Marketing Management

Procter & Gamble

Poonam Sankhe

Acknowledgement
I have taken efforts in this project. However, it would not have
been possible without the kind support and help of many
individuals. I would like to extend my sincere thanks to all of
them.
I am highly indebted to Mrs. Sadhna Singh for her guidance and
constant supervision as well as for providing necessary information
regarding the project & also for her support in completing the
project.
I would like to express my gratitude towards my parents for their
kind co-operation and encouragement which helped me in
completion of this project.

Index

Introduction and History of Procter & Gamble

Market Segmentation
Marketing Mix
Product Strategy
Pricing Strategy
Place Strategy
Promotion Strategy
Price
Positioning:
Channels of distribution
Distribution network of FMCG
Promotional Strategy
SWOT Analysis

PASTEL Analysis
Competitors of P&G in India
Promotion of Integrated Marketing Communications

o Introduction and History of Procter & Gamble

William Procter, a candle maker, and James Gamble, a soap maker,
immigrants from England and Ireland respectively who had settled
earlier in Cincinnati, who met as they both married sisters, Olivia and
Elizabeth Norris, formed the company initially.
Alexander Norris, their father-in law called a meeting in which he
convinced his new sons-in-law to become business partners. On
October 31, 1837, as a result of the suggestion, Procter & Gamble was
born.
In 1859, sales reached one million dollars. By this point,
approximately eighty employees worked for Procter & Gamble.
During the American Civil War, the company won contracts to supply
the Union Army with soap and candles. In addition to the increased
profits experienced during the war, the military contracts introduced
soldiers from all over the country to Procter & Gamble's products.
In the 1880s, Procter & Gamble began to market a new product, an
inexpensive soap that floats in water. The company called the soap
Ivory. William Arnett Procter, William Procter's grandson, began a
profit-sharing program for the company's workforce in 1887.
By giving the workers a stake in the company, he assumed correctly
that they would be less likely to go on strike.
The company began to build factories in other locations in the United
States, because the demand for products had outgrown the capacity of
the Cincinnati facilities .The company's leaders began to diversify its
products as well and, in 1911, began producing Crisco, a shortening
made of vegetable oils rather than animal fats.
As radio became more popular in the 1920s and 1930s, the company
sponsored a number of radio programs .As a result, these shows often
became commonly known as "soap operas.
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 The company moved into other countries, both in terms of

manufacturing and product sales, becoming an international
corporation with its 1930 acquisition of the Newcastle upon Tynebased Thomas Hedley Co.
Procter & Gamble maintained a strong link to the North East of
England after this acquisition.
Numerous new products and brand names were introduced over time,
and Procter & Gamble began branching out into new areas.
The company introduced "Tide" laundry detergent in 1946 and "Prell"
shampoo in 1950. In 1955, Procter & Gamble began selling the first
toothpaste to contain fluoride, known as "Crest".
Branching out once again in 1957, the company purchased Charmin
Paper Mills and began manufacturing toilet paper and other paper
products.
Once again focusing on laundry, Procter & Gamble began making
"Downy" fabric softener in 1960 and "Bounce" fabric softener sheets
in 1972.
One of the most revolutionary products to come out on the market was
the company's "Pampers", first test-marketed in 1961.Prior to this
point disposable diapers were not popular .Although Johnson &
Johnson had developed a product called "Chux". Babies always wore
cloth diapers, which were leaky and labor intensive to wash. Pampers
simplified the diapering process
Procter & Gamble acquired a number of other companies that
diversified its product line and increased profits significantly .These
acquisitions included Folgers Coffee, Norwich Eaton
Pharmaceuticals, Richardson-Vicks, Noxell, Shulton's Old Spice, Max
Factor, and the Iams Company, among others.
In 1994, the company made headlines for big losses resulting from
leveraged positions in interest rate derivatives, and subsequently sued
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Bankers Trust for fraud; this placed their management in the unusual
position of testifying in court that they had entered into transactions
they were not capable of understanding.
In 1996, Procter & Gamble again made headlines when the Food and
Drug Administration approved a new product developed by the
company, Olestra .Also known by its brand name Olean, Olestra is a
substitute for fat in cooking potato chips and other snacks that during
its development stages is known to have caused anal leakage and
gastro-intestinal difficulties in humans.
In January 2005 P&G announced an acquisition of Gillette, forming
the largest consumer goods company and placing Unilever into
second place .This added brands such as Gillette razors, Duracell,
Braun, and Oral-B to their stable.
The acquisition was approved by the European Union and the Federal
Trade Commission, with conditions to a spinoff of certain overlapping
brands.
P&G has agreed to sell its Spin Brush battery-operated electric
toothbrush business to Church & Dwight. It also divested Gillette's
oral-care toothpaste line, Rembrandt.
The deodorant brands Right Guard, Soft & Dri, and Dry Idea were
sold to Dial Corporation. The companies officially merged October 1,
2005. In 2008, P&G branched into the record business with its
sponsorship of Tag Records, as an endorsement for TAG Body Spray.
P&G's dominance in many categories of consumer products makes its
brand management decisions worthy of study.
For example, P&G's corporate strategists must account for the
likelihood of one of their products cannibalizing the sales of another

