Procter & Gamble : Marketing

Capabilities

Sajal Gupta

Harvard Business School Case

PRESENTED BY

SAJAL GUPTA NSIT Delhi

(During a marketing internship under Prof. Sameer Mathur,

IIM Lucknow)

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What is P&G?

What is

?

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P&G is one of the largest and amongst the fastest growing

consumer goods companies in the world. P&G touches and

improves the lives of about 4.4 billion people in 180 countries

around the world with its portfolio of trusted, quality brands.

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Portfolio of P&G

P&G Facts

• P&G was a global leader in branded consumer goods.•Has many > $ 1 billion brand known worldwide.• First company that advertised directly to customers.• 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.

P&G Financial Commitment to Advertising

• $8.68 billion ADVERTISING BUDGET (2010).• $78.94 billion SALES HIT (2010)• $12.74 billion NET INCOME (2010)• $186.63 billion MARKET CAPITALIZATION

Company Background

P&G Vision and MissionVisionBe, and be recognized as, the best consumer products and services company in the world.

MissionP&G’s stated corporate mission was to build on its company purpose to improve the lives of its customers through continued innovation to reach “More Consumers, In More Parts of the World, More Completely.”

Foundation - 1837

1930s International Expansion

1945 to 1980 it began to enter markets in Latin America, Western Europe, and Japan.

Expanded new lines of business through acquisitions

P&G’s approach to entering new markets was via acquisition or joint venture on a small scale.

Today…Procter & Gamble is one of the most skilful marketers of consumer-packaged goods in the world and hold one of the most powerful portfolios of trusted brands. It sustained market leadership rests on a number of different capabilities and philosophies.

Why study this case?

Objectives of the Case (1/4)

To learn from and analyse the best practices of P&G the world's largest advertising spender and a renowned marketer of consumer products.

Objectives of the Case (2/4)

To understand their marketing strategies: • where marketing innovation is developed• how it is applied across different categories • and how marketing shifts with

changes in structure and culture.

Objectives of the Case (3/4)

To analyse the gaps in their marketing strategies and suggest improvement points.

Objectives of the Case (4/4)To understand and analyze the potential

risks P&G may face in future.

BEST PRACTICES (1/4)1

Innovation and R&D

Trial-and-error methods for new products.

P&G took a scientific approach and connected R&D with the company’s sales and marketing.

Better brands are based on innovations and continuous improvement that delivers the customer value.

BEST PRACTICES (2/4)1Global Business Units

Seven global business units (GBUs) based on product categories replaced the company’s four geographic business units. P&G felt the GBUs would help with global product development and quick-to-market strategies.

BEST PRACTICES (3/4)1Sub-divisions under GBUs

1. a business development team focused on innovating in existing categories

2. 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

3. and market development organizations that would perform intensive market research to ensure global products’ success in local markets.

P&G hoped the net result would be “bigger innovations, faster speed to market, greater growth—innovation vitality.”

BEST PRACTICES (4/4)1

P&G aims to partner with the world’s most innovative minds– from individual inventors and small businesses, to Fortune 500 companies– to deliver on the company’s most challenging opportunities.

Connect + Develop helps P&G engage with innovators and patent-holders to meet needs across the P&G business: for products, technology, in-store, ecommerce and the supply chain.

Results of connect + developBy 2006 , • more than 35% of P&G’s new products had elements that

originated from outside the firm •45% of P&G’s initiatives had key elements discovered externally • P&G’s R&D productivity increased by nearly 60% • firm’s innovation success doubled • drop in cost of innovation

P&G had pursued a multi-brand strategy, and it managed brands across a category carefully, with each getting individual support and satisfying a segment of the market. P&G’s detergent category illustrated this:

MARKETING STRATEGIES 2

Premium brand “cleaned colours safely” “had fresh scent” “contained bleach”

MARKETING STRATEGIES 2

1.Function2.Performance 3.Price

Design

Change in Focus

MARKETING STRATEGIES (3/)2

“First moment of truth”

Design every component of the product:communication experience user experience

The influx of design had a strong impact on P&G’s product development; design informed the innovation process and even changed the function of some products .

The new emphasis shifted the company towards a more

consumer-centric marketing approach.

Shift in Marketing & Advertising…

Traditional Marketing Digital Marketing ?

Why?To measure

ROMI (Return on Marketing

Investment)

Shift from T.V and Print

Soap Operas, Radio and TV Broadcasts….

To Digital and Direct Marketing…

How does this helps ?

The data collected, along with information about online usage and grocery purchases, and frequent surveys of attitudes and lifestyle choices, helped subscribers such as P&G understand its marketing tactics’ performance.

P&G’s Tide #LoadsofHope team providing relief services by washing laundry for families impacted by the #TexasFloods.

Social Cause Marketing

Leveraging Secondary Associations by Sponsorships

Emotional Branding…

Celebrity Endorsements…

Gillette YouTube channel

Shift in Market Research

Traditionally….• P&G ran focus group discussions,•interviewed consumers at home, and

performed in-context visits and in- store interviews .• Quantitatively, the firm gathered data on

consumers utilizing blind tests, concept and use tests, and quality monitoring, and doing large-scale studies of the habits and practices of consumers who purchased P&G products.

VocalPoint, P&G’s word-of-mouth program

New technologies also continued to provide P&G with ways to engage and measure consumer interests, habits, and satisfaction.

Insights from new technologies….

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.

Eye tracking Neuromarketing EEG

P&G sought to better understand how its customers felt—not about a product such as Pantene, but about having a “bad hair day.”

P&G maintains its level of media spending, while shifting $s to digital and other new media to broaden the audience.

Gaps in Marketing Strategies (1/2)3

Across the industry, many were finding that while television was still the best way to reach many customers at once, they were not necessarily all repeat customers. Still, in 2011, the bulk of P&G’s advertising spending went toward television.

Excessive focus on Television

Gaps in Marketing Strategies (2/2)3

Digital marketing efforts were a large part of

P&G’s plan. Although, in 2010, only 5% of P&G’s $3.2 billion was spent on online marketing.

Less emphasis on Digital and Social Media

Though…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 in 2010, and bridged the power of digital and social media. And more efforts like Mobile Advertising, YouTube , Expert Advise websites etc. have changed the way P&G advertise.

Still…

To maintain its brand image, it has to increase its presence

online…

Improvement points • P&G should partner with e-commerce websites to increase its

presence online. • A stronger presence could be ensured by marketing using

Twitter, Pinterest, Facebook, YouTube , Instagram etc. • A strong Ad Words campaign for its core products can strengthen

its online presence. • Applications could be launched pertaining to specific product

categories.• Extra incentives and offers like coupons, loyalty points or cards

etc. could be incorporated. • Social cause marketing campaigns for best performing brands can

be launched.• Online quizzes or competitions (Selfie Contest with product) or

flash sales on Facebook pages, Twitter can be immensely helpful.

Potential Risks4Competition from local products which may offer a cheaper price. Limited growth for innovation may not satisfy customer’s expectation.Customer Knowledge: It might be difficult to maintain a face-to-face

interaction of R&D team with customers and trade partners for feedback, owing to increasing number of brands.

Numerous line extensions may cause the brand name to be less strongly identified with any one product.

Marketing of such a large pool of brands, especially with the rise of social media.

Brand DilutionBrand extension harming the parent brand in case of failure. Inefficient Brand-Management system for large number of brands

Still…