P&G Europe: Ariel Ultra’s Euro-Brand Strategy - İlker Temir · PDF fileP&G Europe: Ariel Ultra’s Euro-Brand Strategy Group 2 ... How consistent should Procter and...

P&G Europe: Ariel Ultra’s Euro-Brand Strategy

Group 2 Stephane Willaert

James Matthys-Donnadieu Brian Haeck

Annick Bolland Rob Roelandts

Ilker Temir

Production Cycle

Product Cycle in 1970s

•  Distributed R&D •  Different prices from same suppliers •  Manufacturing at multiple sites •  Multiple formulas for the same product

Euro-Branding Timeline

1970 1980 1990

“Kingdom” of GMs

Unsuccessful “Pampers Experiment”

Some success of Euro-Branding

Centralization

“The Compact Challenge” Ariel Ultra

The New Ariel Ultra

Old Ariel Ariel Ultra

Country specific formulas (with or without phosphate)

One formula (without phosphate)

Various densities Fixed density

Different perfumes in different countries One perfume

A wide range of package sizes and designs

European-wide, much less range of package sizes and designs

Outcome is a “highest common factor” European product

The Strategy

Convert the market to compact detergent or create a niche?

15% 30%

Ariel Powder Vizir (Liquid)

Ariel Ultra (Compact)

Pricing

Launching Strategy

The German Launch •  Launched in May 1989 •  2 kg size compact, fully equivalent to a regular 3 kg •  Priced between regular detergent and premium liquid •  Primary focus on environmental friendliness •  Secondary focus on performance

The French Launch •  Planned for September 1989 •  3 kg size compact, promoted as roughly equivalent to a regular 5 kg. Same for 5 kg size compact, promoted as equivalent of 8 kg •  Focus on environmental friendliness

Competitive Preemptive Strike

In July 1989, Unilever launched Skip Micro

Skip Micro Ariel Ultra P&G Competitive Analysis

Removed fillers from regular phosphate based Skip

New European-wide design with higher performance

Skip Micro has poorer performance than regular Skip or Ariel

Using a 2.2 = 5 slogan. Planned to position 3 kg instead of 5 kg regular

Much larger dose of Skip Micro is required than Ariel Ultra for an equivalent job

Skip Micro 2.2 kg was priced lower than Skip regular 5 kg

Planned to position Ariel Ultra in mid-premium (15% extra)

Unilever’s Strategy

Destroying the Compact Detergents

“Competitor knew that their product was inferior. So they wanted to induce consumer to try compact and reject it, thereby, damaging the valuable segment P&G had hoped for”

First Mover Advantage “Competitor was buying time, using a quickly developed, lower quality product to gain first-mover advantage, but planning to upgrade the formula as quickly as possible”

What To Do

QUESTIONS:

1.  How should P&G respond to Unilever’s Skip initiative in France?

2. To what extent this response will challenge Euro-Brand approach?

3a. What are the benefits of a (unified) pan-European product/brand?

3b. What are the drawbacks of a (unified) pan-European product/brand? 3c. Which elements of the product/brand benefit most from a pan-European approach? Which least? 3d. How consistent should Procter and Gamble have sought to be on the degree of “Europeanness” or “localness”? 3e. How successful was Procter and Gamble in the development process?

Country Overview

France

Germany

ETC

Eismann Italy

Spain

Ariel Ultra Delivery team

Higher cost But ecological

Holland

UK

3kg 4kg 5kg

Pan-European Brand Advantages

•  Economies of scale •  Brand consistency and reliability •  Better control on organization •  Quicker product development time & time-to-market •  Coordinated roll-out and product life cycle management •  Shift R&D focus to innovations and new products •  Improvements to products after launch is easier •  Easier benchmarking with competitors •  Increased customer awareness and recognition

•  No possibility of adapting local needs •  No/Limited possibility of tailor made response to local competition •  May lead to frustration at GM level – They are not in control anymore •  Potential lack of involvement in local subsidiaries •  Inherent problems of matrix organizations •  Higher product costs due to “highest common factor” •  Brings challenges to thorough market testing – Increased risk •  May kill creativity

Pan-European Brand Disadvantages

Pan-European Brand Who Benefits

•  R&D

•  Procurement

•  Manufacturing

•  Overhead support functions

Economies of Scale!

Pan-European Brand Who Doesn’t Benefit

Marketing!

Europeanness vs Localness

We think P&G should follow a “glocal” strategy, seeking the optimal local and global balance.

Key aspects in this optimal balance:

•  Europe-wide common product features and aspects •  Products with a potential for “Europeanization” •  Trends in legislations and being proactive (i.e. phosphate) •  Cost/Benefit analyses of “non-Europeanizable” products

Success of Development

We think that P&G was successful.

•  Demonstrated high level ownership •  Cross functional project team •  Early involvement (=commitment) of subsidiary marketing departments •  Keeping stakeholders informed (GMs via marketing) •  Country visits Meyers and Murray •  Premium pricing vs replacement of existing product

How Should P&G Respond? We think P&G should do the following:

•  Emphasize quality equivalence with Ariel standard •  Emphasize the environmental theme – differentiator •  Allow 2 kg boxes in French market (available in Germany) •  2 kg of Ariel Ultra is still 24% cheaper than 5 kg of Ariel standard without changing 15% premium pricing

Overall Strategy:

•  Emphasize key propositions: Compactness and environment friendliness •  Emphasize quality equivalence •  Do not point out premium pricing

Our Conclusion

No effect on Euro-Branding:

•  The environmental theme stays the same •  2 kg packaging already exists in Germany and can be “Europeanized” •  Pricing policy unchanged

Overall, there is no change in value proposition!

Questions

Annex French GM Notes

•  Phosphate legally allowed => non phosphate is too expensive •  Preference for Flanker strategy to get premium product to boost margin and take market share •  France prefers large packages (don’t like the “one packaging for Europe” strategy) •  Test market feb 89; launch planned sept89 •  Pitch: ecologically against LeChat (Henkel) •  July 89: UniLever launches Skip Micro (2.2 = 5)

General • Distrust Euro-Brand strategy because it ignores regional differences in buying behaviour • If ETC strategy fails, results and responsibilities will show up in regional bottom line

Annex German GM Notes

•  Phosphate legally banned => ok with non-phosphate •  Launch may 89 •  Focus “environmental” against Henkel

General •  Distrust Euro-Brand strategy because it ignores regional differences in buying behaviour •  If ETC strategy fails, results and responsibilities will show up in regional bottom line

Annex European President Notes

•  In favour of “one formula” concept

•  No further comments found.

•  But: -  Likely to support one formula and one package if this is creating value (reducing costs, increasing sales, taking market share or all) -  Likely to prefer balanced matrix power distribution to political strongholds

Annex Italian GM Notes

•  Phosphate legally banned => ok with non-phosphate


Annex Spanish / Portugese GM Notes

•  Phosphate legally allowed => non phosphate is too expensive


Annex Headquarters Notes

No comments found

But: - Likely to support one formula and one package if this is creating value (reducing costs, increasing sales, taking market share or all) - Likely to prefer balanced matrix power distribution to political strongholds

Annex Ariel Ultra Delivery Team Notes

•  Want to launch pan-European by September1989 •  Time pressure => only one formula can be developed •  Would prefer unified formula and packaging as this reduces complexity and speeds up the rollout

P&G Europe: Ariel Ultra’s Euro-Brand Strategy - İlker Temir · PDF fileP&G Europe: Ariel Ultra’s Euro-Brand Strategy Group 2 ... How consistent should Procter and...

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