Market Segmentation
Market segmentation is a marketing strategy that involves dividing a
broad target market into subsets of consumers who have common needs, and
then designing and implementing strategies to target their needs and desires
using media channels and other touch-points that best allow to reach them.
Market segments allow companies to create product differentiation strategies
to target them.
Each brand must be positioned for its target segment and a single Procter
and Gamble brand cannot have one positioning for all of P&Gs segments
As of July 1, 2011, the company structure is categorized into two "Global
Business Units" with each one further divided into "Business Segments"
according to the company's 2011 Annual Report. Dimitri Panayotopoulos is
Vice Chairman of Global Business Units

Beauty segment

Grooming segment

Health Care segment

Snacks & Pet Care segment

Fabric Care & Home Care segment

Baby Care & Family Home Care segment

Companies that make multiple products in multiple product categories are

delivering quite different sets of benefits to quite different target segments.
As a result, they cannot create and support a single brand that can hold
multiple positions in the minds of different targets. P&Gs main competitors
such as Unilever, Colgate-Palmolive and Johnson & Johnson follow a
similar multi-brand strategy.

Marketing Mix
The marketing mix is a business tool used in marketing and by marketing
professionals. The marketing mix is often crucial when determining a
product or brand's offering, and is often synonymous with the four
Ps: price, product, promotion, and place; in service marketing, however, the
four Ps have been expanded to the Seven Ps or eight Ps to address the
different nature of services.
In recent times, the concept of four Cs has been introduced as a more
customer-driven replacement of four Ps. And there are two four Cs theories
today. One is Lauterborn's four Cs
(consumer, cost, communication, convenience) another is Shimizu's four Cs
(commodity, cost, communication and channel).

Product Strategy

Product classification service consumer good

Product differentiation- form , features , performance , reliability
Superior technology
CSR initiatives
Attractive packaging
Catchy taglines
Established as a brand itself

Pricing Strategy

Optional feature pricing

Product- line pricing
Cost- plus pricing
Competitive pricing
Distribution pricing
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Place Strategy

In store placement strategy

Already existing strong links in urban area
Rural penetration
Develop marketing channels as strong and penetrated so that it would
gain access to remote areas
Strategic location of warehouse
Increase wholesale dealers in small towns so that they can go to the
nearby villages
National coverage would be dealt with by increasing the companys
warehouses and creating C&F agents in the smaller cities

Promotion Strategy
Media
Radio
Hoardings
Consumer promotion
Fragrance oriented and eco friendly
Newspaper
Various promotional offers

P & G is spending 30-35 % of its sales in Advertisement and

Promotion which is highest in the industry, HUL expends only 15% of
sales on Advertisement and Promotion.

