You have been tasked with introducing the

Old Spice brand in Pakistan!

Old Spice is a global male grooming brand made by P&G,created in 1930s. The overall brand portfolio includes many formsof deodorant sticks, body washes, and body sprays in severalscents under the Old Spice brand as well as other variants andinnovations. Your task is to prepare a product launch plan for

introducing the Old Spice Body Spray line-up in Pakistan. You canintroduce either the entire line-up or just one or more specificvariants (with proper reasoning) as listed on the global Old Spicewebsite

Your plan needs to be holistic, and should cover marketing,finance, supply chain, and sales strategy elements. For each ofthese areas we will provide a set of assumptions and a list ofexpectations in the following pages. Good luck!

ContentsFinancial – Page 1 • Supply Chain – Page 3 • Marketing – Page 7 • Sales – Page 10

FinancialsThe Finance function provides stewardship towards all business decisions, ensuring the

organization reaches profitability goals and adds to shareholder’s return. It is critical to

understand the driving factors of all business decisions and propose solutions that maximize

return and minimize the risks involved.

Your task is to prepare a detailed financial analysis on the Old Spice launch for the next 5 years.

You should understand and question all assumptions behind the launch and prospective

solutions offered by your counterparts. Your key objective would be to prioritize and focus

investment on the right business fundamentals, while delivering a healthy profit growth.

Key Measures

You are expected to fill the table below in absolute numbers and also show each component

as a %age of your Sales Revenue for each year. Additionally you need to include NPV of your 5

year plan. You may also include additional financial measures while explaining your financial

plan.

Key Budgets

• Cost of Goods Sold (COGS): This is the cost of sourcing and transporting your product and will

be determined through the Supply Chain Toolkit

• Marketing Spend Budget: For Year 1, this is capped at $3,500,000. For Years 2-5 your Marketing

Budget is capped at $2,000,000 (you can exceed by using your profit, if any).

• Organization Costs: Costs of running the organization are $300,000 per annum

Year 1 Year 2 Year 3 Year 4 Year 5Brand Financials

Volume

Price (PKR)

Sales Revenue (PKR)

Cost of Goods Sold

Gross Margin (PKR)

Marketing Expenses

Organization Costs

Profit (PKR)

1

Key Assumptions

Your financials must accommodate for the following:

* Inflation has already been applied to all Year 1 Costs

**Sales Tax: is applied on your consumer price

*** Distributor Margin: is the incentive/payment made to your distributor. This amount applies on your total revenue

Key Expectations

You are required to act as the CFO of your brand, keeping into consideration both short term &

long term impact of your decisions on business growth and profitability. Evaluation will be made

on the basis of how you deliver profits by incorporating a sustainable business model. You may

take help of graphs and visual aids to enhance your presentation.

You may be asked to share calculations and rationale regarding the following elements:

1) NPV and Breakeven Profitability

2) Building blocks of profit drivers (Pricing, COGs, Marketing Spend, etc)

Year 1 Year 2 Year 3 Year 4 Year 5

80 85 90 95 100

5% 10% 5% 5% 5%

17% 17% 17% 17% 17%

12% 12% 12% 12% 12%

35% 35% 35% 35% 35%

Assumptions

$/PKR Exchange Rate

Inflation (YOY)*

Sales Tax**

Distributor Margin***

Corporate Tax Rate

2

Supply ChainThe task at hand is to build the downstream supply structure for Old Spice in Pakistan. The key

questions that need to be answered are:

Volume Forecast for Year 1 (Annexure 1)

• What will be the monthly base forecast based on the marketing trends you have established

in the Marketing toolkit?

• What will be the impact of the initiatives you are proposing as per your Sales & Marketing

Strategy?

• What will be the Net Forecast for Year 1?

Distribution Structure (Annexure 2)

• What will be your downstream logistics structure based on your proposed sales strategy?

How many replenishment points (and in what cities) do you propose and,

depending on the transit times, what will be the replenishment frequency?

• Assuming that you are operating with a single distributor who sells your product across

Pakistan, what replenishment strategy will you adopt over the initial 5 years of your launch?

Option 1: Vendor Managed Inventory (You manage the inventory of your customer)

Option 2: Customer Managed Inventory (The customer manages its own inventory and orders

as per requirement)

• Based on your decisions above, what will be the inventory cover in terms of days that needs to

be maintained at the distributor?

Supply Chain Operating Strategy (Annexure 3)

• What will be your strategy to maintain the target service level?

Define the inventory levels in terms of days required at your Central Distribution Centre (DC) to

meet the desired service level

• What will be the warehousing cost (per annum) based on the projected inventory levels?

• What transportation model will you use for replenishments (refer to options in Annexure 3)?

• What will be the Total Logistics Cost/Finished Product Logistics Cost (FPLC) per annum?

