Procter & Gamble: Marketing Capabilities Harvard Business School Case

P&G HISTORY• P&G is an American multinational consumer goods. • Company Headquarter in Ohio, United States. • P&G was founded in 1837 by William Procter and James Gamble. • William a Candle maker and James a Soap maker. • On 31 October the Procter and Gamble company was created. • With the increase of production demands, the company began to

investigate more productive and less time-consuming ways to make soap.

• That eventually led the firm to many more innovative ideas and many more lines of soap, for hair, laundry, and eventually dish washers.

• Other kinds of products would be born as well.• P&G brands are inspired to understand the needs, desires and

aspirations of men and women and by their commitment to R&D and collaborative external research 

1837 – As a result of their father-in-law’s suggestion, William Procter and James Gamble become business partners. Their total assets were $7,192.24. 1858 – Cincinnati Stock Exchange opens. 1859 – P&G sales reach $1 million 1879 – James Norris Gamble, son of the founder and a trained chemist, develops Ivory Soap. 1882 – Harley Procter convinces the partners to allocate $11,000 to advertise Ivory Soap nationally. 1885 – CSE was reorganized and reactivated after the Civil War, during which it was closed. 1890 – The partners incorporate. William Alexander Procter, son of the founder, is named the first president. 1892 – Employee stock purchase program was inaugurated. 1895 – King Camp Gillette invents the first safety razor.  

P&G Time-line

1900 – Net earnings reached $1 million. 1901 – American Safety Razor Company, which later becomes the Gillette Co., forms in Boston, MA. April 30, 1901 – P&G became listed on the CSE. 1907 – William Cooper Procter becomes president, following the death of his father. 1911 – P&G introduces Crisco, the first all-vegetable shortening. 1915 – P&G becomes an international company, building its first factory outside of the U.S.A., in Canada. 1926 – P&G produces Camay, a perfumed beauty soap. 1929 – CSE Board Meeting Minutes show that because of a change in the classification of stock, P&G needed to fill out another application to remain on the CSE. They did so, and the stock was approved for listing. There was no additional lifting fee for P&G because they were listed prior to January 27, 1927. 1930 – William Cooper Procter turns the reins of the company over to Richard R. Deupree. 1931 – P&G begins to focus on brand management. 1933 – Dreft, the first synthetic detergent developed for household use, is introduced.

P&G Time-line

1934 – William Cooper Procter dies; P&G enters the hair business with Drene, the first detergent-based shampoo. 1935 – P&G expands its international presence with the acquisition of the Philippine Manufacturing Company, its first operations in the Far East.1937 – P&G turns 100. Sales reach $230 million. 1946 – Tide is introduced. It is the country’s leading laundry product by 1950. 1948 – Niel H. McElroy assumes leadership of P&G.1950 – The first subsidiary on the South American continent is established in Venezuela.1955 – Crest is introduced.1956 – The new General Office opens up in downtown Cincinnati.1957 – P&G acquired Charmin Paper Mills, entering the consumer paper products business; Howard J. Morgens takes over company leadership when Neil McElroy leaves to serve as U.S. Secretary of Defense.1960 – P&G opens its first office in Frankfurt, Germany; the company introduces liquid Downy, the company’s first fabric softener.1963 – P&G acquires Folgers.1965 – The first paper plant built by P&G opens in Mehoopany, PA.1967 – Ariel, a global laundry brand, is introduced; Braun, established in 1921, is acquired by Gillette.1968 – Pringle’s is introduced.1986 – Ultra Pampers and Luvs Super Baby Pants are introduced. Pert Plus/Rejoice is introduced. 1987 – P&G turns 150; acquires Blendax in Europe.1988 – P&G announces a joint venture to manufacture products in China.1989 – P&G acquires Noxell and its Cover Girl and Noxzema products.1990 – Edwin L. Artzt is named to lead P&G; P&G acquires Old Spice.1991 – P&G acquires Max Factor and Betrix. P&G opens its first operation in Eastern Europe with the acquisition of Rakon in Czechoslovakia.

