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M987Z208 GROUP 8 ROLL-OUT LAUNCH
2. P&G Background and product lines Branding and Positioning Marketing Strategy and Innovation Local Market Needs: US & Europe The BC-18 Product Development in US& Europe market Solution to differ US& Europe Concerning point of P&G Spending Conclusion & Suggestion P&G ? A roll out launch Question and Answer
3. P & G Company Background P&G was founded by William Procter and James Gamble in the USA in October 31st 1837.
Procter and Gamble (henceforth to be called P&G) is an international supplier of consumer goods.
Procter & Gamble started as The Charmin Paper Company, producing paper towels and tissues until the union of the two enterprises in 1957. As a ?joined force? with Procter & Gamble, they produce and market the softest and most popular bath tissue in the retail industry ? Charmin. Today, with operations in over 80 countries, P&G holds the largest and strongest brand portfolio of any consumer products good company in the world with a focus on products that offer ?Everyday Solutions?.
It is a ?global leader in health and beauty care products, detergents, diapers and food?.
P&G?s presence in the hair care market in the U.S has been strengthened by innovative technology BC-18 and the replacement of an old brand ?Pert? with ?Pert Plus? ? a mild shampoo with a fully effective conditioner
P&G brands are inspired to understand the needs, desires and aspirations of men and women and by their commitment to R&D and collaborative external research.
They are dedicated to building brands that excite, delight and deliver. One of the most basic principles is that P&G products should provide ?Superior total value? and should meet ?basic consumer needs?
4. P & G Company Background In 1900s P&G begin to make Factory outside US (Canada and Europe)
In the 1931 P&G pioneering in introducing a formalized Brand Management System (BMS).
In 1985 P&G bought the Richardson-Vicks Company (Strengthen its Health & Beauty Care Div)
1986: The company developed a new technology that enabled consumers to wash and condition their hair using only one product. Pert Plus/Rejoice shampoo quickly became one of the leading worldwide shampoo brands.
In 1987 P&G celebrated its 150th anniversary. P&G bought the German Blendax Group (dental-care products). The company ranked as the second-oldest company among the 50 largest Fortune 500 companies. The company increased its presence in the European personal care category with the acquisition of the Blendax line of products. It was the largest international acquisition in company history.
5. P & G Company Background In 1988, following the success of Pert Plus in the US market, P&G decided to introduce BC-18 into the European market.
The market of the shampoo and conditioner in Europe was growing; there was an evidence of increase hair washing.
P&G initial focus was upon West Germany, Great Britain, France, Scandinavia and Benelux.
With respect to the number of suppliers and brands, the European market was even more crowed than the US market.
The most important competitors for P&G were Unilever, Colgate and L?Oreal.
The top and bottom price class was even bigger than the US market. Between brands there were price differences of over 5 times for the same quantity.
In January 2005 P&G announced an acquisition of Gillette.
In 2005 Procter & Gamble operated on the markets of more than 160 countries and become the market leader in consumer goods company.
6. P&G commitment
7. Product lines Personal and beauty
Antiperspirants and deodorants
Body wash and soap
Health and wellness
House and home
Laundry & fabric care
Baby and family
Baby and child care
Pet care and nutrition
8. Laundry detergent Tide provides ?fabric cleaning and care at its best.? It?s the all purpose family detergent that ?gets to the bottom of dirt and stains to help keep your whites white and your colors bright.?
9. Dishwashing detergent Gain, originally P&G?s ?enzyme? detergent, was repositioned as the detergent that gives you ?great cleaning power and the smell that says clean.? It ?cleans and freshens like sunshine.?
10. Prestige Fragrances Anna Sui rocks your fantasy!It's all about having fun and discovering your inner rock 'n' roll fairytale princess!Anna Sui stands for unique and distinctive prestige fragrance signatures, products that make an emotional connection and strike a deeper chord with the young consumer in her ongoing desire for self-affirmation.Anna Sui packaging is the epitome of the brand's identity and the key driver of the brand's success. Anna Sui Fragrances are highly addictive, sought-after collectibles. Anna's designs tell powerful stories that captivate, inspire and raise the wish to make these charming, magical dreams your own.
11. Target groups All peoples
Focus on some markets: West GermanyGreat BritainFranceScandinaviaBenelux
12. Brand management system (BMS) The P&G?s legendary organizational characteristic.
?Our brand is our bond with consumers. When we succeed, we convert a trademark into a Trustmark, and another P&G brand becomes a valued and trusted member of the household.? (John Lafley, President & CEO, P&G).
Creates a marketing organization based on competing brands managed by dedicated groups of people.
BMS consist of Several BM team with 3 or 4 person for each team.
The BM team objectives are planning, developing, and directing their brand in its market.
13. P&G Brands
14. P&G has long represented the "many brands" side of the spectrum with its large portfolio of consumer products brands.
4 possible brand alternatives:
- A Brand which already present in the US and several European markets, had so far shown a certain European potential (Vidal Sassoon)
- The US brand Pert Plus, unknown in the European.
