P&G case

Procter & Gamble Procter & Gamble (P&G) is one of the most skillful marketers of consumer packaged goods. The company’s scope and accomplishments are staggering. It employs 138,000 people in more than 180 countries; is a global leader in the majority of the 22 different product categories in which it competes; has USD 23 billion global brands; spends more than USD 5 million a day on R&D, and has total worldwide sales of more than USD 76 billion a year. Its sustained market leadership rests on a number of different capabilities and philosophies: Customer Knowledge. P&G studies its customers—both end customers and trade partners—through continuous marketing research and intelligence gathering. It spends more than USD 100 million annually on more than 10,000 formal consumer research projects every year and generates more than 3 million consumer contracts via its e-mail and phone center. It also puts more emphasis on getting its marketers and researchers out into the field, where they can interact with consumers and retailers in their natural environment. Long-term outlook. P&G takes the time to analyze each opportunity carefully and prepare the best product, then commits itself to making this product a success. It struggled with Pringles potato chips(品客薯片)for almost a decade before making market success. Product innovation. P&G is an active product innovator, devoting USD 1.8 billion (3.5 percent of sales) to R&D, an impressively high amount for a packaged-goods company. It employs more science PhDs than Harvard, Berkeley, and MIT combined and applies for roughly 3,000 patents each year. Part of its innovation process is developing brands that offer new consumer benefits. Recent examples include Febreze(纺必适),an odor-eliminating fabric spray; Swiffer(速易洁), a new cleaning system that more effectively removes dust, dirt, and hair from floors and other hard surfaces; and Mr. Clean Magic Eraser, a innovative cleaning sponge that contains a specialty chemical compound developed by BASF(巴斯夫). Quality Strategy. P&G designs products of above-average quality and continuously improves them. When P&G says “new and improved,” it means it. Recent examples include Pantene Ice Shine shampoo, conditioner(护发素), and styling gel(发型啫哩),and Pampers BabyDry with Caterpillar Flex, a diaper designed to prevent leaks when babies’ stomachs shrink at night. Brand extension strategy. P&G produces its brands in several sizes and forms. This strategy gains more shelf space and prevents competitors from moving in to satisfy unmet market needs. P&G also uses its strong brand names to launch new products with instance recognition and much less advertising outlay. The Mr. Clean brand has been extended from household cleaner to bathroom cleaner, and even to 1 a carwash system. Old Spice was successfully extended from men’s fragrances to deodorant. Multi-brand strategy. P&G markets several brands in the same product category, such as Luvs(乐芙适)and Pampers(纵容;娇养)diapers and Oral-B and Crest toothbrushes. Each brand meets a different consumer want and competes against specific competitors’ brands. At the same time, P&G has begun carefully not to sell too many brands and has reduced its vast array of products, sizes, flavors, and varieties in recent years to assemble a stronger brand portfolio. Communication pioneer.With its acquisition(收购) of Gillette, P&G became the nation’s largest advertiser, spending over USD 5 billion a year on advertising. A pioneer in using the power of television to create strong consumer awareness and preference, P&G is now taking a leading role in building its brands on the Web. It’s also infusing stronger emotional appeals into its communications to create deeper consumer connections. Aggressive sales force. P&G sales force has been named one of the top 25 sales forces by Sales and Marketing Management magazine. A key to its success is the close ties its sales force forms with retailers, notably Wal-Mart. The 150-person team that serves the retail giant works closely with Wal-Mart to improve both the products that go to the stores and the process by which they get there. Manufacturing efficiency and cost cutting. P&G’s reputation as a great marketing company is matched by its excellence as a manufacturing company. P&G spends large sums developing and improving production operations to keep its costs among the lowest in the industry, allowing it to reduce the premium prices at which some of its goods sell. Brand-management system.P&G originated the brand-management system, in which one executive is responsible for each brand. The system has been copied by many competitors but not often with P&G’s success. Recently, P&G modified its general management structure so that each brand category is now run by a category manger with volume and profit responsibility. Although this new organization does not replace the brand-management system, it helps to sharpen strategic focus on key consumer needs and competition in the category. It’s easy to see that P&G’s success is based not on doing one thing well, but on successfully orchestrating the myriad(无数的)factors that contribute to market leadership. Discussion Questions: 1.With P&G being the most successful global supplier of consumer goods, what are the major features of its marketing innovation? 2.Analyze the strengths and weaknesses of P&G’s multi-brand strategy. 2