Vizir Group 7

2009

Arsen Alikhanyan, Federica Betti, Erhan

Keskin, Selma Krkid

Procter & Gamble

11/30/2009

Procter & Gamble Europe: Vizir Launch

Group 7: Arsen Alikhanyan, Federica Betti, Erhan Keskin, Selma Krkid| Confidential

2 Procter & Gamble Europe: Vizir Launch

1.0 Introduction Our analysis of the Procter & Gamble (hereafter referred to as ‘P&G’ or ‘the Company’) Vizir

product launch is divided into three broad discussion areas which seek to carefully answer the

vice-president’s pressing questions. In the first section, we explore the possible options P&G

has in regards to launching the product followed by an examination of whether the company

should launch the product Europe wide. The last section includes an evaluation of the impacts

the imminent launch of the product would have on the organisational structure and the move

to a new approach to international marketing.

2.0 To launch or not to launch? In 1981, P&G European sales represented a whopping 15% of their total sales worldwide.

Germany and UK were the largest European markets representing 20% each, with France and

Italy closely following (30%) and Belgium, Holland, Spain, Austria and Switzerland contributing

to the remainder of the market share (20%) (Source: case study, pg 2).

The sheer importance of the European market combined with increasing competitive

pressures in a market which was mired with slowing growth, indicates perhaps that P&G

cannot afford to forgo the future income that would be generated from successfully

launching Vizir.

Although, there had been positive feedback on the product based on the results of four

months of market research, the brevity of the process was not in line with P&G policies which

are designed to hedge launch failures and practically leave no stone unturned. However, the

risk of a looming pre-emptive strike by Henkel poses a significant threat to the Company and

by not launching the product ‘prematurely’ the Company could risk losing the German

market altogether. In fact, Baker (2000) suggests that in Japan, a large number of P&G

products were pre-empted by a competitor with copycat products prior to the Company

completing its necessary 24 month market research period.

In essence it is due to this risk, coupled with unfavourable market landscape, that we

recommend that P&G follows Wolfgang Brent’s ‘hunch’ and launches Vizir even in the

absence of the full market test period.

3.0 Eurobrand and 'adaptation versus standardisation'

A major dilemma is whether to launch the product as a German product or as a single

European brand. Prima face, market conditions could indicate that P&G should limit the

launch to Germany and thereby limiting the initial outlays in infrastructure and promotion

that would enable such a large undertaking.



However, we believe by changing the organisational structure (further elaborated on in the

following section) and launching the product as a Eurobrand the company can truly establish

itself in the European market and homogenise its image as well as reinforce the brand.

By launching the product simultaneously in all European markets, P&G would have the

distinct advantage of being the market leader and in this manner protect itself from similar

products making it harder for competitors to enter into the market (Beiske et al. 2002). In

addition, by capturing a larger market the significantly higher initial capital expenditure (five

or six times higher than the German launch only) would be offset by much higher profits and

thus justify the means.

Furthermore, we believe that the extent of the Europe-wide launch will largely depend on the

degree of standardisation of the marketing mix and this. Buzzell (1968) indicates that there

are several advantages and disadvantages of standardisation indicating that the benefits

perhaps outweigh the costs:

Advantages of Standardisation:

I. International uniformity.

II. Reduced confusion of customer by uniformity.

III. Brand loyalty which derives from uniformity.

IV. Economies of scale.

V. Improved quality in marketing activities.

VI. Easy coordination and controlling.

Disadvantages of standardisation:

I. Different shopping habits.

II. Different legal applications.

III. Different marketing activities in Distribution channels.

IV. Different competition environments.

V. Differences in resources.

VI. Difference in cultures.

However, we believe that taking either of these strategies is not so straightforward and that

the key to the success of the product is to make the marketing mix a delicate balance

between standardisation and adaptation. This issue has been the subject of much debate

amongst experts, and Kotler et al. (1999) suggest that ‘many possibilities exist between the

extremes of standardisation and complete adaptation’ (pg 212, for example Coca-Cola).



The extent of the marketing mix standardisation and adaptation should be as follows:

Product:

The product formulation should be adapted to the market to adapt to legislative requirements, for

example in Finland and Holland legislation limited the phosphate levels (Source: case study, pg 4).

The formula of the product should be customised to the degree that it does not compromise the

quality of the product. Also, the formulation should fully adapt to the European front loading

machine so as to avoid product incompatibility with a commodity which consumers do not replace

for an extensive period of time.

