procter & gamble : marketing capabilities

Harvard Business School Case Study

Procter & Gamble : Marketing Capabilities

Procter & Gamble: Marketing CapabilitiesHarvard Business School Case

Contents

Company Overview

Brief History

Brands & Company’s Vision

Objective of the Case Study

Marketing Strategies

Challenges Faced and Next Move

Company Overview

• Procter & Gamble is a global leader and skillful marketer of branded consumer goods and known for iconic category defining products

• P&G was ranked 3rd on Barron's "World's Most Respected Companies 2010“ list and this marks the sixth consecutive year the company has been recognized• Fortune Magazine ranked P&G 8th on its "America's Most Admired" list and 6th on its "Global Most Admired" list

• Its products includes sanitary products, consumer goods, pet foods, cleaning agents and personal care products

A Brief History:

William Procter (Candlemaker) James Gamble (soapmaker)

Gamble Procter +

= Procter & Gamble

Iconic Historical Events• 1858 -1859 : AMERICAN CIVIL WAR Procter and Gamble signed a contract with Union Army

• 1880 : IVORY An inexpensive soap that floats on water

• 1911 : Factories were build in other locations in United States

• 1920: Company sponsored a number of radio programs which is why these shows were commonly called “Soap operas”

“SOAP OPERAS”

“IVORY SOAP”

COMPANY BRANDS

FEMININE CARE BABY CARE HAIR CARE

The company is known for its impressive Brand Portfolio

FABRIC CARE HOME CARE GROOMING

SKIN AND PERSONALCARE

PERSONAL HEALTH CARE

ORAL CARE

Organizational StructureGBU Reportable

Segment%of Net Sales % of Net Earnings

Beauty and Grooming

Beauty 24% 23%

Grooming 10% 13%

Health and Well-Being

Health Care 14% 16%

Snacks and Pet Care

4% 3%

Household care Fabric care and Home Care

30% 28%

Baby Care and Family care

18% 17%

COMPANY’S VISION

“More Consumers , In Most Parts of the World,

More Completely”

COMPANY’S MAIN FOCUS

• to grow P&G’s 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 business with global leadership potential

The Objective of the Case Study

• To study the significance of Innovation and R&D in success of P&G

• To analyze various marketing strategies of used by P&G

• To know about the different marketing channels used by P&G

+

= P&G Marketing’s Secret Sauce

• P&G adopted scientific approach and connected R&D with the company’s sale and marketing

• CEO Durk jager called for 50% innovation to come from P&G’s labs and rest 50% through non-P&G scientists and engineers

• New strategy called ”Connect-and-develop” identified proven technologies, packages and products that P&G could improve or scale-up

• Seven global business units(GBUs) based on product categories replaced the company’s four geographic business units

• Three new teams supported the GBUs:

- A business development team focused on innovating in existing categories

- A venture team tasked with acquiring brands in new areas

- Market development organizations that would perform intensive market research to ensure global products’ success in local markets

• Lafley was appointed as the CEO of P&G in 2000

• He set a goal to make P&G top product – design company in the world with a departure from past focus on function, performance & price

• Lafley then named Jim Singel as the new

CEO and created a new unit for innovation

and appointed Claudia Kotchka as vice-president for design innovation

• Kotchka brought a new culture of design to P&G by introducing “Design Tasting”

NEW STRATEGIE

S

CONSUMER CENTRIC

APPROACH

DESIGNING & INNOVATION

RETURN ON MARKETING

INVESTMENTS

COMMITMENT TO THE CONSUMER

• The company is especially known “Process-oriented”• P&G invested more in market research , interacting more than 5million consumers in almost 100 countries• The company ran Group discussions, interviews at home and performed in-context visits and in-store interviews to connect to its consumers• P&G employed psychological surveys to measure mood and EEG technology to measure brain activity subject to any commercial

• P&G had been marketing trailblazer from the outset• Early advertising included sponsorship of daytime radio dramas and television commercials• “Another World”, ”The Young and the Restless” , and “Guiding Light” were longtime P&G sponsored daytime radio dramas• In 2002,P&G decided to reconsider its advertising strategies after facing local and global competitors • The company developed “Media-Neutral” idea• Later, region –wise customized products were introduced

“P&G Advertisements”

SPONSORSHIPS

CELEBRITY ENDORSEMENTS

A Shift toDIGITAL MARKETING

• Throughout 1990s , P&G’s digital activity was limited to brand websites which later expanded in 1999 with the launch of pampers.com

• BeingGirl.com was launched in 2000 targeted teenage girls

• P&G slowed its digital push after “.com burst”

• McDonald who became the CEO in 2010 stated to shift from traditional to Digital Marketing

• P&G launched its first mobile banking marketing ad campaign to promote Crest Whitening Plus toothpaste

• The company signed the Olympic Sponsorship in 2010

• P&G’s line of “My Black is Beautiful” products targeted African American women and introduced two web series to showcase its products: Buppies and My Black is Beautiful

• The collection sales grew 20% in first half of 2010

• P&G’s Old Spice television commercial and Youtube sensation ,”The Man Your Man Could Smell Like”, gave P&G its greatest exposure in the online community

SOCIAL MEDIA• P&G maintained its marketing budget despite recession and later added Social Media as their new tool

• In 2007, company launched two social media sites : Capessa for women and The People’s Choice Community

• In 2010 , P&G began using Facebook as their marketing supplement

• In 2011, company came up with Manofthehouse.com which featured household advices for men

• In 2005, Tide detergent had its best sales after highly successful post-katrina Campaign ,”Loads of Hope”

• In 2006, P&G unveiled a major campaign in Times Square targeting holiday shoppers

• The Times Square Campaign created nine Youtube ads and generated 20 million views per month

Select P&G Iconic Brands

CURRENT SCENARIO

RECENT CHALLENGES• stagnant growth, lagging productivity, and restless

shareholders

• P&G’s shares have trailed its rivals and the broader market over the past three years

• continuous pressure to innovate

• decisions about which brands to retain

• customer satisfaction

• costs optimization

NEXT MOVE??

Few Points where Company should Focus

• P&G needs more, better, faster product innovation

•P&G needs innovation in its business system—downstream, upstream, internal, or all three

• P&G needs to be thinking about bigger, bolder strategic innovation

• Strategic innovations in the Global–local operating model

• The company should optimize their costs and prices by looking at customer’s desires

Created by Neha Byadwal, IIT Kanpur during a Marketing Management Internship under Prof. Sameer Mathur, IIM Lucknow