Case Study Presentation

By Anurag Roy

Introduction

Procter & Gamble (P&G) is a global leader in branded consumer goods The company managed two dozen $1 billion brands known worldwide, including Bounty, Crest, Downy/Lenor, Febreze, Gillette, Iams, and Pampers. It was the first company to advertise directly to consumers, in the 1880s, and it invented “soap operas” by sponsoring radio and TV programming

Some of P&G’s Billion Dollar Brands

P&G Product Line

History

Started by William Procter and James Gamble as a small business.Pursued international expansion as early as the 1930s, and from 1945 to 1980 it began to enter markets in Latin America, Western Europe, and Japan. It expanded into new lines of business through acquisitions, such as Charmin Paper Mill (1957), which opened up the household paper products market (toilet paper, paper towels) for the company, and Folgers Coffee (1963), giving P&G a presence in the food category.

P&G Growth History

In the 1980s, P&G ramped up its global expansion and developed its first global brands, including Always/Whisper, Pringles, and Pantene and it continued to acquire brands.By the early 1990s, the company had become the U.S.’s top cosmetics company.In 2003, the company entered the pet-care market by acquiring pet food manufacturer Iams (for $2.3 billion).

What is Current Situation?

P&G is a seasoned marketer with strong consumer research, a powerful innovation network, an evolving marketing strategy, strong marketing talent.World’s largest financial commitment to advertising, spending $8.68 billion in 2010. 2010 sales hit $78.94 billion; net income, $12.74 billion; and market capitalization, $186.63 billion.2 Household care was 48% of P&G’s 2010 sales; beauty and grooming, 34%; and health and well-being, 18%. North America represented 42% of sales; Western Europe, 21%; Asia, 15%; Central and Eastern Europe and the Middle East and Africa, 13%; and Latin America, 9%; developed markets represented 66% of 2010 sales.

Innovation and R&D: P&G Marketing’s Secret Sauce In 1887, a nephew of one of P&G’s founders, who had a chemistry degree, set up an analytical lab for the company, laying the foundation for a professional R&D division and establishing one of the first corporate labs in the field of consumer goods.In June 1999, under then-CEO Durk Jager, P&G reorganized to boost growth after net sales slowed to 2.6% growth from the previous year. P&G hoped the net result would be “bigger innovations, faster speed to market, greater growth—innovation vitality.”

Innovation and R&D

Led to such successful product introductions as the Swiffer Dusters, Olay Regenerist, Crest Whitestrips, and Crest Spinbrush.

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

Marketing Strategy

When Lafley took over in 2000, he set a goal to make P&G the top product-design company in the world, a departure from P&G’s past focus on function, performance, and price. Named Jim Stengel as chief marketing officer (CMO). Lafley then created a new design unit, separate from P&G’s other business units, and named Claudia Kotchka as vice president for design innovation and strategy, giving her decision-making responsibility equal to that of P&G’s CMO and head of R&D. It drove a new, intensified focus on design, married to P&G’s long-standing focus on product functionality and price.

Marketing Strategy

Sought to bring design to every step of product development and introduce a culture of design to P&G.The influx of design had a strong impact on P&G’s product development; design informed the innovation process and even changed the function of some products, such as the Tampax Pearl’s more comfortable applicatorP&G strove to develop metrics that measured brand loyalty and customer relationships.

Commitment to the Consumer

■ P&G had a long history of rigorous product and market testing ■ P&G invested more in market research than any company in the world, interacting

with more than 5 million consumers in almost 100 countries■ Innovative approaches to consumer engagement led to new marketing and

promotional opportunities: one example was VocalPoint, P&G’s word-of-mouth program that enrolled more than 600,000 women to pitch its products.

■ P&G’s culture of performance-driven products, as the firm leveraged new and innovative ways to learn directly from consumers, while also building the opportunity to create more direct, one-on-one relationships with the target audiences.

Advertising

■ P&G had been a marketing trailblazer from the outset ■ Soap operas owed their existence to P&G: the daytime drama As the

World Turns was launched in 1956 to specifically target women in their homes. Another World, The Young and the Restless, and Guiding Light were other longtime P&G-sponsored daytime dramas.