- The two other alternatives were national brands firmly established in their domestic market (Pantene and Shamtu). Brand Development
Easy, time ? saving, everyday use of the product. P&G products provide ?superior total value? and meet ?basic consumer needs?
16. P&G Goals The short-term objective of P&G is to establish a market share that will expand and gain recognition
P&G will aim to increase steadily the market share of the market in Europe
Penetrate into new geographical territories
The long-term is to ensure that the company benefits from revenues and strengthens its position as a market leader.
17. Marketing Strategy International Supplier for consumer goods. The company determine its market strategy by shaping the brand name and the product identification.
Knowing that women would be the primary target market for the product also shaped the tactics that Procter & Gamble used in its promotional strategy.
Procter & Gamble, undertook market research before launching its own product in this category, and used the research to make decisions about the marketing mix as well as its marketing strategy and tactics.
P&G is design to innovate consistently and successfully in every part of business
18. Marketing Strategy Cont?d
Target all kind of product segmented people
Premium priced segment and low priced segment
Long term marketing goal is to take over the leading
value position in the US market
In 2007 P&G spent more on U.S. advertising than any other company: $2.62 billion
Develops Sale promotion
Advertising : sponsored
Packaging: Manages package design and package size
Initiates cost saving
19. P&G Innovation Increasing the pace of innovation at P&G is one of the key to faster growth, greater business vitality
P&G compete in nearly 50 product categories (laundry products, toothpaste, paper towels, personal cleansing, cough and cold, bone disease therapies, snacks, diapers, cosmetics and many others)
P&G innovation focuses on both existing and entirely new products
20. P&G's unique innovative capability is based on three key characteristics:
A deep understanding of consumers, their habits and product needs
Capability to acquire, develop and apply technology across P&G's broad array of product categories
The ability to make "connections" between consumers' wants and what technology can deliver
P&G Innovation Cont?d
21. Media spendings, shampoo, Europe, 1988 N/A: product is not offer in this country
22. Local Market Needs: US & Europe US Market
At the time the market for shampoo was very profitable as 90% of the population uses shampoo, the conditioner market however shows less then half the results of the shampoo market and the main purchaser being new users. There are many companies competing in the shampoo market often with more than 1 brand to offer (P&G for example)
Europe market is diversified, the shampoo market is steadily growing, although the conditioner purchase is less than 44%. This is the reason why the focus was mainly to the following countries: West Germany, Great Britain, Scandinavia, Benelux, and France. France being a special case as France was also counted in the underdeveloped conditioner market. Being a continent consisting of many different countries, the competition is even more numerous than the US market
23. The BC-18 Product Development in US and Europe Market US Market
The original idea of the BC-18 technology was to gain market share. At the time the major shampoo brands of P&G were losing market share, and the company came out with an ingenious idea to offer a 2 in 1 shampoo and conditioner all wrapped up in one package, this being an innovation at the time was a total success in the US market.
Seeing the success in the Market, the company decided to try it out in the Europe market. The BC-18 technology was applied on a number of brands belonging to different price segment.
24. Solution to differ US and Europe Market Two different models for US and Europe were adopted, as US market was more homogenous, a nationwide brand and product division management was adopted. Western Europe is a heterogeneous market with different languages, culture and laws therefore a decentralized model was adopted.
The organizational model was developed on two key dimensions: functions and brand. Brand manager has responsibility for profitability and matching company strategy with product category. Brand manager has access to strong divisional functions. It was more product centric and costlier. There was competition within brand managers and this was the era when max product innovation took place.
In 1987 structure was changed and functional units were centralized. Brands would be managed as components of category portfolios by category general manager, to whom both brand and functional managers would report. Each business unit has it?s own sales, product development, manufacturing and finance functions. To retain the functional strength a matrix reporting structure was set up whereby functional leaders report directly to their business leader and also have reporting relationship to their functional leadership. Again product managers were more powerful and responsible for profit and loss, matrix structure create ambiguity as man can?t serve two masters. Interdivision communication improved.
25. Solution to differ US and Europe Market Western Europe
P&G organizational model developed along three key dimensions: Geography , function , brand. The result was a portfolio of self- sufficient subsidiaries led by country GM with local market expertise. New technologies were sourced from US , tested in local R&D and manufactured in each country. there was high product launch time and sometimes it was as high as 14 years !
In 1963 , the European Technical Center (ETC) in Brussels was establish to act as centralized R&D and process-engineering unit. ETC develop products and manufacturing process that country managers could choose to adapt and launch in their own countries.
Problems in Europe: Corporate R&D were completely disconnected from US operations. European functional organizations were also in isolation from US counterparts. Un standardized , sub-scale production was expensive and unreliable. Country R&D were expensive to maintain.
By early 1980s , An attempted was made to promote cross-border cooperation and focus was shifted from country management to product-category management. Headquarters at Brussels encouraged formation of regional committees and eliminate needless product variations. The strategy was successful and Entire Europe was divided into three sub regions, whose leaders were given secondary responsibility for coordinating particular product category across the entire continent. Country GMs were replaced with multiple country product-category GMs who report to the division VPs.