Price
Costs of the products are subject to fluctuations, particularly due to changes
in commodity prices, raw materials and cost of labor, foreign exchange and
interest rates. Therefore, success rate of the company is dependent, in part,
on its continued ability to manage these fluctuations through pricing actions,
cost savings projects, sourcing decisions and certain hedging transactions. It
must also manage their debt and currency exposure, especially in certain
countries, such as Venezuela, China and India. They need to maintain key
manufacturing and supply arrangements, including sole supplier and sole
manufacturing plant arrangements. They must implement, achieve and
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sustain cost improvement plans, including our outsourcing projects and

those related to general overhead and workforce optimization. Successfully
managing these changes, including identifying, developing and retaining key
employees, are critical to their success.

Positioning:
The place the product occupies in consumers minds relative to competing
products. Typically defined by consumers on the basis of important
attributes. Involves implanting the brands unique benefits and
differentiation in the customers mind. Positioning maps that plot
perceptions of brands are commonly used.
Differentiation can be based on

Products
Services
Channels
People
Image
Positioning and Branding Strategy
Developing the Strategy through use of the Creative Work Plan
1 Key Fact:
A single piece of known information relating to the brand which is
agreed to be the leading factor influencing or describing the brand
performance. It may be information about the brand itself, the
competition, the customer; innovation etc. but it must be a single fact.
2 Problem the advertising must solve:
This is a consumer problem. It describes the awareness, perception or
behavior of the prospective user which has resulted in the Key Fact
and which we wish to change.
3 Advertising Objective:
Usually, simply the counterpart to the problem, although there are a
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great many distinct options. E.g. "Persuade consumers to try my

brand" Or "use more of my brand." Or "use my brand in a different
way." Persuade them that my brand is a viable alternative to brand x".
4. Strategy:
a) Prospect DefinitionBoth demographics and psychographics.
b) Principal Competition.Not just a list of competitors but a description of the segment from
which we wish to obtain business
c) PromiseThe single most persuasive agreement one can advance for the brand
framed with the customer and the competition in mind.
d) Reason WhyThe strongest piece of support for the promise. Occasionally there
may be more than one piece of support but never a list
e) Tone/CharacterThe tone that messages should convey to provide personality to the
message and bring it alive. This is not executional.
As you can see, the format is very simple. However, like everything at
Procter & Gamble, the use of the simple tool is handled by experts in
the field. That is what makes the tool so effective.

Channels of distribution
The path through which goods and services travel from the vendor to
the consumer or payments for those products travel from the consumer to the
vendor. A distribution channel can be as short as a direct transaction from
the vendor to the consumer, or may include several
interconnected intermediaries along the way such as wholesalers,
distributors, agents and retailers. Each intermediary receives the item at one
pricing point and movies it to the next higher pricing point until it reaches
the final buyer. Coffee does not reach the consumer before first going
through a channel involving the farmer, exporter, importer, distributor and
the retailer. Also called the channel of distribution.
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Distribution network of FMCG:-

MDCEO
I/ANU
TSND
ULTC
FOER
IANT
CSBS
/UTU
ETMS
OREH
POR
LP/
AUS
NS
TE
R

P&G keeping broaden the market by slashing its no. of distributors

down to one-tenth of its size.
85% of its sales come from the top 30 towns & its current volume did
not justify a large distributor network.
So P&G will now have one distributer who will operate like super
stockist. Which help to replenish its distributors more frequently and
reduce their average stock level.
P&G keep growing on ROI (Return on Investment) which resulted in
each distributer trying to extend its reach to push up volumes.
With a limited number of distributers, P&G will also not need to
invest in C&F agents.
P & G follows wholesale format of distribution for Vicks.
P&G is giving 6% margin to the distributor
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Promotional Strategy
Thank You, Mom Campaign
P&G's corporate campaign kicked off in April with its first ``Thank
You, Mom'' TV spot.
It also has a dedicated ``Thank, You Mom'' Facebook page and app
that allows people to send ``Thank you'' messages to their mothers.
P&G is sponsoring more than 150 global athletes.
P&G is sponsoring a few athletes like boxer Mary Kom and runner
Kavita Raut, giving their mothers a chance to see them perform and
hopefully win at London this year.
P&G expects the campaign to drive $500 million in sales.

