Strategic management

Report on:

Business plan of proctor and gamble shampoos

Submitted To:M. Ekhlaque Ahmed

Submitted by:Idrees warisNazia sahar

Romana ashfaque

PROCTER & GAMBLE SHAMPOOS

BUSINESS SCOPE

Nineteen years ago Procter and gamble started the journey in Pakistan to provide the world

famous quality brands to Pakistani consumers. Procter and Gamble Corporation have been well

known in the eyes of customers for serving the needs in fast moving consumer’s goods. Proctor

and gamble has a mission to improve the lives of consumers wherever it operates.

REGIONS:

WHERE WE ARE OPERATING?

Islamabad Karachi Lahore Rawalpindi Quetta Sialkot

P & G operates in all major cities of Pakistan and their expansion plan is to cater the rural area as well.

Internationally they are in the markets of 190 countries.

FUNCTIONS AND APPLICATION:

People have become more conscious about their hair problems and they want solution and better

results. Different customers have different problems related to their hair like dandruff, splinted

hair, fizzy hair, hair fall etc. Now Proctor and gamble is providing different products with

solution for almost every hair problem. The demand of hair care shampoos keep on increasing.

As it have different ranges, head and shoulder have seven varieties and Pantene is available in 5

varieties.

Head and shoulder is anti-dandruff and Pantene is beauty hair care.

Anti-Dandruff shampoos

Shampoos for smooth and strong hairs

Shampoos for deep black hairs

Shampoos for anti hair fall

Shampoo for Dry/damaged hair

Shampoo cum conditioner.

Hair care shampoo for milky extra treatment

CUSTOMERS AND USERS:

The user of proctor and gamble shampoo are 15 to 35 years old people and they are using

more shampoo and more conscious about their hairs. Students are having more demand of

shampoo. Demand of shampoo in house wives and older age people is relatively less then

others. Procter & Gamble considers the different factors while choosing its primary users.

The primary users of Procter & Gamble are mentioned below.

1. Young adults

2. Middle-aged adults

3. Families belonging to SEC (socio-economic class) A to C.

4. Beauty saloons

5. Cosmetic shops

6. Hotels

VALUE ADDITION

Recently proctor and gamble introduced new Pantene with the power of oil; it will help in

addressing the toughest hair issues of Pakistani consumers with in just 14 days i.e. due to

breakage and Split it caused to hair fall of the hair. The shampoo in the name of New Pantene

that combines oil benefits which helps to nourish hairs and it also helps to address the issue of

hair fall and split ends and in just 14-days. The shampoo contain the natural herbs that provide

the oil benefits which not only helps to nourish the hair but it also helps to tangle free and makes

your hair healthy and strong.

CONSIDERATIONS:

Currently the company has following variants in shampoo, each catering to a different segment which is mentioned below:

Hair fall defense Guaranteed 100%* Dandruff gone and a solution for hair fall

Refreshing Cleans your hair and refreshes your scalp.

Smooth and Sleek It contains the amino Pro-V complex which makes hair glowing finish, and sleek.

Sheer Volume Specially designed for shining and body.

Daily Moisture Renewal it helps to protect your hair from polluted environment

Color Revival Specially designed for maintaining the true color of your hair

Classic Care Help in balancing the hair and to give shine and health look to your hair.

Full and Thick Specially made for the thin hair to make your hair full of body.

Classic clean Makes your scalp cleanses and regenerates your gorgeous hair

INTENDED BUSINESS:

They want to penetrate in existing market and also planning for distribution extension.

But these all are segmented according to the general needs of customer. The company doesn’t

have the specific segmentation of shampoo for men.

Today the shopping trends of customers are change and they are very specific in selecting their

personal care products. So in order to expand its business in future, the company needs to come

up with different varieties which will fulfill the needs of customers. Men usually prefer to

Shampoos which address their problems like dandruff, hair fall and fizzy hairs.