Packaging:

The shape of the bottles should be standardised but the size of the bottles should be tailored to the

specific country preferences. As mentioned in the case Dutch customers prefer smaller sizes in

comparison to the German customers. Naturally, the labels and the user instructions should be in the

local languages. However, the same labels can be used for French speaking countries such as

Belgium, Luxembourg and to an extent Switzerland.

Promotion:

The Company should standardise the advertising message and thus reinforce the brand Europe-wide.

This can be done in much the same fashion as Nike for example where almost everyone can

recognise the ‘swoosh’ sign and the message behind. However the media advertising strategies

should be tailored country to country. In those countries where commercial time was limited, for

example Holland, Germany and Italy, P&G should target women’s magazines as well as newspapers.

During every step of ad and promotion it's important to stretch the difference between liquid and powder laudry detergents in the mind of the consumer. In addition, we also suggest emphasising the difference of the product in respect to the ‘traditional’ powder laundry detergent Ariel.

Pricing:

Pricing should be adopted country to country that reflects the buying power of the particular country’s consumer. However, the product pricing should carry a common trait and be positioned as a premium product to reflect its superior quality. Many consumers consider the price to represent an indicator of quality and even small difference in price can suggest differences between products (Kotler et al. 2001). In addition, the price premium placed on the product will ensure that Vizir is differentiated from Ariel so as not to cannibalise it.



4.0 A way forward – organisational change

In launching this product as a ‘Euro’ brand, P&G would have to change its organisational

structure and at the same time not compromise their sound corporate values. The setting up

of Euro Brand Team lead by Germany, as the case study suggest, could be a way in achieving

this, however, a project of this scale cannot be the responsibility of the brand manager

alone.

Nevertheless, the emergence of the Euro Brand Team should be considered as only one

aspect of a much wider spectrum of organisational reforms. The marketing department

should not work independently of the ETC centre but rather these two entities should go

hand in hand to enable prompt testing of trend emergence.

Individual subsidiaries should be responsible for monitoring marketing trends and suggesting

them to the head marketing department which should be in charge of general oversight and

decision making. Subsidiary management should be incentivised to monitor and hence

appropriately rewarded for recognising plausible trends early on. In this way P&G can work

towards reducing bureaucratic decision making processes currently in place which will reduce

the risk of pre-emptive strikes.

To implement this new organisational structure, the Company needs to foster a culture of

effective communication. One way of achieving this is to encourage staff rotation from

country to country and by doing so spread knowledge evenly through the organisation and

leverage more efficiently on its current resources. Moreover, this would avoid the lead Euro

Brand country team to have too much power in decision making to avoid bias. For example,

P&G could bring in managers from France or the United Kingdom to the Euro Brand Team

and create more balance to avoid country partiality.



References:

1. Baker 2000, Marketing Theory: a student text, Google Books, Viewed 27 November 2009,

http://books.google.com/books?id=zpch0sOGOPgC&pg=PA121&lpg=PA121&dq=vizir+launch

+student&source=bl&ots=7pum5NqEZl&sig=3KznRQBNiJ7VDNpRzMCX_8nZuD4&hl=sl&ei=3q

QKS5SuHpeZ_QbxmaTQBA&sa=X&oi=book_result&ct=result&resnum=1&ved=0CAcQ6AEwA

A#v=onepage&q=&f=fal

2. Bartlett CA 1989, Proctor & Gamble: Vizir Launch, Harvard Business School

3. Beiske B , Murray J, White S 2002, Procter & Gamble Europe: Vizir Launch, Scholarly Paper

(Advanced Paper), Google Books, Viewed 28 November 2009,

http://books.google.com/books?id=_o4ohReKTYIC&pg=PT35&lpg=PT35&dq=procter+and+ga

mble+vizir+launch&source=bl&ots=jeNiHiBHoI&sig=J5r3Z9aTUzp1IUfGGypj8isDyNU&hl=sl&e

i=VaAOS-

fWONCA_Qb4nJGvBQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CDgQ6AEwCQ#v

=onepage&q=&f=false

4. Buzzell DW 1968, Can you standardize multinational marketing?, Harvard Business review,

5. Kotler, P, Armstrong, G, Saunders J & Wong V 2001, Principi di marketing, Utet, Milano

6. Kotler, P, Armstrong, G, Saunders J & Wong V 1999, Principles of marketing, 2nd European

edition, Prentice Hall, Italy

Documents

Vizir Group 7