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SWOT Analysis

Other threat controversies of the past

Price fixing
Toxic shock syndrome and tampons
Animal testing
Other product
Logo controversy
Former P&G logo
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PASTEL Analysis
Political/Legal statement
With the U.S economy currently expiriencing a recession other countries
may not be far behind. Japan, Britain, Spain, Singapore which together
represent about 12 percent of the worlds economy are equally vulnerable as
fallout from the U.S worsens their economic weaknesses. Even emerging
markets including China are likely to suffer from exports to the U.S
diminish.
The developing slump has put pressure in the Japan, U.S and the euro region
to follow the lead of federal reserve chairman Ben S. Benmake who in the 1st
quarter of 2009 accelerated interest rate cuts in the U.S with an emergency
move to lower the bench mark by 3 quarters of percentage point
The effect of the U.S recession which according to the IMF represents about
21 percent of the total economy is spreading via multiple channels. There is
less spending by american consumer and companies are reducing demand
for imported goods. The meltdown of the U.S.subprime mortgage market
has pushed up credit cost worldwide and forced European and Asian banks
to write down billions of dollars in holdings. Tumbling U.S.stocks prices
are also dragging down market elsewhere.

ECONOMICS SEGMENT :The United States, the country with worlds largest economy, is currently in
an economic ressession. Since the recession began in December,2007. The
real Gross Demostic Product (GDP), the total value of goods and produce in
a year and a basic reason of an economys performance, dropped in at an
annual rate of more than 6% in the fourth quarter of 2008 . Federal Reserve
Chairman Ben Bemanke said condition in the labour market and declines in
the value of housing along with tight consumer credit conditions will
continue to hold consumers back spending more until the experience a
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losening of conditions that impact them directly . Demanke said economy

activity abroad is also an important consideration in how soon the U.S.
economy rebounce. He states the steep drop in U.S. exports that began last
fall has been a significant drag on domestic production and any
improvement on that front would be helpful.

Socio cultural segment

Women from the major target groups for house hold, personal products and
consumer goods companies. Several P&G consumer products, such as skin
care and beauty care , are adressed directly to women. Other products such
as food and beverages, home cleaning and detergents are adressed to women
as the primary decision makers or influencers.In addition to the media
choice companies have decided on the types of programme they sponsor. So
as to attract the target of their audience.

Technological segment
Organizations are rapidly trying to incorporate the Internet into their supply
chain practices. Global competitive pressure
And heightened share holder expectations have accelerated the rate of
Internet adoption. Electronic markets are websites where buyers and sellers
converge to advertise, bid for products in auction, post catalogue
information procure inventory and manage inventory procurement of
industry specific products such as paper, metal, chemicals, agriculture and
industries. These market act as hubs where buyers can procure direct goods
and suppliers can market their products.

Micro and Macro Environment

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Competitors of P&G in India

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All the Micro and Macro Environment features have been covered in this
project
Promotions and Integrated marketing Communications
Integrated Marketing Communication (IMC) is a term that emerged in
the late 20th century regarding application of consistent brand messaging
across myriad marketing channels. The term has varying definitions
depending upon the source cited. These definitions continue to form an
ongoing discussion in marketing - and therefore are included here for
review, as the differences in these discussions can play a part in how IMC is
viewed and utilized.
The first definition for integrated marketing communication came from
the American Association of Advertising Agencies (also 4A's) in 1989,
defining IMC as "an approach to achieving the objectives of a marketing
campaign through a well-coordinated use of different promotional methods
that are intended to reinforce each other." The 4A's definition of IMC
recognizes the strategic roles of various communication disciplines
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(advertising, public relations, sales promotions, etc.) to provide clarity,

consistency, and increased impact when combined within a comprehensive
communications plan. Basically, it is the application of consistent brand
messaging across both traditional and non-traditional marketing channels.
Components of Integrated Marketing Communications
IMC weaves diverse aspects of business and marketing together. These
include:

Organizational culture
Four P's
Advertising
Online/internet marketing
E-commerce
Search engine optimization (SEO)
Search engine marketing (SEM)
Mobile Marketing
Email marketing
Content marketing
Social Media ( Facebook, Twitter, LinkedIn, Google +, Foursquare,
Pinterest, Youtube, Wikipedia, Instagram)
Sales & customer service
Public Relations
Promotions
Trade shows
Corporate philanthropy

The following excerpt has been taken directly from their

website
Our Foundation
Taken together, our Purpose, Values and Principles are the foundation for
P&Gs unique culture. Throughout our history of over 170 years, our
business has grown and changed while these elements have endured, and
will continue to be passed down to generations of P&G people to come.
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Our Purpose unifies us in a common cause and growth strategy of improving

more consumers lives in small but meaningful ways each day. It inspires
P&G people to make a positive contribution every day.
Our Values reflect the behaviors that shape the tone of how we work with
each other and with our partners.
And Our Principles articulate P&Gs unique approach to conducting work
every day.

We always try to do the right thing.

We are honest and straightforward with each other.
We operate within the letter and spirit of the law.
We uphold the values and principles of P&G in every action and
decision.

We are data-based and intellectually honest in advocating proposals,

including, recognizing risks.
Leadership

We are all leaders in our area of responsibility, with a deep

commitment to delivering leadership results.

We have a clear vision of where we are going.

We focus our resources to achieve leadership objectives and

strategies.

We develop the capability to deliver our strategies and eliminate

organizational barriers.
Ownership

We accept personal accountability to meet our business needs,

improve our systems and help others improve their effectiveness.

We all act like owners, treating the Companys assets as our own and
behaving with the Companys long-term success in mind.
Passion for Winning

We are determined to be the best at doing what matters most.

We have a healthy dissatisfaction with the status quo.
We have a compelling desire to improve and to win in the
marketplace.
Trust
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We respect our P&G colleagues, customers and consumers, and treat

them as we want to be treated.

We have confidence in each others capabilities and intentions.

We believe that people work best when there is a foundation of trust.

We Show Respect for All Individuals

We believe that all individuals can and want to contribute to their

fullest potential.

We value differences.

We inspire and enable people to achieve high expectations, standards

and challenging goals.

We are honest with people about their performance.

The Interests of the Company and the Individual Are Inseparable

We believe that doing what is right for the business with integrity will
lead to mutual success for both the Company and the individual. Our quest
for mutual success ties us together.

We encourage stock ownership and ownership behavior.

We Are Strategically Focused in Our Work

We operate against clearly articulated and aligned objectives and

strategies.

We only do work and only ask for work that adds value to the
business.

We simplify, standardize and streamline our current work whenever

possible.
Innovation Is the Cornerstone of Our Success

We place great value on big, new consumer innovations.

We challenge convention and reinvent the way we do business to
better win in the marketplace.
We Value Personal Mastery

We believe it is the responsibility of all individuals to continually

develop themselves and others.

We encourage and expect outstanding technical mastery and

executional excellence.
We Seek to Be the Best
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We strive to be the best in all areas of strategic importance to the

Company.

We benchmark our performance rigorously versus the very best

internally and externally.

We learn from both our successes and our failures.

We Are Externally Focused

We develop superior understanding of consumers and their needs.

We create and deliver products, packaging and concepts that build
winning brand equities.

We develop close, mutually productive relationships with our

customers and our suppliers.

We are good corporate citizens.

We incorporate sustainability into our products, packaging and

operations.
Mutual Interdependency Is a Way of Life

We work together with confidence and trust across business units,

functions, categories and geographies.

We take pride in results from reapplying others ideas.

We build superior relationships with all the parties who contribute to

fulfilling our Corporate Purpose, including our customers and suppliers,
universities and governments.

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