FPLC = Import Cost + Warehousing Cost + Transportation Cost

3

Annexure 1 – Volume Forecasting

* For Year 1 the launch itself will be your primary marketing & sales initiative. Use this for Year 2-5

Annexure 2 – Distribution Structure

Assume that the P&G Central DC is in Karachi and you replenish to your distributor locations

from the DC. Get a map of Pakistan and mark the locations which you propose as your

replenishment points.

Based on the above, the national inventory cover at the distributor would be ____ Days.

Forecast in Cases Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Base Forecast

Marketing Initiatives*

Initiative 1

Initiative 2

Sales Initiatives*

Initiative 1

Initiative 2

Total Forecast

Replenishment Points Transit Times Replenishment Frequency Inventory Cover

City 1

City 2

City 3, 4, 5, etc

4

Annexure 3 – Supply Chain Operating Strategy

Service Level and Inventory

To support 100% availability there has to be infinite inventory in the supply chain. One can simply

not cater for the demand of every single unit hence there has to be a tolerance in terms of

availability. The challenge is to maintain a service level of 99.5%. How many days of cover

should you keep at your Central DC (assuming a forecast error of 20%)?

Watch out! Forecasting error can change based on the number of variants you choose to

launch.

Warehousing

Products are stored on individual pallets within the warehouse. Each pallet holds a finite number

of cases (containing a set number of units of product). The rent of each pallet is PKR 150 per

week. This is the only cost element attached to warehousing. Based on your forecasts,

determine the per annum Warehousing Cost.

Transportation

As mentioned earlier, you will have two transport options available to you. These are:

1) Dedicated Fleet: You fix the number of trucks, with specific transporters, on a monthly basis

and use the same fleet for all replenishments (monthly fixed rates + variable charges for

each trip)

2) Non Dedicated Fleet: You contract with multiple transporters and fix the rate of trucks for

future hires. There are no vehicles dedicated to you, hence the contract is applicable

based on the availability of trucks when you require them.

Number of Variants Launched Forecast Error

Less than or equal to 2 20%

3 25%

More than or equal to 4 30%

Pallet Occupation

Product Line/Size Cases per Pallet

Old Spice Body Sprays 90

Fixed Cost p/Month

(per container)

Variable Rent p/trip

(per container)

Capacity

(Cases per container)

Dedicated Fleet PKR 100,000 PKR 80,000 4,000

Non Dedicated Fleet 0 PKR 105,000 4,000

5

Product Import Cost

The assumption here is that each size and variant of your brand is being supplied from a P&G

plant based in a foreign country. There are three types of cost attached in bringing this product

to Pakistan; the manufacturing cost (i.e. the cost of production incurred by the P&G plant),

taxes and import duties levied by the Pakistani government, and the freight cost of shipping the

product from the P&G plant to your warehouse.

Determine the overall import cost of your product using the forecasts calculated earlier, and

the keeping in consideration the cost elements below.

Watch out! Import costs are given in terms of one case of product. Refer to the second table to

find out how many units of product one case contains.

* One container carries 4000 cases of product

Finished Product Logistics Cost (FPLC)

Once you have determined each cost element of supplying the product (i.e. import cost,

warehousing cost and transportation cost), you should be able to determine the total logistics

cost (FPLC). This cost should be reflected in your financials as the sourcing cost/Cost of Goods

Sold.

FPLC = Import Cost + Warehousing Cost + Transportation Cost

Product Sizes

Manufacturing

Cost

(per Case)

Taxes & Duties

(as a function of

import cost)

Freight Cost

(per Container)

Old Spice Body Sprays PKR 540 25% USD 3,000

Case Count

Product Size Units per Case

Old Spice Body Sprays 6

6

MarketingThe task at hand is to come up with a marketing plan for Old Spice in Pakistan. The key

questions that need to be answered in your plan are:

Product Positioning (Where to Play), and

Marketing Strategy (How to Win with Consumers)

Background

I. Historically, Old Spice has been a premium tier brand, with strong potential for success in

the mid tier market also.

II. In Pakistan, the Male Grooming market is a $40 Million per annum business. The overall

penetration of Body Sprays as a category within Male Grooming products is low, since

nearly 70% of the population uses little or no body fragrance. Body Sprays form only $11

Million (27.5%) of the current male grooming category.

III. The size and scale of male grooming market in Pakistan is summarized below:

IV. The Pakistan Male Grooming market represents one of the biggest opportunities for P&G to

explore due to its size and scale.

Market Overview

The age demographic split of the Body Sprays consumers in Pakistan is as follows:

7

Pakistan – Male Grooming Industry

Segments Share Value

Male - Urban 90% $36 Million

Male - Rural 10% $ 4 Million

Total 100 $ 40 Million

Age Group (Years) Split

Under 20 20%

21-35 55%

36 & above 25%

Consumer

Over the past two decades, Pakistan’s economy has shifted from an agricultural base to being

service-based. With increasing urbanization (currently 36%), the availability of new jobs is heavily

skewed towards careers in Marketing, Sales and PR (all of which are image-related industries).

