Case Summary

Positive Income: Year 3 Target Demo: Men 16-34 Potential Market: >$100 M Launchpad to Western Europe

P&G Overview

Procter and GambleP&G: Touching Lives, Improving Life...

• 1837

• 175 years history

• Serves 4.8 billion people / Operation in 70 countries

• 50 Leadership brands/ 25 billion-dollar brands

• Beauty/ Baby, Feminine and Family Care

• Fabric and Home Care/ Health and Grooming

Financial Highlights

Profitability P&G Industry

Gross Margin 49.59 52 ROA 8.33 8.64ROE 17.38 22.21

Solvency P&G Industry

Debt/Equity .47 .85Interest Coverage 23.25 13.60

Efficiency P&G IndustryInventory Turnover 6.23 4.85Receivables Turnover 13.39 10.06Asset Turnover .62 .82

Financial Performance

Liquidity P&G Industry

Current Ratio .80 .88Quick Ratio .41 .53

2013 Net Sales

Developed Markets

Beauty

Country Analysis

Italy Country Analysis

Population

61.5 MGrowth Rate

0.34%

Urban Pop.

68%

Male Age 15-355.1 M

Government & Political direction Corruption & Organized crime Judicial system Ranked 102nd- Institutional environment

Political Factors

Economic Factors

GDP$2.014 T

GDP per capita$33,115

Europe5th largest economy

Italy is part of a monetary union, the Eurozone (dark blue), and of the EU single market.

World10th largest

economy

GDP Growth Rate

Social Factors

Fashion Conscious First Impressions Face-to-Face contact Expressive Communicators Sports Low Labor Efficiency

Appearance

Technology

Highly educated workforce Sophisticated work process Long tradition in science & technology Advanced medical care

Bologna University is the oldest academic institution of the world, founded in 1088.

Environmental Factors

Good infrastructure Education and Training Programs Electricity and Telecommunications is good Highly sophisticated business environment High Tax Rate, Ranks #4

Infrastructure

Most Problematic Factors

Italian Personal Hygiene Industry

Industry Definition

Bath & Shower Products Oral Care Deodorants Grooming

Industry Opportunities

Export Growth Global Distribution Organic Product Youthful New Target Markets The “Italian Man

Market Growth

Hygiene Market$1,513 M

Market Volume

-2%

Growth Forecast

0.8%

Growth by Value

Growth by Units

Geography Segmentation

Category Segmentation

Personal Hygiene Market Share

Fading Traditions

Growing Industry Traditional belief: “Human Smell” Marketing Push by Manufacturers The “Italian Man”

Porter’s Analysis Summary

Analysis Summary

Barriers To Entry

Supplier Power

Buyer Power

Rivalry From Competitors

Rivalry From Substitutes

SWOTSTRENGTHS WEAKNESSES

● Leading market position garnered on a strong brand portfolio

● Significant R&D and marketing investments

● Strategic acquisitions expanded P&G’s product portfolio

● Increasing presence in the developing markets

● Robust cash productivity

● Increasing instances of product recalls

● Weak brand presence in Italian hygiene industry

OPPORTUNITIES THREATS

● Growing men’ s grooming industry Initiatives to improve productivity

● Growing personal care and home care markets

● Rising input cost inflation● Counterfeit goods

Deodorants

Deodorants Company Shares

Italy Deodorants Brand/Parent Share

Parent Brand % Share Parent Brand % Share

Artsana, Gruppo Lycia 6.8 Mirato Nuova SpA Malizia 6.5

Avon Products Inc Avon 1.7 Mirato Nuova SpA Intesa 5.7

Beiersdorf AG Nivea 14.9 Other (<1%) 15.9

Bolton Group, The Roberts 11.9 Paglieri SpA Azzurra 1.5

Bolton Group, The Borotalco 2.5 Private Label 3.1

Dibra Spa Hanorah Breeze 1.5 Procter & Gamble Co, The Infasil (divested) 8.5

Henkel AG & Co KGaA Neutromed 1.8 Procter & Gamble Co, The Gillette 0.4

L'Oréal Groupe Vichy 1.8 Unilever Group Dove 13.2

Unilever Group Axe/Lynx/Ego 2.3

Deodorants Brand Shares

P&G - ItalyShaving Deodorant Skin & Hair Soap/Body Wash/

ShampoosGillette + FusionBraunVenusMach3

GilletteInfasil (divested)

