P&G Final-2009

1. What is Product Pruning?

2. Why and How did P&G pruned its product line?

3. SWOT analysis of Product Pruning.

4. Pros and Cons of P&G line extension under a brand.

5. Why P&G was unsuccessful in Europe in case of Fairy?

6. Recommendations.

“According to Kotler, a product line is too short if profits can be increased by adding new products to the existing line. And the product line is too long if profits can be increased (or losses if any, can be decreased) by removing a few of the existing products”

To remove unnecessary products from the product line which

Do not add to company’s overall profitability

Complicate the task to allocating budgets

Are a setback to new product development

Its complex product line (Consisted of 5 divisions and was selling more 2,300 SKU in 34 product categories).

Most of the Product Variants remained unsold (Noted brands such as Head & Shoulders and crest were offered in 31 & 52 variants respectively).

Company recorded the highest marketing overheads in the industry.

It led to complexity in logistic and more errors in forecasting demand.

Line proliferation distracted the attention of R&D department.

SEGMENTS PRODUCTS IMPORTANT BRANDS

Laundry and Cleaning

Laundry detergents and bleaches, fabric conditioners, household cleaners and dishwashing detergents.

Ariel, Bounce, Cascade, Mr. Clean, Febreze, Dryel.

Paper Diapers, facial tissue, toilet tissue, paper towels, baby wipes, feminine protection.

Pampers, Luvs, Always, Whisper.

Beauty Care Facial cleaners and moisturizers, hand and body lotion, personal cleaning, color cosmetics, skin care cosmetics, deodorants, shampoos, hair conditioners, hair spray.

Clearasil, Head and Shoulders, Oil of Olay, Old Spice, Pantene

Food and Beverage

Snacks, coffee, juices, shortening and oil, peanut butter.

Crisco, Folgers, Pringles.

Health Care Toothpastes, toothbrushes, mouthwashes, allergy remedy, stomach remedy, cold remedies, decongestant, sinus remedy, throat drops, pharmaceuticals.

 Vicks Formula 44, Vicks vaporub, Actonel, Didronel, Crest, Metamucil

....P&G went for contraction and altering of existing products to remove cost overheads and increase market share.

….They went for contraction by removing 11 brands from various lines and alteration by making common fragrances for Vidal Sasoon shampoos and conditioners at varied prices throughout the world.

STRENGTHS1.Decrease complexity in logistics.2.Better allocation of resources.3.Better brand portfolio management.4.Decrease the cost of manufacturing, promotion , R&D…

WEAKNESSES1.It can lead to shortage of product line.2Many times it leads to decrease in market share.3.Some time it spoils the image of company.4. It can decrease the overall profit of company.

OPPORTUNITIES1.During recession of economy, marketers can use it as a tool.2.Industries can use it to increase its brand loyalty.3.Better bargaining power.

THREATS1.After pruning, Competitors can enter in market and launch their products with slight or no difference.2.It is very difficult to launch the same product again after pruning

PROS CONSLow-cost, low-risk way to introduce new products.

Weaker Lines and Quality maintenance becomes difficult.

Brand loyalty increases due to availability of wide range of products.

Profits earned by extending product lines were short lived.

Increasing customer base in different segments.

Can fragment the overall marketing efforts of the firm and dilute the brand’s image.

Occupying large shelf space from retailers.

Line proliferation distracts the attention of the R&D department

Increase in advertisement cost.

P&G renamed its detergent “Fairy” to “Dawn”. Renaming affected sales of company as customers were not happy with change of name.

DESIRABLE QUALITIES FOR A CHANGE IN BRAND NAME:

If customer associates themselves with a particular brand, it should be maintained.

Should suggest something about products benefits & qualities.

Cultural factors affect the success or failure of a brand.

Should be easy to pronounce, recognize & remember.

Should be distinctive.

Product Line managers should periodically check and analyze the product line that yield no profits.

It is matter of great concern for a company that increase in sales of its one product should not be at the cost of its another product.

Before extension of product line, it is necessary to know that whether the product should be launched under same umbrella of brand or not.

There should be Cost –Benefit analysis.

…..Chandan Sukul…..Gopal Krishna Das…..Pallavi Boruah…..Partha Mishra…..Sandeep Taparia…..Sulagna Chatterjee…..Vikram Kapoor…..Yashodhan Mundra