P&G Time-line

1992 – P&G receives the World Environment Center Gold Medal for International Corporate Environmental Achievement; Pantene Pro-V is introduced, and it quickly becomes the fastest growing shampoo in the world.1993 – Company sales exceed $30 billion; 50% of sales come from outside the U.S. for the first time in P&G history; Japan Headquarters and Technical Center opens on Rokko Island in Kobe City, Japan.1994 – P&G acquires VP Schickedanz, a German-based company; P&G adds Giorgio Beverly Hills to its fine fragrance business; the company re-enters the S. African market after the lifting of U.S. sanctions against investment in S. Africa; U.S. Dept. of Labor gives P&G the Opportunity 2000 Award for instituting equal employment opportunities and creating a diverse work force.1995 – John E. Pepper becomes Chairman and CEO; Durk I. Jager becomes President and COO; P&G is awarded the National Medal of Technology, the highest award the United States bestows for achievement and technology; P&G opens its Health Care Research Center in Cincinnati.1996 – U.S. FDA grants approval for Olestra in salty snacks and crackers; P&G acquires Baby Fresh, a U.S. baby wipes brand; Gillette acquires Duracell. 1997 – P&G introduces Tampax.  1998 – Mach 3 razor, Febreze, Dryel and Swiffer are introduced. 1999 – Durk Jager becomes Chairman of the Board and Chief Executive; P&G acquires Iams pet food and Recovery Engineering, Inc. 2000- A.G. Lafley becomes President and CEO; U.S. FDA approves Actonel.2001 – Crest WhiteStrips is introduced; P&G acquires Clairol business from Bristol-Myers Squibb Co. 2002 – A. G. Lafley is elected Chairman of the Board; Bruce Byrnes and R. Kerry Clark are elected Vice-Chairman of the Board; ThermaCare HeatWraps are introduced.2003 – FDA approves switching Prilosec from a prescription to an over-the-counter product; P&G acquires controlling interest in Wella AG, a leading hair care company.2004 – P&G’s Childrens Safe Drinking Water Program wins the World Business Award from the UN Development Program & International Chamber of Commerce; Actonel becomes a billion dollar brand, P&G’s first pharmaceutical brand to reach this milestone.2005 – P&G and Gillette merge into one company.P&G currently employs 140,000 people in 80 countries.

P&G Time-line

P&G evolution of Logo

To provide branded products and services of superior Quality and value that improve the lives of the worlds consumers, Now and for generations to come.

To be the best consumer products and services company In the world.

• Integrity• Leadership• Ownership • Passion for winning • Trust

MISSION

VISION

VALUES

P&G

P&G Products

P&G Brands

•  Since A.G. Lafley became chief executive officer in 2000, the leaders of P&G have worked hard to make innovation part of the daily routine and to establish an innovation culture.

• Lafley and his team preserved the essential part of P&G’s research and development capability — world-class technologists who are masters of the core technologies critical to the household and personal-care businesses — while also bringing more P&G employees outside R&D into the innovation game.

• They sought to create an enterprise-wide social system that would harness the skills and insights of people throughout the company and give them one common focus: the consumer.

• Without that kind of culture of innovation, a strategy of sustainable organic growth is far more difficult to achieve.• The decision to focus on innovation as a core strength throughout the company has had a direct influence on their performance.

• P&G has delivered, on average, 6 percent organic sales growth since the beginning of the decade, virtually all of it driven by innovation.

• Over the same period, we’ve reduced R&D spending as a percentage of sales; it was about 4.5 percent in the late 1990s and only 2.8 percent in 2007. In that year, they spent US$2.1 billion on innovation, and received $76.5 billion in revenues. 

P&G’s Secret Sauce

• Global Leader in Branded Consumer goods • Has 2 dozen $1bn brands known worldwide • First company to advertise directly to consumers• 2010, total sales=$78.94bn • Net Income=$12 bn

• Market capitalization=$186.63bn Sales Percentage Household care beauty & grooming Health & well being 4th Qtr

• Regional Sales North Amercica Latin America West Europe East Europe& Africa Asia

P&G case facts

• The main philosophy behind the successful progression of the company is that besides cashing its global presence it focuses on every market segment which does business for the company; no matter of which extent that business is of!

• The mission statement of Procter and Gamble revolves around the standard elevation of human lifestyle by introducing chains of modernized and superior quality brands.

• P&G had pursued a multi-brand strategy with each getting individual support an satisfying a segment of the market.

• In 2000, P&G set its goal to become a top product-design company in the world, a departure from P&G’s past focus on function, performance and price.

