
They Are Externally Focused
They develop superior understanding of consumers and their needs. They create and deliver products, packaging and concepts that build winning
brand equities. They develop close, mutually productive relationships with their customers and
their suppliers. They are good corporate citizens. They incorporate sustainability into their products, packaging and operations.
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They Value Personal Mastery
They believe it is the responsibility of all individuals to continually develop themselves and others.
They enrage and expect outstanding technical mastery and exceptional excellence.
They Seek to Be the Best
They strive to be the best in all areas of strategic importance to the Company. They benchmark their performance rigorously versus the very best internally and
externally. They learn from both their successes and Their failures.
Mutual Interdependency Is a Way of Life
They work together with confidence and trust across business units, functions, categories and geographies.
They take pride in results from reapplying others' ideas. They build superior relationships with all the parties who contribute to fulfilling
Their Corporate Purpose, including their customers and suppliers, universities and governments.
Corporate structure of P& G:
Their pillars — Global Business Units, Market Development Organizations, Global Business Services and Corporate Functions — form the heart of P&G's organizational structure.
Global Business Units (GBU) build major global brands with robust business strategies.
Market Development Organizations (MDO) build local understanding as a foundation for marketing campaigns.
Global Business Services (GBS) provide business technology and services that drive business success.
Corporate Functions (CF) work to maintain Their place as a leader of Their industries.
P&G approaches business knowing that They need to Think Globally (GBU) and Act Locally (MDO). This approach is supported by Their commitment to operate efficiently (GBS) and Their constant striving to be the best at what They do (CF). This streamlined structure allows us to get to market faster.
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They have made P&G’s organization structure an important part of our capability to grow. It combines the global scale benefits of a $83 billion global company with a local focus to win with consumers and retail customers in each country where P&G products are sold.
Operations
Effective July 1, 2007, the company's operations are categorized into three "Global Business Units" with each Global Business Unit divided into "Business Segments" according to the company's March 2010 earnings release.
Beauty Care o Beauty segmento Grooming segment
Household Care o Baby Care and Family Care segmento Fabric Care and Home Care segment
Health and well-Being o Health Care segmento Snacks, Coffee, and Pet Care segment
Management and staff
The board of directors of Procter & Gamble currently has thirteen members: Alan Lafley, Clayton Daley Jr., Charles Lee, Ralph Snyderman M.D., Margaret Whitman, W. J.
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McNerney Jr., Lynn Martin, Johnathan Rodgers, Ernesto Zedillo, Scott Cook, Rajat Gupta, Patricia Woertz, and Kenneth Chenault..
In October 2008, P&G was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in MacLean’s newsmagazine.
Procter & Gamble brands
List of Procter & Gamble brands
Twenty-four of P&G's brands have more than a billion dollars in net annual sales,[13] and another eighteen have sales between $500 million and $1 billion.
Billion dollar brands
Always is a brand of feminine hygiene products, including maxi pads, pantyliners (sometimes called Alldays), and feminine wipes.
Ariel is a brand of washing powder/liquid available in numerous forms and scents.
Braun is a small-appliances manufacturer specializing in electric razors, coffeemakers, toasters, and blenders.
Crest is a brand of toothpaste. Dawn is a brand of dishwashing detergent. Downy/Lenor is a brand of fabric softener. Duracell is a brand of batteries and flashlights. Fusion is a brand of men's Theyt shave razors and is the quickest P&G brand to
have reached $1 billion in annual sales. Gain is a brand of laundry detergent and fabric softeners. Gillette is a safety razor manufacturer. Head & Shoulders is a brand of shampoo. Old Spice is a brand of aftershave and shaving soap. Ivory is a soap. Nice 'n Easy is a hair coloring product. Olay is a brand of women's skin care products. Oral-B is a brand of toothbrush. Pampers is a brand of disposable diaper/nappy. Pantene is a brand of hair care products (conditioners/styling aids). Prilosec OTC is a brand of heartburn medicine co-marketed by AstraZeneca. Pringles is a brand of potato chips. Puffs is a brand of facial tissue. Secret is a brand of antiperspirant and deodorant.