All Pakistan shampoo is 18%.

Urban areas 67%

Rural areas 23%

A-C segment is the fastest growing segment in Pakistan.

COMPETITORS AND THEIR BUSINESSES:

There are many local and multinational direct competitors operating in Pakistan which are

mentioned below:

1. Sunsilk, (Uniliver)

2. Clear (Uniliver)

3. lifebuoy (Uniliver)

4. Garnier

5. Samsol by Samsol International Private Limited

6. Medicam by Marriana International

7. Bio amla

Proctor and gamble:

It is expected that the usage of shampoo in rural areas will rise in 2011, So P&G have a plan to

expand in rural areas where they are behind unilever shampoo, prices are relatively low as

compared to P&G, but we are focusing on the quality. However, the demand in urban areas

would be the key growth driver over the long term. Also, increase in the urban population, along

with increase in income levels and the availability of new categories, would help the urban areas

maintain their position in terms of consumption.

1. EXTERNAL ANALYSIS

Market structure

Applications Anti-dandruff Beauty (shine, healthy,

straight, smooth and

silk)

Herbal

User & products Head and shoulder (P&G)

Lifebuoy Anti Dandruff (unilever)

Selsun anti- dandruff shampoo

Sun silk Anti – Dandruff (unilever)

Life buoy (unilever)

Sun silk for shinny

hair(unilever)

Decrease(unilever)

Pantene smooth & strong

(P&G)

Lifebuoy anti-hair fall

(unilever)

Dove (unilever)

Organics

Flex

Selsun Blue for Itchy Dry

Scalp

Bio Amla

Garnier frutcis

Herbal essence

(p &g)

Darbar vatika

(Dabar)

Household Consumer

DISTRIBUTION STRUCTURES

It is showing that from factory floor it reaches to agility warehouse of the company then it moves

to distributor (abu dawood) the only distributor, then from distributor to global customers,

modern stores, high frequency stores and the wholesaler who directly buy from distributors. it

will move to the distributor premises as well as to wholesalers.  They forward inventory to the

GENERAL STORES MEDICAL STORES UTILITY STORES

RETAILER

WHOLESALER

GLOBAL CUSTOMERS MODERN RETAIL

DISTRIBUTORS

WAREHOUSE

MANUFACTURING PLANTS

retailers. the retailer sells the products to utility stores, medical stores and general stores and final

consumers as well.

GLOBAL CUSTOMERS:

Our global customers are metro and macro. There are five metros in Pakistan, two are in Lahore,

and 1 is in Karachi, Islamabad, and Faisalabad. And out of five macros, three are in Karachi and

two are in Lahore.

MODERN RETAILS:

In modern retail we have Naheed, Aghas, and Imtiaz.

HIGH FREQUENCY STORES:

High frequency stores include.

Wholesaler

Retailer

General stores

Medical stores

Utility stores

Cosmetic shops

Beauty saloons

Market Size

31%

26%

14%

11%

18%

market shareProctor & Gamble28 Unilever Bio AmlaGarnier Others

Analysis

Market share of the shampoo companies are shown above, which is indicating that Procter and gamble has 31% market share in shampoo industry, unilever 26%, bio amla 14%, garnier 11% and remaining 18% are the other local and international companies. Proctor and gamble shampoos are anti-dandruff, beauty and herbal. Procter and gamble capturing the major share in market due to high share in anti-dandruff segment, which is providing the world No.1 anti-dandruff shampoo. Unilever shampoos stand in second position and it has 26% market share but the share of unilever in beauty segment is more than Procter and gamble, so proctor and gamble need to focus more on beauty segment.