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

• New Emphasis shifted the company towards more consumer-centric marketing approach

P&G Marketing Strategy

P&G Marketing Strategy

P&G consumer centric marketing

• The Common theme is a deep understanding of the consumers who offer the potential for growth

• P&G strove to develop metrics that measured brand loyalty and customer relationship • In 2008, P&G wooed recession-wary consumers with more focused attention to in-store

promotions such as coupons, displays etc.

• Customer-centric marketing teams think of their customer base as their greatest long-term investment. A useful analogy might be a financial portfolio containing different types of assets: stocks, bonds, and money market funds. These assets are all important in delivering long-term value.

• P&G conducted over 20,000 research studies each year, and invested over $500 million into developing and executing these studies.

• Qualitatively, P&G ran focus group discussions, interviewed consumers at home, and performed in-context visits and in-store interviews.

• Quantitatively, P&G gathered data on consumers utilizing blind tests, concept and use tests, and quality monitoring.

• New technologies also continued to provide P&G with ways to engage and measure consumer interests, habits and satisfaction.

P&G commitment to consumer

P&G’s Advertising• P&G had been a marketing trailblazer from the

outset• P&G have relied heavily on developing long-standing partnerships with advertising agencies to develop robust brand identities for its portfolio of consumer goods.

• One of the first example of P&G’s successful advertising campaign for the 2010 Winter Olympics which featured the commercial that thanked moms around the globe for their effort.

• P&G’s advertising had been built around the idea that functionality would sell over emotional connection. Also, they believed that equity of great brands has to something that a consumer finds inspirational and an organisation finds inspirational.

P&G’s Advertising

P&G’s Advertising

• P&G, a U.S Olympic team sponsor for the 2010 Games .• Worldwide sponsor for 2012 winter games and also 2016 summer games in Brazil. • P&G sponsor NFL and tied in with the NFL’s Play 60 initiative.

Sponsorships

• P&G brought a number of celebrity endorsers, including stars like Ellen DeGeneres, Eva Mendes and Naomi Watts.

• Tennis legend Roger Federer was featured in Gillette Fusion products and soon became huge hit.

• 2010, Sebastian Vettel, the “youngest ever” Formula One champion, secured a long-term sponsorship with P&G to promote Head & Shoulders shampoo.

Celebrity Endorsements

• Throughout the 1990s, P&G’s digital activity had been limited to its operations of brand websites.

• By 1999, P&G expanded its digital content with the launch of pampers.com and expanded it to 49 countries till 2007

• P&G launched its first mobile marketing ad campaigns in 2006 promoting Crest Whitening Plus Scope toothpaste

• Segmented Campaigns such as “My Black is beautiful” and “ The Man Your Man Could Smell Like” garnered huge success.

Digital Marketing

Digital Marketing

Social Media• P&G used Facebook as a marketing supplement, not a replacement.• P&G launched 2 social media sites: Capessa for woman and the people choice community.• Manofthehouse.com was P&G’s earlier social media effort which featured household advice for

men.• Building on its strengths in R&D, consumer research, and product performance, P&G continued

to evolve and innovate as the world’s largest marketer.

Social Media

• Ivory – soap

• Tide- brand of laundry detergent.

• Pampers- brand of disposable diaper

• Crest- brand of toothpaste

• Always- brand of sanitary pads

Major Products

Connect And Develop

• P&G had a network of 70 technology entrepreneurs to maintain its pace with the latest research.

• Its key strategy ,Connect-and-develop had to combat P&G’s long-standing centralization and internal focus.

• Over its Journey, P&G have been successful in keeping the cost of innovation low as a percentage of sales.

What’s Next?• As P&G continued to push toward reaching 5 billion consumers served worldwide, its evolving

marketing capabilities took centre stage. • The firm had proven its ability to navigate the digital environment with efforts like “The Man

Your Man Could Smell Like” and Manofthehouse.com, had incorporated a sense of design into its culture, and aimed to complement its strong function-driven marketing background by adding emotional efforts such as the “Thank you, Mom” and “Loads of Hope” campaigns.

• Building on its strengths in R&D, consumer research, and product performance, P&G continued to evolve and innovate as the world’s largest marketer.

Sameer Mathur IIM Lucknow, Marketing Professor 2013 –

McGill University Marketing Professor 2009 – 2013

Carnegie Mellon Ph.D and M.S (Marketing) 2003 – 2009

DISCLAIMER

NARESH R

Vellore Institute Of Technology (VIT University , Vellore)

Marketing Management Intern-2017