26. Concerning Point of P&G Spending Focusing on cost improvement and cash productivity.
Each organization is evaluated on its ability to support the Company?s financial goals and increase total shareholder return. This includes an evaluation of net sales growth, earnings growth, profit margin expansion and cash productivity.
This organization are evaluated on their ability to generate cash, for example, by increasing productivity, improving capacity utilization, meeting capital spending targets and reducing working capital required to run the business.
And also through promotion in media or advertising campaign, P&G consider to be cost effective and deliver the message properly.
27. Conclusion P & G is a global leader in health and beauty care products, detergents and food.
P&G has a lot of experience in international operations.
The new acquisitions of companies that are leader in the market of health and beauty care products in Europe.
They have a specific brand management team; this team assumes the responsibilities for its brand.
Adopt to new local cultures to meet the customer needs is a basic approach to launch a new product to a new market.
In a roll out launch, we have to emphasize on New Product Development and Product Life-Cycle Strategies
28. Suggestion P&G should adjust its European brand strategy and allow local adoptions in its marketing mix. The European brand building strategy is lacking the local adaptation required to achieve market leadership and is out performed by its competition.
Core competitive activities such as research and development, product formulation, and competitive positioning should be made in a more centralized model. Market specific activities such as product package sizing and pricing, should be made in a country by country basis to adjust for specific customer?s behavior, competitive situation, and distribution structure.
29. P&G - A Roll out launch Question 1
The main issues to be considered in balancing a pan-European strategy with local market needs
The name to use for the new product
Bottle size to be used
To market the brand as Pan European or regional
How to price the product
Where to produce and production capacity
The possible alternative brand name strategies
Euro-Balancing ? the concept of standardizing to the maximum and implementing localization only where necessary
30. P&G - A Roll out launch The BC-18 technology should be introduced with a mixture of pan-European name and local brand name.
The BC-18 should be introduced as a new single brand name for its potential market.
In instead of "Pert Plus", the European name could be "Vidal Sassoon Plus"
The possible criteria for the decision above :
With a single brand name, P&G does not have to create new marketing campaigns for targeted countries.
The European market is heterogeneous, multicultural and multilingual; therefore, the name chosen for the shampoo should have to no connotations in a particular language's history or religion. Moreover, the name should be easily pronounceable in each culture.
31. P&G - A Roll out launch
The longer ? term marketing object :
continuation of the short-term objective (establish a market share that will expand and gain in recognition).
The alternative possibilities in relation to issues of positioning, target groups, sources of business, pricing strategy and packaging
Penetration into new geographical territories.
It would ensure the company benefits from revenues and
strengthens its position as a market leader.
32. P&G - A Roll out launch Question 2
The first ? year marketing objective
to attract new European customers who never used conditioner
To attract customers from competing brands to shift to the use of conditioner and/or shampoo to BC-18.
The relate to the long ? term marketing objective :
to create a new market inside the shampoo market and encourage the people to use the new BC-18.
33. P&G - A Roll out launch Question 3
We will recommend to undertake a ?roll ? out? launch in Europe
Since there is "a steady growth of the shampoo market and the conditioner market" and statistics show an increase in hair washing
The countries order
West Germany, Great Britain, France, Scandinavia and Benelux.
available production capacity
34. P&G - A Roll out launch Question 4
For country with the highest priority, to budget media spending, we would use TV advertising and household sampling.
First year ? introduction to convince customers of the superiority of the new product and to explain its new technology.
A TV add should have two parts :
- underlines the easy way to use and the perfect hair
- should explain in a more scientific but understandable way
the effects shampoo and conditioner have on your hair
35. P&G - A Roll out launch
The same advertising campaign can be 'reused' in all targeted.
European markets with background voiceovers changing according to language of the country, elements can be changed through the means of air-brush computer software e.g. the background.
This will allow the company to cut down on promotional costs
Second year ? to maintain the growth of market share.
Sampling will go down to 10% but should be raised again for the new marketing cycle when decline begins.
Third year ? TV advertising can be reduced when the product reaches its mature stage.
In the third year, all countries will make profits and the company will break even point.
36. P&G - A Roll out launch Question 5
According to the table profit, there are any loss in the first year, for West Germany, Great Britain, and Scandinavia.
Those happened because in the first year, they spend many for media and promotion cost.
Great Britain and Germany are already profitable after the first year but with the introduction in the other countries in the second year, the gain in Great Britain and Germany will not compensate the losses of the first year and the losses due to the introduction in those countries.
37. The cost and revenue implication of the Europe wide introduction program The results of consumer test shows that more than 70% says BC-18 brands were very convincing and relevant, around 40% says its very new, and 25% would definitely want to buy the products.
Taking into account the data provided in the case, it would be profitable for the company to produce its shampoo on the larger size bottle than the smaller size as it cost less. Also producing in a large amount will cost less due to the special production technology. Exhibit 12 shows loss in all 200 ml products, naturally the company will avoid loss by focusing on larger package size shampoo that generates profit.
38. Thank you!!!