Procter & Gamble: Marketing Capabilities -Case Study Material: Harvard Business School-Analysis by: -Email: hvasudha18@gmail.com Vasudha Harlalka -Mentor: Prof. Sameer Mathur VIT University, Vellore IIM Lucknow

Who Is P&G?•A global leader in branded consumer goods•Iconic category-defining products such as

Ivory soap, Crisco shortening, and Tide laundry detergent.

•The company managed two dozen $1 billion brands known worldwide, including Bounty, Crest, Downy/Lenor, Febreze, Gillette, Iams, and Pampers.

•P&G had pioneered marketing strategies that were considered standard industry practice.

• It was the first company to advertise directly to consumers, in the 1880s, and it invented “soap operas” by sponsoring radio and TV programming that targeted women.

• From these early marketing campaigns to recent experiments in digital media for its men’s hygiene brand, Old Spice.

• P&G is a seasoned marketer with: -strong consumer research - a powerful innovation network - an evolving marketing strategy - strong marketing talent, and the world’s

largest financial commitment to advertising

Firsts by P&G.• Analytical lab laid foundation for a

professional R&D division and establishing one of the first corporate labs in the field of consumer goods.

•It replaced the trial-and-error methods commonly pursued at the time, P&G took a scientific approach and connected R&D with the company’s sales and marketing.

Current Mission:•Corporate mission to build on its company

purpose to improve the lives of its customers through continued innovation to reach;

“More Consumers, In More Parts of the World, More Completely.”

Company Focus: It always focused on growth and was not afraid to make big

bets globally.

It focused on three specific choices:

1.to grow P&G’s core brands and categories with an unrelenting focus on innovation;

2.to build business with un-served and underserved consumers;

3.to continue to grow and develop faster-growing, higher margin businesses with global leadership potential

How is cannibalization prevented?•P&G has pursued a multi-brand strategy, and it

managed brands across a category carefully, with each getting individual support and satisfying a segment of the market.

Example: P&G’s detergent category illustrated this; Tide was offered as the premium brand; next came Cheer, which “cleaned colors safely”; Gain “had fresh scent”; at the bottom sat Oxydol, which “contained bleach.

Why study this case?

OBJECTIVE: (1/3)•To understand how a multi brand

company engages in marketing.

•Segmentation done to prevent cannibalization.

•Timeline of P&G and marketing changes over those years.

OBJECTIVE: (2/3)•Change in priorities while marketing

product over the years.

•Restructuring done by different CEOs

OBJECTIVE: (3/3)•Emergence of P&G as market leader.

•To evaluate how policy, plan and marketing strategies helped P&G grow.

TIMELINE:-

-2000 •Durk Jager: CEO •Focus on R&D and innovation.

2000-10 •Lafley: CEO•Top product designing

2010- •McDonald: CEO•Digital advertising and other new media

Druk Jager period:• 7 global business units (GBUs) based on product categories

replaced the company’s 4 geographic business units.

• For help with global product development and quick-to-market strategies.

• Three new teams supported the GBUs: -a business development team focused on innovating in existing

categories; - a venture team tasked with acquiring brands in new areas and

nurturing ideas created by the business development team that did not relate to an existing brand; and

- market development organizations that would perform intensive market research to ensure global products’ success in local markets.

P&G hoped the net result would be “bigger innovations, faster speed to market, greater growth—innovation vitality.”

Lafley & product design:

Ideology:“We have an innovation process and we want to

make sure that design is plugged in at the front end”.

“We want to design the purchasing experience—what we call the ‘first moment of truth’; we want to design every component of the product; and we want to design the communication experience and the user experience. I mean, it’s all design. And I think that’s been hard for people to come to grips with.”

Positions given: •Jim Stengel as chief marketing officer

(CMO).

•Lafley then created a new design unit, separate from P&G’s other business units, and named Claudia Kotchka as vice president for design innovation and strategy, giving her decision-making responsibility equal to that of P&G’s CMO and head of R&D.