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TAG is a deodorant and body spray. Tide is a brand of laundry detergent. Vicks is a brand name of over-the-counter medicines (Formula 44, Sinex,
NyQuil/DayQuil) Theylla is a brand name of hair care products (shampoo, conditioner, styling, and
hair color).
Product range
The available range in the UK currently includes:
Ariel Biological, biological with bleach for whites: automatic (low suds) powder, liquid, 2x concentrated Power liquid, Excel Gel, tablets, and liquates.
Ariel Color and Style, a biological bleach free product to protect Color: automatic powder, tablets, liquid, 2x concentrated Power liquid, Excel Gel and liquates.
Ariel Sensitive (formerly known as Ariel Non Bio, without enzymes supposedly protecting sensitive skin): automatic powder, tablets, liquid and liquates
Ariel Biological with Febreze: as Ariel biological but with the added freshness of Febreze, sold at a premium price to standard Ariel. Available as automatic powder, tablets, liquid, 2x concentrated Power liquid, Excel Gel and liquates
Ariel Stain Pen: a stain pre-treatment product. Ariel Hand wash: twin-tub powder; also refers to a high-suds version of liquid
sold in smaller bottle: a product to take on holiday, to launder small quantities of clothes.
Head & Shoulders
Head & Shoulders is a brand of anti-dandruff shampoo produced by Procter & Gamble. Head & Shoulders Classic Clean Shampoo is the top selling shampoo in the United States by Dollar Sales.
History
Procter & Gamble researchers first decided on making a new anti-dandruff shampoo in 1950. Nearly a decade of research went into making a new formula, which introduced the product pyrithione zinc into a shampoo.
Head & Shoulders was first introduced to the U.S. market in November 1961, as a blue-green shampoo formula.
The brand's "Extra Strength" product had a cameo role in the 2001 film Evolution, where its startling copper orange color was shown.
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Product list
Classic Clean Shampoo / Classic Clean 2n1 Dry Scalp Shampoo / Dry Scalp 2n1 Ocean Lift Shampoo / Ocean Lift 2n1 Smooth & Silky Shampoo / Smooth & Silky 2n1 Restoring Shine / Restoring Shine 2n1 Refresh Shampoo / Refresh 2n1 Sensitive Care Shampoo / Sensitive Care 2n1 Extra Volume / Extra Volume 2n1 Citrus Breeze / Citrus Breeze 2n1 Intensive Treatment Shampoo (1% selenium sulfide) Intensive Solutions Shampoo (2% pyrithione zinc)
TAG Body Spray
TAG Body Spray is manufactured by TAG Fragrance Company, a subsidiary of Procter & Gamble. It was first released in 2005. From 2005 to 2007, TAG Fragrance Company was part of Global Gillette, until Gillette was bought out by P&G and dissolved.
TAG Signature Series
With the launch of the TAG Signature Series body sprays in July 2009, TAG reintroduced three popular scents with new packaging. By featuring basketball star Carmelo Anthony, skateboarder Rob Dryden and multi-platinum rapper Ludicrous on the bottles, the TAG Signature Series helps TAG expand its audience beyond just hip hop.
History
TAG is a re-incarnation of Right Guard Body Spray, released in 2002. Right Guard Body Spray was discontinued after several months due to very low sales. Gillette then spent the next few years trying to find how to successfully market a body spray for teen boys. As a result of their research, TAG was released in the beginning of 2005. Features inspired by their research included their advertising campaign which "warns" the viewer that women will be attracted to him in a way that will cause them to attack him, the charcoal-grey aluminum cans with silhouettes of women, and fragrances named after dating milestones. Additionally, Gillette decided not to include any sign that Gillette manufactured the product on the product itself or in the advertising. It was decided that Gillette's reputation from its other products would detract from the sale of TAG. In March 2006, Gillette released TAG in a smaller, portable size, TAG Body Shots.
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In 2006 Right Guard was sold to Dial Corporation (along with Soft & Drink and Dry Idea) for $420 million as a condition for Procter & Gamble's Gillette acquisition. TAG remained with Gillette. Dial now markets another derivative of the old Right Guard Body Spray: RGX Body spray from Right Guard. TAG and RGX are both direct competitors of Unilever's Axe. Tag’s and Axe's advertising and packaging are very similar.
