P&G: Marketing Capabilities HBS case

Procter & Gamble: Marketing Capabilities

Harvard Business School case

William Procter and James Gambler

Founders:

 We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.

 To be recognized as, the best consumer products and Services

Company in the world.

Case Facts

• Global Leader in Branded Consumer goods

• Has 2 dozen $1bn brands known worldwide

• First company to advertise directly to

consumers.

• 2010, total sales=$78.94bn

• Net Income=$12 bn

• Market capitalization=$186.63bn

Current Picture of its success

Organizational Structure

Analysis of Net Sales

Source: Procter&Gamble,2010 Annual Report

1)How firm struggled with

controlling costs and how

they fixed it?

2)How to build business with

unserved and underserved

customers?

Is INNOVATION and intensive R&D a key

ingredient for their prominent success?

How firm struggled with controlling costs and how they fixed it?

• In 1999, Net sales slowed to 2.6% growth.

• Firm promised to deliver more innovation.

• 7 Global Business Units(GBU) replaced existing 4 Geographic

Business Units.

• This helped in achieving Innovation vitality- bigger innovations,

faster speed to market and greater growth.

• Started a “Connect-and-Develop” program.

• Under this program, 6 connect-and-develop hubs(in China, India,

Japan, Western Europe, Latin America and US) were established.

• Hubs focused on products and technologies specific to the

specialties of the hub’s region.

• Connect-and-develop helped P&G adapt and develop new skills.

• by 2006, P&G’s R&D productivity increased by 60% and firms

innovation success doubled.

• This also led to a simultaneous drop in cost of innovation.

• R&D investment as a percentage of sales dropped from 4.8% in

2000 to 3.4% in 2006.

How to build business with unserved and underserved customers?

Building business with unserved and underserved consumers through consumer-centric, digital, direct and neuromarketing, multibranding and interactive community promotion.

• Multibrand Stratergy: Brands of different product lines got

individual support and satisfied a segment of the market.

• Design Innovation & Strategy unit: A culture of design

introduced in P&G which complemented function driven

process.

• Consumer centric marketing: keeping itself relevant and

customized with respect to the needs of people.

• Focused on two moments of truth-

1. On the store shelf.

2. customer satisfaction and feedback.

Commitment to the

Consumer

• Firm conducted various Qualitative and Quantitative

researches like interviews, ran focus group discussions, instore

interviews, etc.

• They started Personal Endorsement Approach.

VOCALPOINT, P&G’s word-of-mouth program was a huge

hit.

• Consumer interests, habits and satisfaction were measured by

online grocer sites and Neuromarketing, building one-to-one

relationship with customers.

• P&G relied on developing long standing partnerships with

advertising agencies to develop robust brand identities for its

portfolio of consumer goods.

• P&G advertised directly to consumers by passing the

established network of wholesalers, distributors and retailers.

• “Media Neutral” Advertised in different and relevant local

languages in less familiar markets.

• P&G advertised through innovative channels like dramas, T.V

commercials and Operas.

• Soon firm shifted its aim towards a more “Design and Emotion

driven advertising” along with the benefits and functionality.

• P&G sponsored the US Olympic team in 2010, 2012 and 2016 games.• P&G was indulged in Fitness campaign through NFL sponsorship.

Celebrity Endorsements

Media Spending• During the recession, P&G shifted to coupons and in-store

promotional activities to maintain the same media presence.

• P&G increased ad spending by $1 billion with a 20% increase

in media impressions.

• McDonald maintained same level of spending, while shifting

dollars to digital advertising and other new media to broaden the

audience.

• Niche Experimentation through online serials, video games and

YouTube channels for specific products.

• Mobile Marketing ad campaign, TV commercials and print

media advertisements had an online presence.

• “My Black is Beautiful” line of products showcased with 2 web

series attracted over 3 million views.

• Old Spice television commercial and YouTube sensation “The

Man Your Man Could Smell Like” gave P&G its greatest

exposure.

• It bridged the power of digital and social media.

Social Media

• Launched two social media sites: Capessa for

women on Yahoo! Health and the People’s Choice

Community, associated with the People’s Choice

awards.

• Started using FACEBOOK as a marketing

supplement.

• In 2011, P&G rolled out Manofthehouse.com which

featured advice for men and aimed to “speak to the

whole man”.

• P&G started highly successful post Katrina campaign, “Loads of

Hope”.

• T-shirts having slogans “Be seen, not spotted” were endorsed

celebrities to promote tide and Febreze.

• A mass promotional activity held in Times Square targeted

holiday shoppers, generated YouTube ads and attracted youth.

• An innovative and including restrooms and spotless toilets used

to promote Charmin toilet paper, and tourists loved it.

THANKYOU