Claudia Kotchka:• hosted a “design tasting”

• created the Clay Street Project, bringing cross-functional teams from their jobs elsewhere across the firm’s global footprint to Cincinnati for 10 weeks to create new brands based on design

• P&G did not use design as an antidote to its function-driven process but rather as a complement, helping consumers recognize, understand, and in some cases even imagine the functions of a given product.

Jim Stengel:• He moved P&G’s marketing approach away

from its traditionally process-oriented and template-driven culture toward a deeper understanding of who the product was for, what was different about that consumer, and how that consumer expected to use the product.

• He said, “Consumer-centric marketing makes no assumptions. It begins with ‘Who is your consumer, and what’s different about her?’ ” is a crucial question to address.

•Lafley and he developed metrics that measured brand loyalty and customer relationships, in addition to sales.

•Stengel says, “If you go back at Procter & Gamble, and in a lot of the industry, we often thought of our brands in terms of functional benefits. But the equity of great brands has to be something that a consumer finds inspirational and an organization finds inspirational.”

Lafley, Stengel and Kotchka: •Together they reorganised entire P&G

with fresh breath of designing which gave way to innovation and marketing schemes which had never been undertaken before.

•Also the campaigns, advertisements were tailor made for the prevalent scenarios, with modification in marketing to suit a recession hit economy.

McDonald: digital advertising•P&G would maintain the same level of spending,

while shifting dollars to digital advertising and other new media to broaden the audience

•the firm planned to reach a billion new customers by 2015. The firm’s worldwide Olympic sponsorship, announced in 2010, was one part of this effort. As P&G’s global marketing head noted, these kinds of sponsorships were aimed to “build our developing markets.”

Other Innovative Marketing Methods:

•Neuromarketing played an increasingly important role. P&G employed psychological surveys to measure mood and electroencephalography (EEG) technology to measure electrical activity in the brain as subjects were exposed to commercials. The approach held that feelings affected decisions and human behavior.

Partnerships to understand markets:•In 2010,P&G announced a partnership

with Tobii, a leader in eye tracking, which objectively identified visibility and attention that consumers gave to packaging, displays, and advertising.

•In 2008, P&G took a stake in Ocado, a U.K.-based online grocer, for understanding how consumers used the Internet and engaged in e-retailing

Traditional with a Twist: Sponsorships: It has engaged in

sponsoring Olympics and numerous other such events. Also it utilised for spreading love and

campaigning, “Thank You Mom” for emotional connect.

•Celebrities: Its brands give it access to celebrities from the likes of Taylor Swift, Ellen DeGeneres, to sportsperson like Roger Federer.

Thus, helping in endorsements from the same.

Old Spice’s catchy Ad:

“Loads of Hope” campaign, post-Katrina

Hypothesis:1. The P&G history and habit of rigorous product

and market testing, attention given to every aspect ranging from function, price and design enables the company enormous multi-brand company.

2. The change with time after appropriate market research to shift priority from: functionality in 90s, to design in 2000s, to digital in 2010s has been beneficial for the company.

Hypothesis: (cont)3. Pioneering connect and develop, the

permeable boundaries allow innovation seamlessly.

4. The struggle around 2009s was due to lesser focus on advertisements, and also recession hit in 2008s, and the effects and scare prevailed.

Decisions in accordance:•The decision of re-orgaisation taken by

Lafley was well timed and provided the company a much needed edge.

•Decision options being:-continue focus on functionality-product designing•Decision criteria:-emergence into market leader-changes made in history of P&G

-money returns on investment made

• Evidence:-growth under Lafley-company survival through global recession

period of 2007-08-easy shift into digital advertisement-acquisitions which allowed market entry and

expansion.- “my black is beautiful” line for African

countries.- “Loads of Hope” campaign success post-Katrina- “Thank You Mom” for sensitization and brand

loyalty

Strenghts:•Insight into timely changes which are

crucial after market analysis over time.•The survival and emergence into leader in

cut throat competitions reason has been assessed.

Shortcomings: •The data of decade wise, or year wise

analysis in comprehensive sense has not been used.

•The impact made by celebrities, sponsorships or any other marketing practice individually has not been assessed.

•The data is 4-5 years old by now, so relevance decreases.