MARKET SIZE (PAST)

Volume in msu (million in state unit)

Market Segment

2006 2007 2008 2009 Growth P.A

Anti-dandruff483.760 500.691 550.259 604.774 2.7%

Beauty 683.760 744.715 818.332 914.076 6.9%

Herbal 305.190 316.482 336.736 360.644 5.6%

Overall growth5.06%

Value in millions

Market Segment 2010 2011 2012 2013 Growth P.A

Anti-dandruff665.856 721.122 774.485 837.218 2.7%

Beauty 1016.452 1126.228 1239.977 1382.574 6.9%

Herbal 389.13 412.208 433.636 462.689 5.6%

Overall growth 5.06%

MARKET SIZE(PAST)

MARKET SIZE (FUTURE)

Volume in msu (million in state unit)

Market Segment

2010 2011 2012 2013 Growth P.A

Anti-dandruff649 662 695 718 2.1%

Beauty 1068 1149 1214 1306 7.8%

Herbal 394 438 481 514 6.3%

Overall growth5.4%

MARKET SIZE (FUTURE)

Volume in msu (million in state unit)

Market Segment

2010 2011 2012 2013 Growth P.A

Anti-dandruff892 921 956 998 2.1%

Beauty 1468 1548 1636 1709 7.8%

Herbal 508 583 678 756 6.3%

Overall growth5.4%

MAJOR CHANGES FOR SALES INCREASE

• Population is keep on increasing with an average annual rate of 1.6% and the problem of dandruff and hair fall is increasing day by day and the women have become more conscious about their hair style.

• Constant innovation and aggressive marketing by hair care companies also lead sales trends upward of almost all segments. As Procter and gamble has vast array of advertising campaign.

• Delight the consumer with sustainable innovations that improve the environmental profile and sales of our products.

• Increasing awareness of hair care issues and the growing influence of western lifestyle trends and consumption habits were the main factors that extend the consumption of the shampoos.

• P&G Shampoos sale can also be increase if they provides the extra benefits to the customers like if they provide the more solutions in one product

• ASSUMPTIONS FOR FUTURE GROWTH (2010 onward)

• Due to intense competition in FMCG industry, P&G should place strong emphasis on innovation across all functions and activities.

• Head & shoulder safeguard and Pantene are the leadings products of P&G and they are catering the 20% markets of dandruff they should also focus upon the hair falling by doing the more research .

• Still people has hair falling problem in our society so p&g should be take more concern on the shampoo and insert those quality which protects customers from hair falling

• They should build separate brands for men as men has also become style conscious about their hair.

• In rural area, people are still unaware about hair care problems and their solutions. As per our research during 1950-2008, Pakistan's urban population expanded over sevenfold and it corresponds to 32.34%. This shows that majority of our population is living in the rural area so it is huge segment which need to be cater in future.

PRODUCT LIFE CYCLE STAGE:

REPRESENT INDUSTRY

Market

Segment

Introductory Growth Maturity Decline

Anti- Dandruff

Beauty

Herbal

Analysis

Antidandruff market of P& G has achieved the position in the minds of consumer and now it is on the maturity stage while the industry is growing.

In beauty P&G is behind the industry because its competitor is already on the top of the mind of

customers.

Herbal shampoos are also on the growing segment in both the industry and Proctor and Gamble

product herbal essence is in the induction stage.

COMPETITION MATRIX

Competition

Overall

Anti dandruff

Beauty Herbal

 

1.P&G 24% 66% 10% 100%

2.GARNIER  - 33% 67% 100%

3. UNILEVER 19%  65%  16%  100%

4. Bio Amla 12% 25%  63% 100%

Historical Growth 2.7%  6.9%   5.6%

Projected Growth 2.1%  7.8%  6.3%

Company Profitability

14% 12% 8%

ANALYSIS:

As Unilever is having neck to neck competition with P&G. So P&G needs improvement in hair care products, personal care products specially they should keep focus upon the men hair care product. Because men have also become more style oriented as compare to the previous year. But the overall business of P&G is in profit. Rural market is the best segment to capture more market share along with the new segment identification which is targeting all the customers.