Fragrances
Make Moves endorsed by Rob Dyrdek. Make Moves can be described as lively citrus with a fresh splash of watery mist. It allows you to smell sexy without being too in any face. The blend of exotic citruses uplifts and revives you.
Stay Up endorsed by Carmelo Anthony. Stay Up is a sexy merge of watery natural elements with an intriguing night time bottom note. It makes you feel fresh and clean and ready for anything. The fragrance smells like it should be worn by a fresh clean guy with an upscale allure.
Get Yours endorsed by Ludacris Get Yours is a combination of daytime refreshing citrus on top of a cascade of seductive woody and spices. It’s the perfect blend of masculine traditional forger’s elements with a twist of fun and exciting citrus.
Ivory (soap)
The name "Ivory" refers to a series of products created by the Procter & Gamble Company (P&G), including varieties of a white and mildly fragranced bar soap that became famous for its pure content and for floating in water. Over the years, the bar soap has been altered into other varieties. P&G research revealed in 1992 indicated work in progress to create other varieties that do not float as the original and would sink due to the altered ingredients but avoid dissolving too fast. New varieties of Ivory soap contain glycerin, do not dry the skin as quickly, and do not float as well. In October 2001, P&G tested the sinking bar soap as part of an advertising campaign to see if people would notice the sinking bars, even if given a cash reward.
History
Because Ivory is one of P&G's oldest products (first sold in 1879), P&G is sometimes called "Ivory Tethers" and its factory and research center in Saint Bernard, Ohio is called "Ivory dale". Ivory bar soap is whipped with air in its production and floats in water. According to an apocryphal urban legend, later discounted by the company, a worker accidentally left the mixing machine on too long and the company chose to sell the supposedly ruined batch because mixing air longer did not change the basic ingredients of the soap. When appreciative letters about the new, floating soap inundated the
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company, P&G ordered the extended mix time as a standard setting. However, company records indicate that the design of Ivory was not the result of accident. In 2004, over 100 years later, the P&G company archivist Ed Rider found documentation that revealed that chemist James N. Gamble, son of the founder, had discovered how to make the soap float and noted the result in his writings. Ivory's first slogan "It Floats!" was introduced in 1891. The product's other will-known slogan, "99 44/100% Pure", was based on the results of an analysis by an independent laboratory the founder's son, Harley Procter, hired to demonstrate that Ivory was more pure than the castile soap then available.
Ivory soap had been more caustic in comparison to some milder bars such as Dove, a non-soap synthetic detergent bar. Plus, some consumer investigations had found that Ivory's antimicrobial activity was better than other skin soaps, even those containing antibacterial such as triclosan. A postulate for this effectiveness is the ability of the soap to lyses bacteria efficiently, and to rinse cleanly. The drawback to the soap was its drying effect on the skin, as it had easily dissolved natural oils. Of all the commercial soaps, Ivory has been considered the best by holistic health people, but was criticized for what it did not contain, glycerin. One reason was that glycerin was expensive and would raise the cost of the bars, which had the value of being about the least expensive soap available for people of modest means.
Pricing Policy
CINCINNATI - Procter & Gamble is betting miles of shelf space that its new everyday-low-price (EDLP) policy will benefit P&G's brand equity and at the same time be accepted - however reluctantly at first - by the majority of chain drug, food and mass merchandise outlets that now rely on deals and trade promotions.
P&G's new policy affects around 40 percent of its product lines, including food, beverage, laundry, household cleaning and some HBA, according to P&G's public affairs spokesperson Ann J. Smith.
The EDLP policy is intended to bring several advantages to the manufacturer, including a lower average shelf price to strengthen brand recognition against generic and private labels, and also to make production more efficient by eliminating surges caused by forward buying.
Over the past decade, trade promotion allocation has increased as a percentage of overall marketing dollars to reach 44 percent in 1990 compared with 34 percent a decade earlier, in a study by Donnelley Marketing. According to management consultant Win Theiler, president of Memphis-based Winston Theiler & Associates, Inc., only 25 to 40 cents of a promotional dollar reaches the consumer.
