HARVARD BUISNESS CASE STUDYMARKETING CAPABILITIES

Procter & GambleBy Ajinkya Pujari

•Procter & Gamble (P&G) is a global leader in branded consumer goods.

•Known for iconic category-defining products such as Ivory soap, Crisco shortening, and Tide laundry detergent.

•It was the first company to advertise directly toconsumers, in the 1880s, and it invented“soap operas” by sponsoring radio and TV programming that targeted women.

BackgroundP & G’ s

1945-80…Expanded in Latin America, Western Europe, Japan.

Kept on acquisitioning companies such as Charmin Paper Mill, and established its presence in different markets.

Acquisition of Gillette made them top consumer good company.

Innovation in products kept them blooming.

•P&Gs 2010 sales hit $78.94 billion and net income $12.74 billion

•Market capitalization, $186.63 billion

• Household care was 48% of P&Gs 2010 sales

• Beauty and grooming 34%

•Health and well-being, 18%

ControversiesProcter and Gamble's original logo was

created in 1851 as a large crude cross. This later changed to a man in the moon overlooking 13 stars which is said to remember the 13 colonies. This logo caused a lot of media publicity in the 1980's when rumours spread that the moon and stars logo was a satanic symbol.

ControversiesThere is a passage in the Bible which states

"And there appeared a great wonder in heaven; a woman clothed with the sun, and the moon under her feet, and upon her head a crown of 12 stars which also caused a lot of media publicity.

The company officials denied this as there was no evidence that it was linked to the Church of Satan or any other organisation.

ControversiesFrom 1995 to 2003 Procter & Gamble

unsuccessfully sued Amway over these rumours. Then in 2011 the company successfully sued individual Amway distributors for reviving and propagating the false rumours.

P&G’s

SECRET SAUCE

Innovation and R&DToothpaste with Fluoride (Crest)

Anti-dandruff Shampoo (Head & Shoulders)

Disposable diapers (Pampers)

• The $57 billion acquisition of Gillette in 2005 made P&G the top consumer goods company.

P&G focused on three specific choices:

•to grow P&Gs core brands and categories with an unrelenting focus on innovation,

•to build our business with unserved and underserved consumers,

•to continue to grow and develop faster-growing, higher margin businesses with global leadership potential

Marketing at P&G

Endless resources at their disposal to exploit unmet consumer needs to drive category growth

P&G recognized that building brands is not exclusively or even primarily a marketing activity. Rather it is a systems problem

Steadily lowering the costs of manufacturing and distribution ensured a brands success

P&G had a multibrand strategy,and it managed brands across carefully, with each getting individual support and satisfying a segment of the market

ADVERTISING

Became a worldwide sponsor, specifically to raise its visibility in emerging markets,

WORLDWIDE PARTNERFor the 2012 winter games held in Russia

And For 2016 summer games held in Brazil

National Football League (NFL) sponsorship gave consumers opportunities to engage with the NFL, “just for choosing P&G brands,”

Celebrity Endorsements

P&G’s acquisitions of several beauty companies in the 1990s had brought a number of celebrity endorsers including CoverGirl spokespersons Christie Brinkley, Drew Barrymore, Ellen DeGeneres, and Queen

Taylor Swift also joined the company for the CoverGirl brand. Eva Mendes and Naomi Watts were announced as new spokes models for Pantene shampoo in the spring of 2011

Social MediaManofthehouse.com, which featured household advice for men, including tips.

In 2007, P&G launched two social media sites: Capessa for women on Yahoo! Health and the People’s Choice Community, associated with the People’s Choice awards.

Exhibit 1Ivory soap – its purity says it all. P&G spent about $3 million on the promotion

Tide - Originally 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

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

Exhibit 1Pampers - A blockbuster brand that almost single- handedly created the disposable diaper category for the mass market.Luvs, P&G’s “premium” disposable diaper brand, gave P&G the chance to offer additional features, but also forced the company to learn several difficult lessons as the market became commoditized and competitors matched Luvs’ premium feature

Exhibit 1Crest - The first toothpaste with fluoride, Crest was also a category-defining product that had gained iconic status along with P&G’s other household names.

Crest’s brand franchise beyond toothpaste, with Crest Whitestrips and, through an acquisition, the Spinbrush, both in 2000

Connect and Develop Policy

Institute top ten need list one for each brand

P&G’s R&D productivity increased by nearly 60%,

and the firm’s innovation success doubled, with a

simultaneous drop in cost of innovation. R&D

investment as a percentage of sales dropped from

4.8% in 2000 to 3.4% in 2006.

Connect and Develop Policy

North America

42%

Western Europe

21%

Asia 15%

Other Devel-

oped Na-tions 22%

SALES

Global Business UnitsComprised of three teams-

A. Business Development team focused on innovation in existing categories.

B. Venture team acquiring brands in new areas and nurturing ideas of business development team.

C. Market Development Organization performs Market Research that ensure success of global product in local market.

Issues to be addressed

Brand Dilution

Research and Innovation

Increasing Rivals

TO BE THE BEST INDESIGN !!

Important Changes : P&G

Approach Of Design Unit

Design-Tasting, design case studies for top 200 executives.

P&G design board similar to Mattel and Nike

Helping consumers imagining the functions of products.

TWO

oFirst Moment of Truth –

On the store shelfoSecond Moment of Truth –

Decision of customers on satisfaction on product’s

delivery

Can traditional Way Of Marketing Such As TV ads Can Help P&G Prosper?

Obviously Not……

Setting New MetricsPartnered with firms such as

Project Apollo, a jointventure between media and

marketing researchfirm Arbitron Inc. and VNU, the

Dutch media companythat owned Nielsen.

Setting New MetricsThey collected tracked the media

habits of 30,000 households representing 70,000 consumers.

The data collected, along with information about online usage and

grocery purchases, and frequent surveys of attitudes and lifestyle choices, helped subscribers such as P&G understand its marketing

tactics’ performance.

Setting New MetricsMeasuring brand

loyalty and Customer

relationship

Did they stop?

P&G World-WidePromoted in-store promotions such as coupons, displays, special offers,

and other promotional materials.

Advertising campaign for the 2010 Winter Olympics , a message

thanking moms across the globe.

Commitment to Consumers

Rigorous product and market testing

Process-oriented Over 20000 research studies, invested $500 million

Gathered data on consumer’s habits and practices who purchased P&G products.

Can NeuroMarketin

g Help or Is Dependable??

??

Psychological SurveysAccurately measured the consumers

need

Successfully identified the consumer’s

need

Delivered the products satisfying the

consumers globally.

Electroencephalography (EEG)

EEG technology measured the electrical activities in brain as subject were exposed to the commercials.

This approach held that feelings affected decisions and human behaviour.

TOP BRANDS

OF P&G

WHAT'S AHEAD

FOR P&G???

P&G continued to push toward reaching 5 billion consumers served worldwide, its evolving marketing capabilities took center stage.

Digital environment with efforts like “The Man Your Man Could Smell Like” and Manofthehouse.com

Emotional efforts such as the “Thank you, Mom” and “Loads of Hope” campaigns.

Building on its strengths in R&D.Evolve and innovate as the world’s largest

marketer.

DISCLAIMERCreated By:- AJINKYA PUJARI

PICT PUNE, During Marketing Internship

By Prof. Sameer Mathur , IIM LUCKNOW

END