20% shampoo users are using Head & Shoulder as they are dandruff conscious people. 99% of the people

are influenced by the advertisement of Head & Shoulder on daily use to get rid of dandruff and more over

they are getting the promised results. They have targeted both males and females due to which they have

got more number of shares in market Beauty wise .Pantene is the strongest hair care product of P&G both

formula and advertisement wise. Pantene has 35% market share in beauty.

Areas to be focused

P&G has to focus more on growing market of beauty segments.

Areas of new opportunities

P&G is almost present in all segments and the competitors are following P&G.

Distribution structure:

% SHAMPOO MARKET

2009 2013

HIGH FREQUENCY

STORES

78% 60 %

MODERN RETAILS 13% 23%

GLOBAL CUSTOMERS 9% 17%

100 % 100%

ANALYSIS:

The above mention distribution structure shows that how hair cares industry transfers their goods to the end user. P & G has only one distributor across Pakistan through which the product of P&G Company reaches to end user. Further the company is divided into high frequency stores, modern retails, and global customers.

The trend which is mentioned in the distribution structure shows that the consumers are moving towards the key accounts and modern trade because the standard of living is increasing day by day so every segment is increasing their sales through key accounts and modern trades.

In 2009 78% sales of shampoos is being done by the high frequency stores as P&G provides

transportation facilities to its distributors and retailers which attract these distributors and retailers to buy

The P&G’s shampoo as compared to Lever Brothers Pakistan Limited’s one.

As already explained they are giving top incentive to retailers and distributors. P&G sales staff pays more visits to their retailers and stores to check the shelf space of their shampoo. Thus due to these efforts they were getting 78% of market share.

TOP KEY EXTERNAL TRENDS

TREND POTENTIAL

IMPACT

Proctor and gamble Unilever Bio Amla Garnier

Technological

Trends

Increase in cost

Increase in

efficiency

Yes Yes Yes Yes

Bargaining

power of

supplier due to

inflation

Customer

might

compromise on

quality and not

willing to pay

higher prices.

yes yes NO Yes

Growth of

rural markets

and focus of

companies on

this area

Increasing

competition,

Price Erosion

No Yes Yes No

Application

segmentation

Customization Yes Yes No Yes

Political-Legal Forces

Economic ForcesSocial & Culture Forces

Technological Forces

Internal Environment Proctor and gamble

Social Interest Groups

GovernmentSuppliers

Industry Customers

Competitors

ANALYSIS:

Current trends in the market bring opportunities as well as threats for the organization so it is the

company’s competency how to cope up the external trends. Proctor and gamble is one of the top

company in Pakistan their main focus is to uplift the shampoo industry by changing products

with changing demands. Proctor and gamble is willing to avail all the opportunities present in the

external environment and cope up with the threats through its strengths.

DRIVING FORCES

Political forces

The changes occurring due to uncertain political situation have made the businesses uncertain for

its survival in the country and also terrorism prevailing in the important cities of the country like

Karachi, Peshawar, swat, Quetta and Lahore which are affecting the business activities. Policies

about taxes are changing continuously due to changing government. The shampoo market is very

much dependant on Political & Legal forces. In other words we can say that Political & Legal

forces can dictate the sales and profitability of the shampoo selling firms. Taxes and Excise duty

are of real importance to these organizations because it directly affects the prices which affect

the consumers buying decision.

Economic Forces

The rate of inflation reaches its peak level and it is affected the purchasing power of consumers

due to which consumers are shifting towards the low price local products and its adding fuel to

local business man to enter into the market of shampoos. The imports duty and excise duty on

the other hand become the cause of increased in the prices of raw materials which is ultimately

bear by the consumers. The shift in prices in consumers’ product will force them to switch for

low priced shampoos.

Technological Forces

Technology is also connected with proctor and gamble to benefit the consumer. Proctor and

gamble newly introduced the shampoo with the power of oil but there is a need of rapid

breakthrough in the technology of shampoo and their manufacturing process to produce the

shampoos which keeps eyes lenses safe from harmful chemicals.

