Procter & Gamble: Analyzing Expansion

Analyzing Expansion

Company overview

Procter & Gamble (P & G) is the largest manufacturer of consumer products.

One of the top 10 largest companies by market capitalization.

Founded in 1837, headquartered in Cincinnati , Ohio by William Procter and James Gamble.

Mainstay in American business for over 150 yrs.

Known for Successful brands, introducing new products and maintaining popularity.

Pampers, Tide, Bounty, Folgers, Pringles Charmin, Swiffer, Crest , food, beverages and many more.

$83.62 billion in sales and $14.48 billion profit by 2012

Company History

Brothers-in-law William Procter and James Gamble started a partnership of making and selling candles and soap in Cincinnati in 1837.

In 1859, P&G sales reached $1million. In 1924, P&G creates a market research

department to analyze customer buying habits.

New products kept on adding and sales reached $10 billion by 1980.

P&G now operates in over 80 countries and has 13 billion dollar brands in its portfolio.

Core Values of the company

Always try to do the right thing. Be honest and straightforward amongst each

other. Operate within the spirit of the law. Be data-based and intellectually honest at

recognizing risks. Be a leader in their area of responsibility. Achieve leadership objectives and strategies.

Statement of Purpose

“To improve the lives by touching them everyday”

P&G brands and Products

Most of the brands under P&G are global products available in several continents.

P&G products are available in over 180 countries.

P&G brands and Products

Most of the brands under P&G are global products available in several continents.

P&G products are available in over 180 countries.

Major brands include Pringle’s, Duracell, Pantene, Pampers, Gillette, Olay, etc.

Business Operations

Three main units - Beauty care House hold care Health and well being

Others - Baby care Pet care Grooming segment

Business Goals

Three main focuses - Maintaining popularity of existing products. Developing new products related to the company’s goals. Innovating and introducing new products.

Market Competitors

In the beauty, hair and personal care segment, Avon is a major competitor to Procter and Gamble as are Colgate-Palmolive, Estee Lauder, Revlon, Coty, Elizabeth Arden, Inter Parfums Inc. and Unilever.

In the grooming segment, P&G’s Gillette brand is the dominant market player. Bic is a major competitor with a large international presence.

In the health care segment, major competitors include CCA Industries, Colgate-Palmolive, Church and Dwight Co., Ecolab, Stepan Company and United Guardian.

Market Competitors

In the fabric care and home care segment, major competitors include Colgate-Palmolive, Unilever, and Church and Dwight Co.

In the baby, feminine and family care segment, major competitors include Colgate-Palmolive, Unilever, and Church and Dwight Co.

P&G also faces competitions from numerous small and local competitors.

International expansion of P&G

Long time to internationalize: almost 100 years before P&G undertook operations internationally.

1930: P&G began to sell its products overseas (International Strategy).

1950’s: P&G focused on the largest emerging market in the world (China…) with a multi-domestic strategy

1980’s: P&G chose to benefit from the large experience of the company (more than a century).

Focus of Marketing Strategy

More Consumers Reach more parts of the world. Attract new customers into existing brands and

encourage existing customers to use more of their brands.

Focus of Marketing Strategy

Consumers will pay premium price for products that offer improvements over brands they use.

Product innovation must be designed to upscale consumer preferences.

These strategies, innovation and pricing can be used to enter markets of developing countries.

Strengths of P&G’s marketing Strategy

Ability to respond effectively to demands of emerging international markets.

Ability to attain economies of scale. Past experience to compete with competitors.

Challenges in P&G’s marketing strategy

It took a long time to expand to multiple nations and expansion even now is a time taking process.

Company faces several managerial challenges and regional challenges being a multi national company.

P&G's impressive portfolio includes some of the strongest brand names in the world. What are some of the challenges and risks associated with being the market leader in so many categories?

Brand Dilution: Customers stop associating different products with the brand itself.

Customers get a mixed brand image. Company faces competition from many small and

regional competitors. Hard to identify market segment.

With social media becoming increasingly important and fewer peole watching traditional commercials on television, what does P&G need to do maintain its strong brand images?

Use its data to analyze customer behavior and develop strategies accordingly.

P&G should engage with its customers actively through social media.

P&G should enhance its online presence especially when internet is on a boom.

What risks do you feel P&G will face going forward?

Competition from regional competitors. Dilution of brand as more and more products are

introduced. Fake products can also hamper brand image. Pressure to innovate.

Summary

P&G has evolved from a company started by 2 people for selling one product to a multinational company selling products in over 180 countries having numerous brands.

P&G has managed to maintain its brand value. However, it continuously faces a threat of brand dilution and must develop its future strategies to ensure that this does not happen.

Disclaimer

This presentation wascreated by Ryan Pal, IIT Kanpur, during marketing internship by Prof. Sameer Mathur, IIM Lucknow.

Ryan Pal,IIT Kanpur

Sameer Mathur,IIM Lucknow