imc case analysis procter & gamble(b)
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Integrated Marketing Communication
Integrated Marketing Communication Case Analysis: Procter & Gamble(B)
MANGESH PATIL| PAWAN JAGNIK | SUMAN KUMAR SAHA MAHTAAB KAJLA | NILA LOHITA | VARDHAN SINGH
Group II (IMC-A) Submitted by:
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Company Introduction
Manufactured 90 consumer & industrial products
Total sales of $11.4 billion by 1981 of which 70% made in US (exhibit 1)
Eight major operating divisions organized by type of product – Packaged soap & detergents
– Bar soap & Household cleaning products
– Toilet goods
– Paper products
– Coffee
– Food Service & Lodging Products
– Special Products
Each division had its own brand management as well as its own sales, finance, manufacturing & product development line management groups
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Light-Duty Liquid (LDL) Detergents
Annual factory sales of $850 million & volume of 59 million cases in 1981
Average consumer purchase cycle of 3-4 weeks Expected category volume growth of 1 % per year for next 5 years LDL market growth potential is very low due to substantial growth
in the use of Automatic dishwashers (ADWs) It had 3 major players P&G (42% share), Colgate Palmolive (24%),
Levers (7%) and the remaining 27% with generic and private labels
Market Overview
Performance segment (35%)
focusing on cleaning benefits
Mildness segment (37%) focusing on
benefits of mildness to hands
Price segments (28%) focusing on
low cost
3 major segments
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P&G’s Product Portfolio
LDL Segment
Ivory Liquid P&G’s leading LDL brand
(15.5%) Highest trial levels Reduced promotion
frequency from eight 4 week events to 6 events in 1982
20% of promotion budget allocated to trade allowances
80% of promotion budget allocated to consumer promotion
Major focus (2/3rd) on price packs & minor focus (1/3rd) on coupon offers
Dawn Performance brand with
14.1% market share Unique benefit of superior
grease cutting capability 2/3rd of promotional events
were trial oriented coupon events while remaining 1/3rd were price packs
Joy Ranked 3rd in LDL category
with 12.1% market share Product benefit of
delivering shiny dishes by using unique “no spot” formula
50% promotional budget allocated to trial oriented coupon events & pre-priced events
Remaining 50% was allocated to price packs
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Development of H-80
H-80, a high performance LDL with superior cleaning capability than other LDLs
Specially formulated to remove tough stains
Excellent product aesthetics & good packaging
Possibility of cannibalization from existing P&G LDL brands
Suggested target audience – female heads of larger households, aged between 18-35, heavy LDL users
Available in 4 sizes & at prices equivalent to P&G’’s established LDL brands
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Assignment Question What factors and policies guide promotion planning for the LDL’s?
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Factors & policies affecting promotion planning
Low involvement product
– LDLs are low involvement, daily use products
– Purchase mainly depends on top of the mind recall, product availability and sometimes price
– Lack of brand loyalty
– More advertising is required to generate pull from customers
Product category
– Advertising/Promotion also depended on which category the product belonged
– Depending on the category, the particular aspect of the category was emphasized during the promotional events
Launch of advertisements for new products/brands
– P&G generally did not advertise a new brand until it had achieved 70% distribution
– New products/brands demanded more advertising/promotional events in order to achieve maximum exposure
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Factors & policies affecting promotion planning
LDL promotional events calendar (Schedule)
– Each LDL participated in at least 5 events annually
– Brand groups worked together to avoid simultaneous promotion of 2 or more of company’s LDL
– Scheduling played an important role as it helped in maintaining the attention of sales force & trade
– It also helped managers to minimize cannibalization due to consumers switching from one promotion to another
Allocation of budget
– Budgets were distributed under 2 major heads i.e. Advertising & Promotion
– P&G spent higher proportion of budget on advertising & lower on promotion
– Colgate or Lever spent more on promotions than advertising
– We might conclude that players with major market share spent more on advertising & smaller players spent more promotions
– Hence size/market share affected the promotion planning for LDLs
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Assignment Question What factors must Garner consider in developing H80 promotion program?
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Factors to be considered for H80 campaign
Goals & Constraints
– Budget should be lesser than $37 million.
– Getting the expected market share of 7% (Table B)
– Flexibility of scheduling with Ivory Liquid, Dawn and Joy
Positioning
– Positioning should be such that it clearly discriminates H80 with other existing brands
– Focus on high performance of LDL that provides superior cleaning factor that it removes tough strains
Cannibalization
– Already having a market share of 42% in the performance and mildness segments through their 3 popular brands – Ivory, Dawn & Joy.
– Launching another band in same segment would increase the risk of cannibalizing sales of existing brands
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Factors to be considered for H80 campaign
Competitive Rivalry
– High level of competition in performance and mildness segments
– Established companies want larger piece of shrinking market
– Presence of small and private label brands in price segment with no/minimal marketing support
Distribution
– P&G generally did not advertise a new brand until it had achieved 70% distribution
– H80 was expected to achieve >~70% distribution 6 weeks after introduction
Target Segment
– The female heads of larger households, aged between 18-35, heavy LDL users should be primary target audience
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Assignment Question Using Exhibit 18 format, develop a national promotion program for H80?
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National Promotion Program
Please refer to the attached excel sheet for calculations
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Calculations To minimize canibalization of P&G’s LDL brands, the 5 events selected are:
Event I: February and March
Event II: May
Event III: August
Event IV: October
Event V: December
Initially, a $2.70/ statistical case trade allowance has to be given in January, February and March to stimulate initial stocking. Cost for it= $(1.8*3/2)= $2.7 million (Using Table D). No. of average weeks volume = 8 * 3/2 = 12 (Using Table D)
A group promotion is also given which costs $0.1 million
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Events
Event I: February and March
3 oz samples would be mailed to 50% households as done in case of Dawn. Cost for it is =$(0.53 *30.3/ 0.75 million) =$21.4 million (Using Table D and Exhibit 11)
No. of average weeks volume not applied in this case
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Event II: May
• Single brand coupons would be mailed during this phase. Cost for it =$5.8 million (Using Exhibit 12)
• No. of average weeks volume not applied in this case
Event III: August
• Coupons can be distributed in BFD along with a Partial Liquidator premium.
• Costs for the BFD is given as $0.9 million (Using Exhibit 12) and for the Partial Liquidator is $ 0.4 million (Using Exhibit 16) No. of average weeks volume would not be applied in this case
Event IV: October
• A 2nd trade allowance of $2/ statistical case can be given along with a Price Pack of 20% off on the retail price for 22oz and 32oz. Cost for the Trade Allowance would be = $(1.8 * 2/ 2.7 * 1/2 )million = $ 0.66 million (Using Table D)
• No. of average weeks volume would be = 8 * 1/2 = 4 (Using Table D)
• Cost for the Price Pack= $( (1*40.8 /20) + (1.2* 29.2/ 13)) million =$4.7 million (Using Table D and Exhibit 14). 20% of $2.04(price per piece of 32oz) is 40.8 cents and 20% of $1.46 (Price per piece of 22oz) is 29.2 (Using Table C) No. of average weeks volume would be 10 weeks (Exhibit 14)
Events
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Event V: December
• An In-/on-pack own brand refund offer having a response of 7% can be given for each 2 units purchased. Cost for it is = $(560,000 + 3₵ (on 6 million)) =$ (0.56+ 0.18)million =$0.74million (Using Exhibit 15 III)
• No. of average weeks volume would not be applied in this case
• The total cost for the Promotion Plan is estimated at $37.4 million
Events
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