INTERNAL ANALYSIS:

SWOT ANALYSIS

STRENGTHS:

Financially strong company.

Social & corporate image of P&G.

Focus on total quality management.

Direct contact with customers.

Good Relationship with the supplier.

Worldwide research and technology, engineering and manufacturing.

Highly energetic sale force

Extraordinary promotional plan for shampoos.

WEAKNESSES

Unwilling to serve low-income market.

Prices of the shampoos are high

Weak coverage in rural areas of Pakistan

OPPORTUNITIES

There are opportunity for P&G to cater more market share, the main reasons for this growth

are:

Growing population

Increase in the rate of urbanization.

Increase in awareness

Growing rural market

THREATS

Local and Foreign competition.

New entrance in shampoo industry

Country’s inflation rate is high.

The prices of electricity increasing.

Changing policies of the government.

Threats and Weaknesses which could be converted into Opportunities and Strength

Analysis

P&G is weak in serving low income groups while competitors have the ability to serve the low

income peoples. Through capturing in rural markets they can avail the opportunities in terms of

more customers.

THE CUSTOMER : BASIS OF PROCTOR AND GAMBLE BUSINESS

Opportunities Threats Strength weakenesses

Major players are still weak in rural areas

High urbanization Increased awareness

about new advancements

Covering all variants in shampoos through R & D

Don’t serve low income market.

External Analysis Internal Analysis

WHAT MOST IMPORTANT ASPECTS ?

1. Affordability2. Availability3. Variety4. Convenient Packaging5. Use of Natural Herbs6. Good Foam7. Prevent from hair damage8. Shine 9. Fragrance 10. support hair growth

DO YOU REALLY KNOW THAT ?

Yes

HOW DO WE SCORE ?

1. Variety2. Prevent hair damage 3. Availability 4. support hair growth5. Convenient Packaging6. Affordability 7. Use of Natural Herbs

HOW DO COMPETITORS (UNILEVER& BIO AMLA) SCORE ?

1. Variety 2. Availability3. Affordability 4. Prevent hair damage 5. Use of Natural Herbs6. support hair growth7. shine

WHAT DOES CUSTOMER WANT ?

Customer wants to have strong, healthy, shiny, smooth, anti dandruff and anti-hair fall all the time at an economical price. The factors which consumers want in shampoos are given below.

Use of natural herb, Affordability, Availability, Convenient Packaging, Brand name, Variety, good foam, no side effect, compatible with hard water, no irritation to the eyes

RELATIVE IMPORTANCE OF FACTORS

HOW DO WE SCORE ?

1. Variety2. Prevent hair damage 3. Availability 4. support hair growth5. Convenient Packaging6. Affordability 7. Use of Natural Herbs

HOW DO COMPETITORS (UNILEVER& BIO AMLA) SCORE ?

1. Variety 2. Availability3. Affordability 4. Prevent hair damage 5. Use of Natural Herbs6. support hair growth7. shine

Factors

Absolutely Critical

Very Important

Quite Important

Nice to HaveNot significant

5 4 3 2 1

Variety        

Availability        

Prevent hair damage        

support hair growth       

Convenient Packaging     

Affordability      

Use of Natural Herbs       

Fragrance        

Shine    

Good foam      

RATING AGAINST CUSTOMERS BUYING CRITERIA

Quality & Price Proctor and gambleUnilever

Bio Alma

Non-Price attributes Affecting Customer Choice

% Weight

Product - Related 

Variety 17% 16% 16% 6%

Prevent hair damage 15% 9% 11% 12%

Availability 14% 12% 12% 9%

support hair growth 13% 12% 12% 13%

Convenient Packaging 6% 4% 3% 2%

Affordability 14% 9% 10% 12%

Use of Natural Herbs 10% 6% 6% 9%

Good form 4% 3% 4% 4%

Shine 5% 5% 5% 4%

2% 2% 2% 1%

Total 100% 78% 81% 72%

Has quality gone up/down (+/-) In past 4 years

+ +  + 

Relative Price today 135  125 110 

Relative Price 4 years ago 100 100 100

CUSTOMER BUYING CRITERIA: PRICE AND QUALITY ATTRIBUTES

Keep it upQuestion its Cost

Improve FastDo Not Sweatat

Least 5% Most 20%

What strategic issue does the company face?

