Proctor & GambleWE’RE ALSO CHINESE

Global Marketing SWU Fall 2010, Prof. Lee Presenter: Tim Wilson 20082901

12-1-10 Seoul

http://en.wikipedia.org/wiki/File:Procter_and_Gamble_Logo.svg

Multi-National Corporations (MNCs)

In the last 50 years MNCs have focused onChina, India, and other currently emerging

economies as cheep sources of labor. More recently the MNCs have notices the fast growing number of consumers in thesesame countries, who's spending power israpidly increasing along with their appetite

for consumer goods.Focus China and Proctor & Gamble

Corporation

2008 Global Population

http://2.bp.blogspot.com/_pCDyiFUv9XU/ShMlMINkgWI/AAAAAAAAED8/6nj6yabIBpE/s400/800px-World_population_pie_chart.png

Focus: China 1.3 BillionUSA 300 MillionEU 500 MillionJapan 127 MillionKorea 48 Million

Global, Gross Domestic Product Pie

http://www.greenfaucet.com/system/files/517/global_GDP.png

Focus: China 7%USA 23%EU 29%Japan 8%Korea 2%

2008

A.D 0001 -2008 GDP History

http://www.ritholtz.com/blog/wp-content/uploads/2010/08/GDP-History.gif

P & G Marketing Strategy, China Entrance 1998

How an American Company from Cincinnati, Ohio founded in 1837, expanded into China and took on a Chinese Identity and Local Product MixFounded by Two Immigrants:William Procter (from England):

candlemaker, and James Gamble (from Ireland):

soapmaker http://bglhonline.com/wp-content/uploads/2010/07/Cincinnati-procter-and-gamble-headquarters.jpg,http://en.wikipedia.org/wiki/Proctor_and_Gamble

Proctor & Gamble

Product Recognition: “Isn’t P & G a Chinese Brand?”

How to make an International American, European, & Japanese Brand…

Into a Chinese Brand

http://www.couponingtodisney.com/wp-content/uploads/2010/07/brands.jpg

Huge Income Disparities in China

China has huge income disparities and product expectations between the rural, urban, and semi-urban populations.

P & G divided the market segment of China into three areas of income and unit volume: top 15%, middle 30%, and bottom 55%

Revenues are divided at 30% premium, 40% mid-priced, and 30% in the low end segment

Differing Product Purchases

Low income consumers in China often buy single use packages of shampoo, medicine, and other products.

Urban Chinese customers are willing to pay $1 USD for a tube of exotic flavored toothpaste. While rural customers will pay 50cents (1/2 USD) for a tube of Crest Salt White toothpaste, because rural customers believe salt whitens teeth.

R&D: Formulate Cheaper Products

“…Create different value offerings superior to those of the local competitors but at an equal or even lower manufacturing cost.”

P & G used customer research teams to find out customers needs and product desires, by even living with potential customers for several days.

Local Fast Growing Competition Domestic Chinese Firms are growing fast and

they are well informed about their local market High end Foreign originated consumable

products can have little lasting permanent penetration into an emerging market

Huge disparity in emerging market people’s income levels can be growth opportunities.

Know local product expectations and then use readily available local ingredients to manufacture and produce locally superior quality Chinese friendly Proctor & Gamble products for each population and income segment

Proctor & Gamble

Product Recognition: “Isn’t P & G a Chinese Brand?”

How to make an International American, European, & Japanese Brand…

Into a Chinese Brand

http://www.couponingtodisney.com/wp-content/uploads/2010/07/brands.jpg

Questions Please?

Discussion Questions

How does China’s entry into the World Trade Organization (WTO) in 2001 affect multinational firms’ outlook toward China and their future investment in the country?

What are the drawbacks of P & G’s strategy for the Chinese market?

What other marketing strategy could P & G have adopted for the Chinese market as an alternative to the tier system one?