Marketing Capabilities

What is P&G?

‣ a global leader in branded consumer goods

‣ two dozen $1 billion brands known worldwide

‣ pioneered marketing strategies - considered a standard industry practice

What is P&G?

Who are the Players?

CEO Bob McDonald2010-2013

CEO A.G. Lafley 2000-2010

CEO Durk Jager1999-2000

Jim StengelCMO

Claudia KotchkaVP, Design & Strategy

Situation Analysis

Early marketing campaigns like Ivory,Tide, Crest, Pampers, Always

Pursued international expansion - entered markets in Latin America, Western Europe, Japan

Extended into new lines of businesses through expansions

Innovations round out company’s portfolio - entered new categories

In the 1980s, P&G ramped up global expansion - developed first global brands, Always/Whisper, Pringles, and Pantene.

In the early 1990s, the U.S.’s top cosmetics company with the acquisition of Noxell and Max Factor.

Acquisition of Gillette in 2005 made P&G the top consumer goods company

In 2010, P&G’s stated corporate mission to reach “More Consumers, In More Parts of the World, More Completely.” through continued innovation.

Pushing towards reaching 5 billion consumersP&G’s 2010 sales hit $78.94 B; net income, $12.74 B; and market capitalization, $186.63 B

Situational Analysis - 2/3

Sales By Category

Health & Well Being 24%

Beauty & Grooming 31%

Household Care 44%

Sales By Region

Latin America9%

Central & Eastern Europe, Middle East & Africa13%

Asia15%

Western Europe21%

North America42%

Situational Analysis - 3/3

Objectives

Understanding the reasons behind P&G’s massive success in the Consumer Goods

Sector

Using qualitative analysis to evaluate and compare the outcomes of various

methodologies

Understanding the evolving Marketing Capabilities & Strategies

Issues

Consumer Centric

Marketing MixMarket Spending

Innovation andR&D Modern Day

Marketing

Marketing Strategy

Innovation and R&D

Innovation and R&D

• P&G marketing’s secret sauce. • Replaced the trial and error methods • Took a scientific approach - connected R&D with company’s sales and

marketing • Crest toothpaste - first toothpaste with fluoride • Head and Shoulders dandruff shampoo • Pampers - disposable diapers

Innovation and R&D - Connect and Develop

• 50% of innovation and new products to come from P&G’s network of labs, and 50% through the labs

• Convince the company, stuck in a “not invented here” approach • R&D organization now included 7,500 inside the firm and 1.5 million beyond

Objectives

• The firm instituted a top-10 needs list, one for each business and one for the company overall

• Included things such as “reduce wrinkles, improve skin texture and tone” and “create softer paper products with lower lint and higher wet strength”

• Use of technology game boards• Network of 70 technology entrepreneurs - located in six connect-and-develop hubs (in

China, India, Japan, Western Europe, Latin America, and the U.S.)

Strategy

Innovation and R&D - Connect and Develop

Innovation and R&D - Connect and Develop

• Identified proven technologies, packages, and products that P&G could improve, scale up, and market on its own or through partnerships

• Swiffer Dusters, Olay Regenerist, Crest Whitestrips, and Crest Spinbrush• R&D productivity increased by nearly 60%• The firm’s innovation success doubled• Drop in cost of innovation.• R&D investment as a percentage of sales dropped from 4.8% in 2000 to 3.4% in 2006.

Outcome

Originated Outside FirmKey Elements Discovered ExternallyOthers

But…

The firm struggled to control costs, and its stock slid from $118 to $52 over 18 months.