Thus, the trend is going from men in the workforce, who may have worked outside mostly during

the week, to ones that are now indoors, at a computer, taking meetings and attending social

functions for lunch and dinner. Thus, their grooming demands have increased.

The tables below show Body Spray consumption habits for the Pakistani consumer:

The tables below show attributes for premium & mid tier Body Sprays consumers:

8

Consumers who use Body Sprays Total %

Throughout the day (as needed) 18

Once in the Morning 32

Only on Special Occasions 56

Premium Tier Consumer Attributes

High Category Involvement (Regular user)

Equates high price with superior quality

Looks for noticeable scent/smell-protection benefit

Mid Tier Consumer Attributes

Moderate Category Involvement (Semi-regular/Rare user)

Strong interest in using quality, trusted brands but has issues with affordability

Emphasis on past experience and aesthetics as a sign of quality & performance

Competition

The Body Spray segment within the Male

Grooming category has a highly fragmented

competitive landscape, with numerous

brands collectively making up the entire

segment. However one or two noticeable

brands, in recent years, have started gaining

market share from other smaller players. These

two will be your key competitors.

Market Competitors

(Body Spray Segment)

% Value

Share

Lanxe 15.5

Divea 11.0

Others 73.5

Expectations

Within your marketing plan, the following four expectations need to be met:

1. Go to Market Strategy (Product positioning and how to win with consumers)

2. Communication Idea/Unique Selling Proposition

3. Marketing Plan

4. A 30-45 second TV commercial and one Key Visual (Print Ad Poster)

9

SalesThe task at hand is to create the sales strategy for introducing Old Spice in Pakistan. The key

questions that need to be answered are:

Where to Play

We expect you to define the trade channels you will prioritize in order to capture share. It is also

key to define which variants will work best in certain stores and trade channels.

How to Win

Once you define the trade channels in which you will play, we expect you to outline the

strategy of how to stand out in the store, leverage your relationship with the customer, and

catch the eye of the consumer. This has all to do with your pricing strategy, the packaging and

in-shelve placement of your product. A sales pitch can also make or break your strategy, so

come prepared!

Trade Channels

The following channels of trade are available to you:

Top End Retail

Eg: Metro, Makro,

Aghas, Al Fateh

Walk In Stores

Eg: Utility Stores, General

Stores, etc

Cosmetics Stores

Eg: Color Collection,

Gulf Cosmetics Stores

Kiryana Stores +

Bakeries

30%

35%

20%

15%

500

15,000

10,000

100,000

Store Type Size of Trade

Number of

Stores

10

Sales Representatives - Constraint

You have a dedicated sales force of 100 sales reps who are also selling other P&G brands. Each

sales representative covers 50 stores per day and has a total of 600 stores to cover over a period

of two weeks. A sales rep has roughly 5 minutes per sales call. He typically has around 30

seconds to sell a concept to a customer.

Expectations

The following elements need to be addressed in your sales strategy:

• Distribution: How will the sales reps approach their customers? What will be their sales pitch to

their customers?

• Right Pricing: What price points should we introduce this product at? How will we ensure the

correct pricing is reflected in the store? What should the customer margin be (the market

gives an average 10% retailing margin)?

• Shelving/Placement: How will the product be placed in the store (for each size)? What

location in the store will be suitable for an ideal placement? Support with reasoning.

• Merchandising/Positioning: How will the product stand out in the store? What can we do to

ensure it goes in-line with the overall positioning of the brand?

11

GlossarySourcing: refers to the origin of the product. Sourcing cost is the cost attached with importing andwarehousing product from different manufacturing sites across the world

Distribution: is the process that takes product from the warehouse to the customers and consumers.Distribution cost is the per unit cost that needs to be paid to the 3rd party distributor

Organization: refers to all Human and Capital resource cost involved with running the business

Variant: is defined as a member of the same brand family which might differ in flavor, aroma, etc (forexample Zest may have multiple flavor variants; Aqua, Tropical Mango, etc).

Tier/SEC : a consumer segment classified by house hold income

Freight Cost: is the cost of moving one container of product from the sourcing site to the local warehouse.

Case/s: are a measuring unit. A case contains a set amount of single units of product

Pallet: a wooden platform on which cases are stored within a warehouse. Each pallet can hold a finite andpredetermined number of cases

Mileage: refers to the general usage duration of the product

Shelving/Placement: is the physical location in a store where your product will be placed for consumers

Merchandising/Positioning: is the physical location in a store where your product or associated marketingmaterial will be displayed for consumers

Trade Channel/s: is/are the different outlets available to a consumer to shop for goods. Each trade channelwill have a set number of outlets across the country, and has an overall contribution (in terms of usage byconsumers) towards the business.

12

Procter & Gamble Pakistan © 2010. This document is the intellectual property of P&G Pakistan and should only be used

for the purpose/s defined by the Company.