procter and gamble - history, evolution, present and the future
DESCRIPTION
A comprehensive background of P&G containing its History and Origins, Early Evolution, Modern Business, Global Expansion, Company Structure, Recent Efforts and Company DNA. As one of the chapters of the book FMCG: The Power of Fast-Moving Consumer Goods by authors Greg Thain and John Bradley. For more details on their success story and that of other leading FMCG companies, check www.fmcgbook.com or Amazon http://amzn.to/1jRyd20.TRANSCRIPT
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History & Origin . . . . . . . . . . . . . . . . . . . 3
Early Evolution . . . . . . . . . . . . . . . . . . . .4
Global Expansion . . . . . . . . . . . . . . . . . 7
Modern Business . . . . . . . . . . . . . . . . . 10
Company Structure . . . . . . . . . . . . . . 11
Recent Efforts . . . . . . . . . . . . . . . . . . . 13
Company DNA . . . . . . . . . . . . . . . . . .17
Summary . . . . . . . . . . . . . . . . . . . . . . . 18
Social Media Accounts . . . . . . . . . . . 19
Founded in Cincinnati, Ohio, USA in 1837
Alexander Norris, a Cincinnati candle-maker, was concerned for the
financial well-being of his two daughters, Olivia and Elizabeth,
during an economic downturn precipitated by a banking crisis, so
he suggested to their respective husbands that they combine their
struggling businesses to better weather the storm
Irish soap maker, James A. Gamble and English candle-maker,
William Procter dutifully pooled their collective business assets of
$7,192.24 to create the firm of Procter & Gamble (P&G) on 31st
Their surplus fat made a lot of candles and soap
Procter & Gamble given its location backed the winning side and
was soon shipping vast quantities of candles and to a lesser extent
soap to the Union armies
The business founded at a time before modern consumer markets
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Procter bought the formula and playing around with it decided to
combine it with another soap feature he had been experimenting
with himself; floatability, which stopped the bar getting lost in
murky bathwater
For the next 30 years, P&G concentrated most of its efforts in
developing an unrivalled competence in soaps and consumer
P&G could have remained as one of America’s hundreds of soap
companies and would almost certainly have been swallowed in the
great series of interwar industry consolidations with the likes of
James S. Kirk & Co
P&G immediately improved their product by adding naphtha
P&G formed the Buckeye Cotton Oil Co. to acquire and build
cottonseed oil mills
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A scientist E. C. Kayser, literally walked into its office with the
technology for hydrogenation, which enables liquid oils to be
solidified at room temperature. P&G bought it in short order,
patented it four years later and launched Crisco, the world’s first
shortening made entirely from vegetable oil
P&G had been expanding laterally in the soap market
In 1890, P&G had 577 direct soap competitors which kept prices
low and profits elusive
In 1903, P&G entered laundry powder
P&G become second-biggest brand after Ivory had been Lennox
The soap industry began to consolidate and P&G, bolstered by the
success of Crisco, was able to lead the charge swallowing up many
local, regional, and even national players
P&G products sales of $188 million in 1919 fell to $106 million by
1922 and did not reach their original level until 1926
P&G’s launch of Camay, a perfumed ‘beauty’ soap, developed as a
response to the launch of Palmolive.
P&G’s first operation outside of the United States had been as
early as 1915 in the manufacturing plant in Hamilton, Canada
They set up an International division in 1946
The next baby step came in 1948 with an acquisition in Mexico,
soon to be followed by Venezuela and Cuba
By 1990, there was operations in sixteen product categories
Today it has a share of around 25% in the $4 billion, and rapidly
growing, Mexican household products market among other sectors
Through the 1950s P&G built detergent plants in France, Belgium
and Italy
They led to the initial development of Tide with Henkel, Europe’s
detergents giant
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Ariel became P&G’s power brand in its overseas markets, and
strong enough to overtake Tide and become the company’s largest
detergent brand
Pampers became a very big brand for P&G across most of its
European markets.