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When buying branded product on deal, industry are generally acknowledge that some retailers reap profits by taking long margins or by diverting part of the buy. But from an efficiency point of view, says Theiler, "in HBA, retailers may be buying from 70 to 90 percent on deal. If a retailer is buying 70 percent on deal, it's better to take contract pricing and thigh it on a 12-month basis, eliminating the need for forward buying, taking out the peaks and valleys and discarding diversion."
The issue appears to be so sensitive and new to the trade that not a single retailer called agreed to be quoted for this article.
P&G's EDLP policy has been in effect since the turn of the year, but no all accounts have seen the presentation, or as an executive from a mid-sized southern drug store chain remarked: "at this point they haven't yet seen a formal proposal from P&G."
The Vons Companies, the largest supermarket and combo operator in Southern California, reportedly has challenged P&G's EDLP strategy. Although the supermarket/combo officials declined to comment, P&G's Smith told Drug Store News that Vons and P&G "are working together now to resolve this issue."
A merchandising executive with another large combo chain said, "For any retailer who has built business with [trade] allowances and who has a system that alerts them to deals, it's a tremendous change." He noted that even the EDLP-driven retailers buy on deal, adding, "Wal-Mart and others have promotions in the aisles - and look at the club stores."
Analyst Andrew Shore of Prudential Securities in New York said of the many retailers who apparently disapprove of P&G's pricing policy: "Vons is the first to lend their name to it. Everyone on the retail side has been reluctant to speak out."
Some retailers told Drug Store News that with everyday low pricing, many chains will opt to take a long gross margin and negate P&G's intention to focus on brand value. Industry insiders also think some retailers will retaliate by denying selected P&G products prime shelf space. By eliminating trade promotions, P&G could lose market share to manufacturers who pony up for promotions. But Shore points out that since P&G has around 32 No. 1 products across dozens of categories, pushing alternative product could be a costly retail protest. "If consumers don't want it, which cares what you promote?" asks Shore.
One combo chain executive complained that "promotion dollars create excitement and they will be reduced with this program." Although P&G's EDLP policy slashes trade promotions, Smith acknowledges that it still provides for ancillary promotional funds.
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Theiler notes market development funds could also "add freshness to a mundane everyday strategy."
POS data capture is changing distribution logistics and category management. As one marketer noted, the alleged "partnering" strategy of linking a mass merchandiser such as Wal-Mart directly to a manufacturer (for example, P&G) for stock replenishment creates a systems problem for the manufacturer: two different systems will be needed to serve the high-low or on-deal retailer and another for the dead net or EDLP retailer. Clearly two systems are less efficient than one.
In the view of Shore and Theiler, P&G's move is progressive. Many retailers would disagree. "I think P&G clearly recognizes the need to put efficiencies into the distribution system in the U.S., and I think the move - while it is very bold - is an appropriate move," said Theiler.
But a retail chain executive notes, "there have been studies done that show the profit for the retailer is reduced" when a manufacturer imposes everyday low prices, and he adds, "It’s a tremendous change. I would question whether it's in everyone's best interest."
P&G Channel of Distribution
Procter & Gamble (P&G) has signed a contract with The Beauty Systems Group (BSG) that will consolidate the company's position as the market leader in the professional hair care industry.
BSG has the largest chain of professional beauty supply stores in the US with more than 720 stores - providing P&G with a mass retail base to promote its bestselling products, such as they’ll Professionals. The agreement will see BSG using a direct sales targeted approach to the distribution of P&G professional care products in the north and southeastern parts of the US.
P&G says that the move is capitalising on changing distribution opportunities in the North American marketplace. Commenting on the agreement with BSG, Reuben Caranza, md of P&G professional care exclusive line, said: “They will be an excellent partner in the southeast, and their targeted approach for salon distribution, the first of its kind in the US, will serve the needs of individual salons based on their business model.”
The marketing concept
The term marketing concept pertains to the fundamental premise of modern marketing. This can be laid out as recognising consumer needs/wants, and making products that correlate with consumer desires.
