PROCTER & GAMBLE

CASE STUDY
Strategy Formulation
THE COMPANY
• Established in 1837, P&G - manufactured, distributed and
marketed consumer goods products.

• Owned and operated 83 manufacturing facilities in 42

countries, worldwide.

• Its superior quality products were rewarded with leadership

sales, profits and value creation.

• Aggressively introduced new brands and products by either

creating them or through M&A.
P&G’s Structure Division

Market Development Global Business Corporate Global

Organization Services Functions Business Units
Studies consumers to Provides business Works to maintain Creates strong
build local technology and P&G’s place as a brand equity,
understanding. services that drove leader of the robust
business and won consumers’ good’s strategies and
customers industries on going
innovation in
products and
marketing to
build major
global brands.
 Product Basket
Consumer
Goods

Non-
Durable
Durable
Goods
Goods

Beauty/Fe
Pharmaceut
Petroleum Beverages Apparel Tobacco minine
icals
Care

Hair Skin Feminine Fine Personal

Products Products Products Fragrances Cosmetics Cleansing
Product Basket
HAIR PRODUCTS SKIN PRODUCTS FEMENINE PRODUCTS
- Offered a variety of hair - Offered products like - Offered products like
products like shampoos, creams, pads, astringents, tampons and sanitary pads
conditioners, leave-ins, gels, mosturizers, toners for females to use during
styling aids etc for and after shave etc for their menstrual cycle.
different kind of hair like, three basic skin types – - Targeted females between
dry, normal, greasy, dry, normal, oily. 12yrs – 50 yrs.
permed, bleached etc. - Each product targeted a
- All products underwent an different need.
elaborate testing process.  

Key Brands: Herbal Essences, Key Brands: Noxzema, Gillete Key Brands: Tampax and
Infusium 23, Physique, and Olay. Always.
Pantene, Aussie & Head and
Shoulders.
Product Basket
FINE FRAGNANCES COSMETICS PERSONAL CLEANSING
- Was a major distributor of - Offered products like - Offered products like bar
various fine fragrance foundation, eye shadow, soaps, body wash, etc.
brands. mascara, lip gloss etc for - Targeted everybody for
- Targeted both men & lips, face, nails, eyes. such products.
women. - Targeted women of all age
groups.

Key Brands: Giorgio Beverly Key Brands: Cover Girl and Key Brands: Zest, Camay and
Hills, Hugo Boss and Lacoste. Max Factor. Noxzema.
CGI Market Segmentation
• Better purchase decisions possible with product
awareness but impulse purchase and ignorantly
following trends were common mistakes
committed by consumers.
– Gender
– Age
– Ethnicity
– Marital Status
– Low income consumers
CGI Market Segmentation
Gender:
Beauty care for female expanded to male consumers (early 2005).
Segment specific success factor: Gender specific promotion

Age:
For all ages. From infants for senior citizens. Addressing each age group
differently. Huge Market potential with adoption of beauty/personal care
products across each age group
eg: baby boomers expected growth 11.9 m in 1999 to 17.39 m in 2010
Segment specific success factor: Brand recognition

Ethnicity:
Products developed catering /considering the extend of ethnicity for
multicultural market or single ethnicity market.
Segment specific success factor: Tailored to the need of each ethnic
 CGI Market Segmentation

Marital Status:
Products offering based on married or single to ascertain the percentage of
disposable income for self or family.
Segment specific success factor: Tailored to the need of each population

Low Income Group:

Products developed or packaged in order to be affordable to the consumer credit
population.
Segment specific success factor: Affordability and packaging

Common Success Factors: Competitive price & affordability, wide selection, good
distribution channel, availability, good quality, attractive packaging, strong brand image and
maintain brand loyalty.
 Distribution
The CGI companies relied on various distribution channels
apart from their sales force to make the goods available at
POP
 Distributions companies
 Success factor: Good relation with store managers for shelf space &
display
 Individual Stores
 Success factor: Location and Good relation with consumers
 Chain store Outlets
 Success factor: variety of service and good customer service. Eg:
Costo, Walgreens, Target, Sears and Wal-Mart
Advertising