SebastianHerbal EssencePantene OlayKoleston

Head & ShouldersHerbal Essence Gillette

Perfumes Colognes Teeth/Oral care Medicines Makeup

Laura BiagiottiPuma Hugo BossDolce & GabbanaLacosteReplayGucci

AZFlucarilParogencylOral BKukident

Vicks (Nyquil/Dayquil)

Dolce & GabbannaMax FactorWellaSebastian

OLD SPICE

Products

Product Types Fragrance Variations Total Products

7 22 96*

Value Proposition

Masculinity - Maturity - ConfidenceProduct: Innovative and masculine

Targeted female viewers, despite the product's target market being male

A Product for Your Hygiene Problem

4 D’s of Marketing

Distinct Desirable

Defendable Deliverable

Entry Model1. Introduce

2 product types, 3 scentsTarget: men’s market

2. Utilize Existing manufacturing capacity in GermanyImport to Italy

3. Ally Italian PR company and advertisers

4. Share Distribution channel with GilletteExpand channels corresponding to growth

Entry Model

Introduce

Utilize

Ally

Share

Marketing Mix Implementation

Product

Fragrance from market research Vibrant Packaging

Target Males 16-34 Position Gillette Males 35+

Single package:- 2.35oz (80ml) stick- 5oz (150ml) spray

Brand:Classic, dapper

masculinity

Price€ Stick Spray

Low Cost 2-3 2-4Super-Premium 19-25 22-35

Old Spice as mid-premium

pricing

Stick Spray

6 7

PlaceSuper/Hyper

MarketsOnline

RetailersDenseCities

Conad eBay Milan

Coop Amazon FlorenceEssalunga NaplesPanorama Rome

Personal Hygiene Distribution

● Social Media○ Outsource viral marketing to

local PR firm○ Satellite to sales

● Scented Magazine Ads ● Television Networks● Athletic Sponsoring

○ 2014 World Cup○ 2016 Olympics

● Promotional Special Events

Promotion

Product Manager (From Old Spice American

Parent company)

Sales Manager (Italian/ Local)

Marketing Manager (From Old Spice +

local)

Outsourcer (local marketing

agency & advertisers)

Operation Manager

Administrative Manager

Human Resources

• Start investing from the first quarter of 2014

• The initial investment in 2014 is $12.85 million.

• Direct investment from the P&G American parent company

Finance Source

$$$$$Finance Source

Invest: First Quarter 2014

Initial investment $12.85 million

Direct investment from parent company

Market Outlook

Market Volume Forecast

Financial Projections

1.50% 2014 2015 2016 2017 2018

Italian Deodorant Market 569.41 577.95 586.62 595.41 604.35

Old Spice Market Share 2.00% 2.40% 2.88% 3.60% 4.32%

Projected Revenue (M) 11.39 13.87 16.89 21.43 26.11

COGS 2.28 2.77 3.38 4.29 5.22

Gross Income 9.11 11.10 13.52 17.15 20.89

SG&A 2.85 3.47 4.22 6.43 7.83

Extra Marketing 10.00 8.00 6.00 3.00 3.00

Total Expenses 12.85 11.47 10.22 9.43 10.83

Operating Income -3.74 -0.37 3.29 7.72 10.05

Taxes -1.17 -0.12 1.03 2.42 3.16

Net Income -2.56 -0.25 2.26 5.29 6.90

Net Profit Margin -22.51% -1.84% 13.37% 24.70% 26.42%

Next Steps

Expansion1. Old Spice bodywash and soap2. Italian women’s market3. France and Spain

ExitIf the project cannot reach or beat P&G general net profit margin in year three, suspend the project and reposition the brand

Works Cited

OUTLINE