Procter & Gamble: Marketing Capabilities

WHAT IS P&g?Procter & Gamble Co. , also known as P&G , is an American multinational consumer goods company headquartered in downtown Cincinnati , Ohio , the U.S. , founded by William Procter and James Gamble. It was the first company to advertise directly to consumers, in the 1880s, and it invented “soap operas” by sponsoring radio and TV programming that targeted women. From early marketing campaigns to recent experiments in digital media for its men’s hygiene brand, Old Spice, P&G was a seasoned marketer with strong consumer research, a powerful innovation network, an evolving marketing strategy, strong marketing talent, and the world’s largest financial commitment to advertising, spending $8.68 billion in 2010.

WHO ARE THE PLAYERS?• A.G. Lafley, CEO • Bob McDonald, CEO • Durk Jager, CEO • Jim Stengel, CMO • Claudia Kotchka, Vice-president, Design unit• Marc Pritchard, Global Brand Building Officer

P&G’s 2010 sales hit $78.94 billion; net income, $12.74 billion; and market capitalization, $186.63 billion. 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. P&G’s approach to entering new markets was via “acquisition or joint venture on a small scale, and through trial and error, learn the formula for success before making a major commitment.”

SITUATION ANALYSIS

FOCUS ON THREE MAIN GROWTH FACTOR

• P&G’s core brands and categories with an unrelenting focus on innovation.

• to build business with unserved and underserved consumers through consumer-centric , digital & direct and neuromarketing , multibranding and interactive community promotion.

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

Innovation and R&D: P&G Marketing’s Secret Sauce • Four geographic business units were set up that would help with

global product development and quick-to-market strategies.16 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 and nurturing ideas created by the business development team that did not relate to an existing brand; and market development organizations that would perform intensive market research to ensure global products’ success in local markets. • 50% of innovation and new products came from P&G’s network

of labs, and 50% through the labs—that is, through partnerships and connections with non-P&G scientists and engineers. This approach was called Connect and Develop.

MARKETING STRATEGY

Brands lay at the heart of P&G’s success. On their own, most of P&G’s biggest brands are category killers run by industry leaders with seemingly endless resources at their disposal to exploit unmet consumer needs to drive category growth and market share expansion.P&G ideology is that Better brands are based on innovation and continuous improvement throughout the company’s operations and activities, starting with developed or acquired products with performance features that consumers value.In 2000’s company intensified its focus on Design as an additional complement to its better quality product. The new emphasis shifted the company toward a more consumer-centric marketing approach as well. Lafley’s shake-up and design emphasis articulated more clearly that P&G’s brands faced two moments of truth: first, on the store shelf; and second, when the consumer used the product and decided whether it delivered on its promise. It gave the company a deep understanding of the consumers who offer the potential for growth.Apart from this, company shifted from TV and print to digital and direct marketing. Customer-centric marketing also focused P&G on what happened in the shopping experience. In 2008, P&G wooed recession-wary consumers with more focused attention to in-store promotions such as coupons, displays, special offers, and other promotional materials.

P&G had a long history of rigorous product and market testing; the firm was well known as especially process-oriented. The firm conducted over 20,000 research studies each year, and invested nearly $500 million into developing and executing studiesP&G believed in word of mouth advertisement as they considered it the most powerful form of advertisement.P&G with its partnership with Tobii did Neuromarketing employed psychological surveys to measure mood and electroencephalography (EEG) technology to measure electrical activity in the brain as subjects were exposed to commercials. The approach held that feelings affected decisions and human behaviour and P&G sought to better understand how its customers .Integrating these new technologies in an attempt to gain more hard data on consumers dovetailed with 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.

• For many years, P&G’s staple TV ads focused on P&G’s product superiority and the clear functional benefits of its products. P&G marketing had been built around the idea that functionality would sell over emotional connection

• To compete in less familiar markets , it developed “Media neutral” idea that could be advertised in different and relevant local languages.

• Lafley , Stengel and Kotchka aimed towards design and emotion driven-advertising along with benefits and function driven one.

• It sponsored the U.S. Olympic team in 2010 and raised its visibility as a worldwide sponsor for 2012 winter games in Russia and 2016 summer games summer games in Brazil.

• It engaged its consumers in fitness campaign through NFL sponsorship whereas the major campaign “Thank you Mom” still remained the best in touching everyone’s heart.

• P&G endorsed many celebrities and spokesmodels for its acquired beauty companies and products like CoverGirl cosmetics and Pantene shampoo.

• Gillette and Head & Shoulders ads featuring sportspersons were advertised through YouTube, T.V. , online and print media.

• P&G also pursued a host of promotion, sponsorship, and endorsement relationships as well as other nontraditional outlets, such as product placement in television and film.

• Digital media enabled niche experimentation targeted to specific customers, including online serials , video games, and YouTube channels for specific products.

• P&G launched its first mobile marketing ad campaign in 2006 . The campaign also released TV commercials and print advertisements, and had an online presence.

• P&G’s line of “My Black is Beautiful” products, introduced two web series in 2010 to showcase its products. This attracted a lot of views online . Collection sales and market share increased.

• 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 and bridged the power of digital and social media.

• From mass marketer , P&G became one-to-one digitized marketer.

• During recession in 2009 , P&G shifted to coupons and in-store promotional activities to maintain its media presence while shifting ad costs.

• In 2010, P&G increased ad spending by $1 billion, with a 20% increase in media impressions; higher revenues led to an increase in dollars spent. McDonald, who became CEO in 2010, stated that P&G would maintain the same level of spending, while shifting dollars to digital advertising and other new media to broaden the audience.

GLOBAL LEADERSHIP

MOVING FORWARD

Digital marketing with campaigns,Emotional, design and function driven marketing , R&D , consumer research & product performance.Reach its dream of 5 Billion customers.