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Marketing orientations
An orientation, in the marketing context, relates to a perception or attitude a firm holds towards its product or service, essentially concerning consumers and end-users. There exist several common orientations:
Product orientation
A firm employing a product orientation is chiefly concerned with the quality of its own product, and not in necessarily ascertaining consumer desires. A firm would also assume that as long as its product was of a high standard, people would buy and consume the product. Hover, they utilizing a product orientation has a prime disadvantage of making a firm lose out to competitors, who may produce technologically superior goods that engender higher consumer demand and thus market share. A product orientation may perhaps work best in a monopolistic market form, due to the inherent high barriers to entry within a monopoly.
Sales orientation
A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Consequently, this entails simply selling an already existing product, and using promotion techniques to attain the highest sales possible. Such an orientation may suit scenarios in which a firm holds dead stock, or otherwise sells a good that is in high demand, with little likelihood of changes in consumer tastes diminishing demand.
Production orientation
A firm focusing on a production orientation specialises in producing as much as possible of a given good. Thus, this signifies a firm exploiting economies of scale, until the minimum efficient scale is reached. A production orientation may be deployed when a high demand for a good exists, coupled with a good certainty that consumer tastes do not rapidly alter (similar to the sales orientation).
Marketing orientation
The marketing orientation is perhaps the most common orientation used in contemporary marketing. It involves a firm essentially basing its marketing plans around the marketing concept, and thus forging products to suit new consumer tastes. As an example, a firm would employ market research to gauge consumer desires, use R&D to develop a good attuned to the revealed information, and then utilise promotion techniques to ensure
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persons know the good exists. The marketing orientation often has three prime facets, which are:
Customer orientation
A firm in the market economy survives by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even existence as a going concern.
Organizational orientation
All departments of a firm should be geared to satisfying consumer wants/needs.
Mutually beneficial exchange
In a transaction in the market economy, a firm gains revenue, which thus leads to more profits/market share/sales. A consumer on the other hand gains a need/want that is satisfied, utility, reliability and value for money from the purchase of a good. As no one has to buy goods from any one supplier in the market economy, firms must entice consumers to buy goods, and thus seek to satisfy consumers' utility. If an exchange is not mutually beneficial in n
SWOT of P&G
Objective: “They will provide branded products and services of superior quality and value that improve the lives of the world's consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing their people, Their shareholders and the communities in which They live and work to prosper.”
Strengths
Diversification: Product diversification with about 300 products. The diverse product mix includes personal and beauty items, household products, health and their illness, Baby and family and pet care and nutrition.
Research and development: P&G invests 3 - 4 % of Net outside Sales in research and development (R&D). This amount easily exceeds their leading competitors, among consumer products companies. They also have more Ph.D.s working in labs around the world than the combined science and engineering faculty at Harvard, MIT and Berkeley.Innovation: In fiscal year 2004-05, P&G was granted 27,000 patents globally. P&G has produced a number of new products like diapers; shampoo and conditioner in one;
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toothpaste that prevents osteoporosis. Its diversified product mix helps in connecting technology across categories and brings innovation to the product.Fat profit margins: P&G announced net sales for the April - June quarter to $21.3 billion, the growth of 10%. This is the seventh year and 24th consecutive quarter in which P&G delivered top-line growth above the company's targets.
Strong brands: P&G has 13 Billion-Dollar Sales Brands such as: Always, Ariel, Bounty, Charmin, Crest, Downy/Lenor, Folgers, Iams, Pampers, Pantene, Pringle's and Tide. The total sales of these thirteen ‘billion dollar brands’ taken together, would make a Fortune 100 company in itself. Brand building: Advertisement expenditure of P&G is twice than the next company on the list of companies which spend highly on advertising.
P&G focuses on five core strengths required to win in the consumer products industry. We are designed to lead in each of these areas.
Consumer Understanding
No company in the world has invested more in market research than P&G. They interact with more than five million consumers each year in nearly 100 countries. They conduct over 20,000 research studies every year, and invest more than $400 million annually in
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consumer understanding. The insights we gain help us identify opportunities for innovation and better serve and communicate with their consumers.