■ In 2002, P&G reconsidered its advertising strategies to better meet the company’s global markets and consumers. Working with agencies, P&G began by first developing a “media neutral” idea47 that could be translated across a range of media

Celebrity Endorsements

■ P&G’s acquisitions of several beauty companies in the 1990s had brought a number of celebrity endorsers into the P&G stable

■ Examples- CoverGirl spokespersons Christie Brinkley, Drew Barrymore, Ellen DeGeneres, and Queen Latifah, television show Modern Family actress Sofia Vergara, Taylor Swift, Eva Mendes and Naomi Watts, Gisele Bündchen, Stacy London, and Teri Hatcher.

■ Also feature sportspeople like tennis star Roger Federer, Sebastian Vettel, the “youngest ever”61 Formula One champion, U.S. Olympic athletes.

Digital Marketing

■ Throughout the 1990s, P&G’s digital activity had been limited to its operation of brand websites, but the firm expanded its digital content offering in 1999

■ Launched its first mobile marketing ad campaign in 2006

■ It planned to reach a billion new customers by 2015 and it’s worldwide Olympic sponsorship, announced in 2010, was one part of this effort.

■ P&G’s line of “My Black is Beautiful” products, targeting African American women, introduced two web series in 2010 to showcase its products

■ P&G’s Old Spice television commercial and YouTube sensation gave P&G its greatest exposure in the online community in 2010, and bridged the power of digital and social media.

Iconic Brands

Ivory First product to be marketed directly to consumers. Relied heavily on magazine advertising focused on a clear message of Ivory’s purity. Ads ran in magazines aimed at women in their 30s with children, primarily The Oprah Magazine, People, Parenting, and Parents. P&G spent about $3 million on the promotion, including in-store merchandising displays.

Iconic Brands

TideOriginally developed during the height of World War II, Tide (called Product X) was not just a new soap, but a new synthetic formula for a detergent—a breakthrough product. To gain a two-year lead on the competition, the company decided to risk going straight to market, despite the chance Tide would cannibalize P&G’s other laundry soap products. With the introduction of top-loading washing machines, P&G played up Tide’s compatibility with the new appliances, which were enjoying huge popularity after World War II. Tide’s two-year lead on the competition made speed-to-market an ingrained imperative for the firm, having an impact on all aspects of the P&G system.

Iconic Brands

PampersA blockbuster brand that almost single-handedly created the disposable diaper category for the mass market, Pampers evolved out of P&G’s experiments in expanding its paper products line in the 1950s. Pampers’ success, was the manufacturing efficiencies P&G managed to achieve, keeping up with demand while keeping costs down and making the product affordable for the average family. Pampers.com, launched in 1999, created an early online community for mothers and other family members involved in child care to find information, exchange tips and stories, and get discounts and other promotional materials for P&G products.

Iconic Brands

CrestThe first toothpaste with fluoride, Crest was also a category-defining product that had gained iconic status along with P&G’s other household names. P&G worked with professional organizations such as the American Dental Association However, Crest’s success also helped ensure the generic status of fluoride toothpaste, and in the 1980s, Crest slipped in the market as baking soda and whitening additives bolstered competitors’ offerings. P&G responded to these market threats by expanding Crest’s brand franchise beyond toothpaste.

Iconic Brands

AlwaysAlways sanitary pads, launched in 1984, became P&G’s first truly global product. Was behind some of the biggest innovations in feminine hygiene history, including the introduction of winged pads in 1985 and ultra-thin pads in 1990. As a global brand, P&G adapted Always (in size and shape) to appeal to women across the globe, and in some international markets, it was the first feminine hygiene product ever marketed to consumers.

Summary■ Introduction ■ Product Line■ History ■ Growth■ Current Situation■ Innovation and R&D■ Marketing Strategy■ Connecting to the consumer ■ Advertising■ Celebrity Endorsements■ Digital Marketing ■ Iconic Brands

By Anurag Roy for Marketing Management Internship of Prof. Sameer Mathur of IIM-L.

Anurag Roy Prof. Sameer Mathur