P&G’s next major learning experience in globalism came with its
1970s experience in Japan
P&G had a fairly standard approach to entering markets; research
the consumer and retail trade form an alliance with a local player
as a quick access route and a conduit for P&G technologies and
brands until a critical mass for a P&G local operation was achieved
By 1985, thirteen years after entering the market P&G still hadn’t
turned a profit and pulled together a last-ditch attempt to make a
success of its venture
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P&G developed a large and profitable business in Japan an
experience that would inform its subsequent forays into Eastern
Europe and the emerging BRIC markets (Brazil, Russia, India,
China)
In the end of the 1970s P&G had finally established itself as a
genuine global company with one-third of its sales coming from
outside the US
P&G was determined to win first place in the race into the
crumbling Communist markets of Eastern Europe
P&G’s Eastern European business had looked very rosy indeed
with annual revenues well over $1 billion in 1997
P&G was also very quick into China opening the biggest consumer
products factory in the country in 1991
In three years it was shipping four million cases of product a year,
making the China one of P&G’s top-ten markets 8
P&G progressively extended into fabric care, feminine care, oral
care and baby care, eventually building China into its second-
largest market, generating sales of $6 billion in 2012
The rate of growth in China for P&G products was around $200
million
After ten years it was increased to $2.8 billion
P&G’s growth in developing markets has become the growth
engine of the entire company
Their Sales of $8 billion in 2001 had grown to $21 billion by 2007
when they accounted for 29% of total company sales. Two years
later that was up to 32%
P&G’s compound annual growth has been 17% in China, 25% in
Russia and 27% in India
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Procter & Gamble came into the post-war period better equipped
than any other packaged goods company to benefit from the
twenty-year consumer boom that was about to take place
P&G focused on developing its skills in product enhancements
P&G was now changing rapidly into a maker and seller of brands
rather than having any specific category focus
It was the country’s biggest advertiser at a time when television
dramatically enhanced the ability to reach and influence
consumers
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P&G had first structured itself into divisions as early as 1955 Tambrands, Clairol, and Wella purchases made the company in a
state of constant realignment, which was not eased by selling
some of is businesses After the Wella acquisition, it was employing nearly 100,000
people in over 80 countries In 1998, P&G launched Organisation 2005 with an aim to cope with
the twin challenges of a truly global company trading in various
market conditions, while operating across a large number of
product segments It resulted to three-pronged matrix with seven Global Business
Units (GBUs) in the first segment: Issue and Towel Fabric and Home Care Feminine Protection Health Care
Food and Beverage Baby Care Beauty
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The second segment had eight Market Development Organisations
(MDOs), that were responsible for customer development and local
marketing execution
The third segment was a global set of corporate functions
The re-organization didn’t go well, resulting to a 2.6% sales drop
CEO A.G. Lafley, gave matrix structure an external focus by coming
up with the “Two Moments of Truth” idea
Baby Care, Feminine Care, Tissue and Towel, and Health Care
segments were merged into one new Baby Care and Family Care
unit
He also demanded to focus on winning with top brands, customers,
and market
In 2003, P&G’s top ten brands grew by 8%, top ten customers by
13%, and top ten markets by 11%
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2004
Net sales increased by 17%, breaking the $50 billion barrier
Global market shares core segments increased: 36% in Baby Care,
35% in Feminine Care, and 31% in Fabric Care
Pharmaceuticals Sector launched Actonel, an osteoporosis brand
Prilosec OTC brand achieved market leadership in the heartburn
treatment category
2005
Sales increased by 11% to $57 billion
Tide Coldwater made a successful transition in European and North
American markets
Product innovation like Tide with a Touch of Downy, Febreze air
freshener, Blendax toothpaste, Bounty Basic, and Charmin Basic
Gillette acquisition deal was ratified, increasing the company by
20%
Gillette deal included Duracell, Braun electric shavers, and Oral-B
toothbrush13
2006 Gillette deal boosted sales by 20% to $68 billion Launched the year’s best selling new product, Gillette Fusion Around 35% of the company’s products included technologies
sourced from outside the company
2007 Product innovations like Tide Simple Pleasures, Febreze
Noticeables, and Crest Pro-Health The company acquired Dolce & Gabbana Sales of blades and razors increased by 8%
2008 The 50% target for new products with an external component was
met Pampers Baby Stages of Development exceeded sales of $8 billion Charmin Ultra-Strong, Bounty Basic and Bounty Extra Soft, under
Family Care segment had a strong growth 14
In Beauty segment, Olay Regenerist and Dolce & Gabbana were in
the lead
2009
The economic crisis hit the company hard
Net sales declined by 3%
Baby Care and Family Care were the only segments to report
growth
CEO Lafley was replaced by Bob McDonald
2010
The company returned to growth
It claimed to have 4.2 billion customers
Ambi Pur and Sara Lee acquisition
Product innovations like Fusion ProGlide, Pampers with DryMax, and
Crest toothpaste 3D White
Gillette Guard was launched in India, making it the biggest-selling
razor in just three months15
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2011
P&G won 32 Lion Awards in Cannes Lions International Festival of
Creativity for its advertising
Natura pet business acquisition
Prilosec OTC merged with Teva Pharmaceutical Industries
From seven segments of Organisation 2005, it was down to two
namely Grooming and Beauty, and Household Care
2012
The return of growth in US did not fully help P&G to increase sales
Product innovation such as Tide Pods
Pringles was sold to Kellogg’s
The company is in the business of building brands and brand value
It was the first company to produce half-hour television series
It was also the first company to align every function in the
business around the sole goal of building brands
P&G mastered the application of science in building brands
Rigour and tenacity were two qualities that made P&G successful
in terms of building brands
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P&G currently sells 40 billion products a year
It ranked sixth in Fortune’s World’s Most Admired Companies
because of its expertise gained through long years of market
experience
Though considered as one of the best companies, it currently faces
greater challenge of returning into full growth
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Website/s: www.pg.com/en_UK/
www.pg.com/en_US/index.shtml
LinkedIn: www.linkedin.com/company/procter-&-gamble
Facebook: www.facebook.com/proctergamble
Twitter: www.twitter.com/proctergamble
Youtube: www.youtube.com/user/ProcterGamble
Google+: plus.google.com/+ProcterGamble/videos
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