Innovation
P&G is widely recognized as the industry’s global innovation leader. Nearly all organic sales growth over the past decade has come from new brands or improved products. They collaborate with a global network of research partners, and more than half of all product innovation coming from P&G today includes at least one major component from an external partner. Their contributions have consistently helped us earn honors from the Symphony IRI New Product Pacesetters Report—the annual list of the biggest innovations in our industry. Over the past 16 years, P&G has had 132 products on the top 25 Pacesetters list—more than our six largest competitors combined. P&G earned 5th place among Fortune’s 2011 list of the World’s Most Admired Companies. And as of April 2011, P&G has won 22 “Product of the Year” recognitions, as voted on by consumers in the US, UK, France, Holland, Italy, Spain, and South Africa.
Brand-Building
P&G is the brand-building leader of their industry. They’ve built the strongest portfolio of brands in the industry with 50 leadership brands that are among some of the world’s best-known household names–and which together make up 90% of P&G’s sales and more than 90% of profits. Twenty-four of these brands each generate more than $1 billion dollars in annual sales.
The Inspirational Power of Purpose
P&G Global Marketing & Brand-Building Officer Marc Pritchard explains how the Company is using purpose-driven brand building and creative innovation to thrive even in uncertain economic conditions. Pritchard introduces and discusses several commercials for P&G brands, illustrating the Company’s core marketing strategy: that by improving people’s lives, P&G can do well by doing good.
Go-to-Market Capabilities
They’ve established industry-leading go-to-market capabilities. P&G is consistently ranked by leading retailers in industry surveys as a preferred supplier. We’re also frequently ranked as the industry leader in a wide range of capabilities, including clearest
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company strategy, brands most important to retailers, strong business fundamentals and innovative marketing programs.
Weaknesses
Non-profitable products: Running products which may not be profitable but still had to do it because of keeping up with the market presence strategy. Few such products are Crest as toothpaste, Always hygiene pads, and dawn dishwashing bar.Inadequate quality control: With large number of product profile, the quality control of all the products has deteriorated. In September 2006, P&G suspended sales of the cosmetics in China after they are found by the authorities to contain the banned substances, chromium and neodymium. The case of Rely tampon also establishes this fact. Mass appeal products at premium price: Some mass appeal products like Pringles are priced very high as compared to its competitor’s products.
Opportunity
Developing markets: The economies of China and India are growing at a very fast pace. The company currently competes in only about 10 of its top 25 categories in most developing countries. This provides P&G with an opportunity to enhance its market share as they’ll as expand its presence in other categories.
Growing bottled water market: Bottled water is a fast-growing segment in the world’s food and beverage market owing to increasing health concerns. In May 2007, P&G launched PUR Flavor Options, a product that allows consumers to choose flavored or unflavored water from their home water filter. P&G could leverage its position in the bottled water segment to capitalize on the growing demand for packaged and flavored water. Growing healthcare industry in the US: There is a growing opportunity for disinfectant manufacturers in the healthcare industry in the US. The aging US population would lead to increased healthcare spending in the US. P&G is positioned in the prescription drugs and healthcare segments and can leverage this trend to boost both its revenues and market share. Changing consumer preference: With the consumer preferences and choices, P&G because of its huge R&D base and Connect + Develop program is placed to come up with new and innovative products that may suit the customer needs.
Threats:
New regulations: Due to increasing public pressure, the US Food and Drug Administration (FDA) are expected to impose stringent quality norms on cosmetic products. New regulations may delay launch of new products and result in higher product
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development expenditure. These regulations may impose new liabilities or increase operating expenses, either of which could result in a decline in profitability.Competition from local low cost players: P&G faces competition from local, low-cost manufacturers in developing countries.
Customer concentration: A significant portion of the revenues from the sale of products is derived from a few customers. Sales to Wal-Mart Stores, Inc. represent approximately 15% of its total revenue in 2007. The company gets more than billions of dollars from seven retail customers. The loss of any of these customers will lead to a sharp decline in its revenues.
Conclusion
Procter & Gamble has been accepted successfully by the world wide consumers. They are providing branded products and services of superior quality and value that improve the lives of the world’s consumers. Their human research department was highly trained,
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skilled and experienced. They have more PhD’s working in labs around the world than the combined science & engineering faculty at Harvard, MIT, & Berkeley. They have diversified with about 300 products. They are effective in research and development department. By using research and development, they had come up through innovative products. They are best in quality and brand reputation. Procter & Gamble is now leading in the consumer markets.
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