Proctor and gamble faces the following strategic problems.

RELATIVE

PERFORMAN

ATTRIBUTES IMPORTANT TO CUSTOMERS

Shine

Variety

Convenient Packaging

Prevent hair damageAffordabilityUse of Natural Herb

1. Proctor and gamble is planning to capture the market share of rural area but they might face huge threat from local competitors because people in rural areas are quite cost conscious rather than quality and brand image. So this is difficult for proctor and gamble to market their product with such approach where they can target the majority of people.

2. Proctor and gamble needs to invest a large sum of amount to promotional activities in rural areas and launch their product in rural areas.

3. Economy play a vital role and Pakistan economy show a constant pace of inflation every year so they must need to curtail the prices of product in a competitive environment and need to stream line their operation in a cost effective manner

SUGGESTED:

VISION

To be the most trusted and preferred consumer goods company which look forward to their

needs and act to create value in the eyes of consumers.

MISSION

Our mission is to provide consumers the supreme, high-quality products and to be leading the

industry by doing innovations.

OBJECTIVES

• Expanding distribution network to all over Pakistan.

• To increase continuously offering of new and unique products at affordable prices for all

segments.

• To increase the market shares in rural area by 20% till 2013.

• To grow by 15% year by year for the next four years.

• To increase the number of outlet coverage by providing commission based incentives to retailers.

KEY ISSUES:

Weak distribution resulting in missed sales usually in rural areas.

Increase in input cost due to ingredients imported from foreign companies.

No separate brand for men and children.

Increase in import duties

More fragmented market segments

Increase in inflation

Shortage of electricity

2. ACTION PLAN ( FOR NEXT YEAR)

WHAT HAS TO BE REFERENCES HOW RESULT

DONE

Customer Complain Weak network in

rural area

Should develop

customer complain

centre in rural area to

address the issue of

customers.

Customer satisfaction/loyalty

Enhance company reputation

Increase in sale

Identification of new needs of

customers

Increase the number

of distributors

Distribution

matrix

Competition

matrix

Should increase the

number of

distributors and

Improve relationship

with the distributors

in rural areas and

seek new distributors

Increase sales and value for

company in rural areas because

product will be available

everywhere.

Improve

communication with

external customers

Market structure

SWOT analysis

More advertisements

and promotional

activities.

Will become top of the mind

Brand awareness

Decrease Operating

Costs to cope up with

inflation.

Production

Managers.

By controlling

wastage and efficient

and effective

utilization of

resources to achieve

maximum output.

Cost decreases and revenue

increases

Increase Production to

capture rural market.

Procurement and

Production

Managers along

By master production

scheduling of all

production processes

and operations and by

Profitability will increase

Will be helpful for achieving

economies of scale.

with workers. truly forecasting the

required demands.

Expand Customer

Base

Senior and

Middle

management

(Marketing)

Adopt market

penetration policy

Sales will increase.

Increase in market share by

capturing the competitors share

and penetrating to unmet

segments.

Continuously

improvement in

Research and

Development

R & D

Department

Creating synergy in

value chain by

making new variant

of shampoos from

same manufacturing

plants.

New market segment

Innovation

New products

Build separate brands

for men and children

Brand

management,

Senior

management

Coming up with new

brand for children

and men segment to

cater the needs by

providing more

customized shampoos

with different

variants and

combinations.

Market share will increase

Increase in sale and

Profitability will increase.