Market Strategy

Marketing Strategy

Product Mix

Marketing Strategy - Multibrands

Market Segmentation & Product Differentiation

Premium Brand

Cleaned colors safely

Fresh Scent

Contains Bleach

Marketing Strategy - DesignObjectives

• To make P&G the top product-design company in the world • Departure from P&G’s past focus on function, performance, and price • Not use design as an antidote to its function-driven process but rather as a complement

“We have an innovation process and we want to make sure that design is plugged in at the front end” - Lafley

Strategy

Marketing Strategy - Design

• “Design Tasting” - featuring design case studies for P&G’s top 200 executives • P&G design board • The Clay Street Project • Lobby of P&G’s Cincinnati headquarters featured a faux home and store so that employees could physically view and experience the “two moments of truth” every day.

Marketing Strategy - Design

Consumer’s use of product and decision

whether it delivered on it’s promise

On the store shelf

2

M o m e n t s

o f

T r u t h

Outcome

Marketing Strategy - Design

The new emphasis shifted

the company toward a more

consumer-centric marketing approach

Consumer- Centric

Approach

Consumer-Centric Approach• More focused attention to in-store promotions such as coupons, displays,

special offers, and other promotional materials • Pampers’ 2008 campaign

Consumer-Centric Approach - Consumer Research

Quantitative

• Blind Tests• Concept and Use Tests• Quality monitoring• Large-scale studies of habits

and practices of regular customers

Qualitative

• Focus Group Discussions• Personal Interviews of

customers at home• In context visits• In-store interviews

• 20,000 research studies each year• Invested nearly $500 million into developing and executing these studies

Strategy

Consumer-Centric Approach - Consumer Research

• New marketing and promotional opportunities: VocalPoint • P&G’s word-of-mouth program that enrolled more than 600,000 women to pitch its products • P&G also gave them samples, coupons, and opportunities to share their opinions with P&G

Outcome

Consumer-Centric Approach - Neuromarketing• Feelings affected decisions and human behavior• Psychological surveys to measure mood • Electroencephalography (EEG) technology to measure electrical activity in the brain

as subjects were exposed to commercials

To better understand how its customers felt—not about a

product such as Pantene, but about having a “bad hair

day.”

The study found that users of a new version of Pantene

“reported more joy than those in the control group.

Marketing Mix

Marketing Mix - Advertising• Ivory, the first product to be advertised directly to consumers• Soap operas owed their existence to P&G • Developing a “media neutral” idea• Bulk of spending towards television• Other modes - outdoor displays, mobile devices - Japan VS• Shift toward more design- and emotion-driven advertising -

transformational approach

Marketing Mix - Sponsorships• P&G, a U.S. Olympic team sponsor for the 2010 Games, became a worldwide sponsor• National Football League (NFL) sponsorship gave consumers opportunities to engage with the

NFL, “just for choosing P&G brands”

Marketing Mix - Celebrity Endorsements

Modern Day Marketing

Digital Marketing

• P&G’s digital activity had been limited to its operation of brand websites• Expanded its digital content offering in 1999 with the launch of pampers.com • Provided information for new and expectant mothers and served as an

interactive forum • BeingGirl.com, launched in 2000

Digital Marketing

• First mobile marketing ad campaign in 2006 to promote Crest Whitening Plus Scope toothpaste.

• “My Black is Beautiful” products, targeting African American women, introduced two web series in 2010 to showcase its products: Buppies and My Black is Beautiful

P&G’s Old Spice television commercial and YouTube sensation, “The Man Your Man Could Smell Like”• Old Spice - 3rd most subscribed channel• 1.37 million individual views in 3 days• 94,000 followers on twitter - response campaign• A milestone

Social Media Marketing• In 2010, P&G began using Facebook as a marketing tool • Pringles and Old Spice had 9 million and 1.3 million fans • P&G used Facebook as a marketing supplement, not a replacement • Manofthehouse.com aimed to “speak to the whole man.” • Featured household advice for men, including tips on grilling burgers, cleaning toilets, and disciplining

children

Building on its strengths in R&D,

consumer research, and

product performance,

P&G continued to evolve and

innovate as the world’s largest

marketer.

Disclaimer

Created by Kanika Gupta, JIIT Noida during a Marketing Internship under Prof. Sameer Mathur,

IIM Lucknow