Various forms of media option but companies had to be

careful with the form to convey the intended message.
 Television - Mass Audience
 Internet - Most popular and increasing reach across
the world
 Print - Target Audience
 Radio- Mass Audience, economical
 Sales & Promotions – New product trial, extend PLC
of mature products
Other Verticals of the Business Model
 Geographic regions
Tailored offering to meet the needs specific to each geographic
regions
 Africa, Asia, Australia, Europe, South America and North

America
 Sourcing- choice of sourcing partner, limit of sourcing , price
negotiations etc
 Technology: Manufacturing units flexibility to adapt to
changing needs with less cost
 Competition: Based on price and product line and dept, brand
reputation and market presence
Competitors
 Unilever
 Founded in 1930 in England
 Presence in 150 countries

 International manufacturer of leading brands in foods,

home care and personal care

 Presence in 150 countries

Strengths: Strong brand quality reputation, price competition,

mass market presence, product variety, brand recognition
Weakness: New product development, ethinic group targeted
products, moderate relations with store manager etc
Competitors
 Colgate Palmolive
 $10.6 b global Consumer goods company
 Operations in 200 countries

 Core Businesses- Oral Care, Personal care, Home care

and pet Nutrition.

Strength: Brand recognition, reputation and price
competition, age & gender, distribution, TV
advertising etc
Weakness: Ethnic products as per fashion trends, new
products, store manager relations etc
Competitors
 Playtex Products
 Founded in 1932, New York
 Leading manufacturer and distributor of personal care

products
Strength: Brand reputation and price competition, age &
gender, All media advertising
Weakness: Brand recognition, Mass market presence,
Marital status, age, distribution & store manager
relations etc
Competitors
 Avon
 Started in 1886 in United states
 World’s largest direct seller with 5 million reps

 Products available in 100 countries

 Developed ground breaking line for anti aging- Anew

Strength: Brand reputation and price competition, Mass

market presence, Ethnic products, age & gender,
distribution, TV advertising etc
Weakness: Brand recognition, distribution channel, products
as per fashion trends, low income group
Competitors
 Estée Lauder
 Founded in 1946
 Technologically advanced
 World wide reputation for elegant, luxurious products in
100 countries
 Distribution through department and speciality stores

Strength: Brand reputation and price competition, Quality, All

media advertising

Weakness: Mass market presence, age, gender & marital

status, distribution channel, low income group, geographic
regions
Financial Data
$60,000.00

$55,000.00

$50,000.00

$45,000.00

$40,000.00

$35,000.00
Dollars in million

$30,000.00

$25,000.00

$20,000.00

$15,000.00

$10,000.00

$5,000.00

$-
2000 2001 2002 2003 2004 2005
Financial Data
$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$-
2000 2001 2002 2003 2004 2005
Financial Analysis
 The company was a global leader with sales growth of more than
40%, increasing to $57 billion in 2005.
 Profit was also doubled and generated $30 billion free cash flow.
 40% increase in sales per employee was observed.
 Although the R&D investment had increased but as a percentage
of sales it had declined from 4.8% in 2000 to 3.4% in 2005.
 More than 80% of initiatives succeeded in creating shareholder
value, an improvement of 25% over the past three years.
 Reduced capital spending as a percentage of sales since 2000
from nearly 8% to less than 4%, without forgoing any strategic
investment in growth.
SWOT Analysis
Strengths Weaknesses

• Leading Market Position • Quality control Problem

• Diversified and innovative product • Decreased Revenues in their Northeast
Portfolio Asian Market
• Strong Finances in past years

Opportunities Threats

• Developing Markets • Competitors

• Demographic trends across the world • Rising cost of raw materials
• Economic slowdown in the US and
Eurozone
• New Regulations
Key Strategic Moves
 To build existing core businesses into strong global leaders.
 To reach more consumers especially low income
consumers.
 Acquisition of Gillette.
 To develop fast-growing, high-margin, more asset efficient
businesses with global leadership potential.
 To gain growth momentum internationally by launching
new products and increasing advertisements.
 Re-look at packaging for developing countries to make its
products more affordable in these markets.
Thank You….