Proctor & Gamble EUROPE: VIZIR Launch

Proctor & Gamble EUROPEAN Vice President faced 4 critical decisions as he reviewed the German test-
market results for VIZIR (A heavy-duty liquid detergent)

1- Should he follow the recommendation of Germany’s new advertising manager + his German
team on the basis of 4-months of test results? =Or should ask them to wait until final test-
market results, or even rethink the whole product strategy?
2- Is the decision to launch VIZIR (Laundry detergent) considered a European rather than a German
product?
3- If a coordinated European rollout was planned, to what degree should the company
standardize its product formulation, packaging, advertising, and promotion?

4- What organization implications would these decisions have -> meaning to what extent should
the individual country subsidiary managers have the responsibility to decide when and how the
new product would be introduced to their national markets?

Proctor & Gamble Company( areal, panteen, w gayroun) Background:

Corporate values:
Proctor & gamble was established by 2 religious men with moral values so the company philosophy was:

• Hire only good people of high character

• Provide work environment that encourages & rewards individual achievement

Management policies:
• Knowledge & experience of its people was valued
• Consumer marketer -> product of superior value -> Ensure product meets consumer needs
• Valued/value market research alot
• Did Extensive product & market testing before committing to a full-scale launch of product

Expansion Principles: To Europe

P & G gradually acquired companies and opened plants throughout Europe over a decade, as well as
subsidiaries which were export centers

• As international operations grew P & G overseas vice president emphasized:

• Consumer needs differ by country
• Importance of acquiring intensive knowledge of local consumers (ex.: washing hands differed
from country to country, we must tailor products to meet consumer demands of each nation,
we cant sell products with U.S. formulas, they wont be accepted)
European Industry (how it is) & competitive structure:
From the beginning of entering to European market for laundry detergents, managers realized washing
habits differed from 1 country to another within Europe

Washing Differences:
• Washing temperatures
• Front-loading Vs. backloading washing machines…
• Etc…

Market Condition differences:

• Retailer number in one country more than another, corner stores, hypermarket popularity or
not
• In Europe there was No unlimited access to television (opposite to U.S.), in holland each brand
was only allowed 46 minutes of tv commercials per annum/year, in Germany and Italy slots once
per year
• National legislation (gov. laws) greatly affected market strategies. Legislation in different
countries on limited phosphate levels in detergent, discounts, refunds, package weight, labeling,
etc…
• Competitors (Unilever & Henkel & Colgate) each had strengths in different countries

P&G Europe Strategy:

THE ABOVE LISTED different consumer habits, market conditions, and competitive positions led to:

➔ Development of strong national subsidiaries , each a miniature (min) of P&G with its
own brand management structure
• Each subsidiary attacked the task of establishing P&G detergent business in each national
market differently
• Each of the country general managers subsidiary reported to Head of P&G’s European
operations

Head of Operations believed: selecting creative and entrepreneurial country general managers and
giving them the freedom to run their businesses. He will not interfere in subsidiary decisions. It was
the subsidiary general manager’s responsibility to call on ETC if problem arose.

➔ This strategy was successful and sales & profit grew rapidly for 10 years -> entry into new
markets & more product categories(diversification)
When this head retired, the new-comer faced challenges which were different to his time -> growth
slowed & competition arised

He realized to bring back profit & growth diverse country operations have to be better coordinated
PROBLEM 1 DISCVOERED:
• Duplication of marketing & administrative groups in each subsidiary -> overhead expense per
unit was 50% higher than U.S. P&G parent company. “Our problem is that we couldn’t get
meaningful costs by subsidiaries”. Cost has increased (overhead)

Solution -> Introduction of better cost & reporting system put pressure on subsidiaries to
control their costs → was effective

PROBLEM 2 DISCVOERED:
• Slowing of innovation

Previously each subsidiary did its own product development

-> this resulted in many many excess different versions (diversification) of products, for example: Ariel
had 9 different formulas throughout Europe! And different temperature versions! Etc…

Zaki (R&D Manager) concluded:

• This way provided insufficient focus or strategic direction

• Technical capabilities in the ETC & U.S. not put into use

Solution 2:
• ETC (head in Europe la sherke) take a stronger leadership role in R & D
• ETC coordinate product development among subsidiaries
➔ His analysis indicated differences in consumer practices were narrowing -> no need for high
product differences between countries
➔ He wanted to “Standardize” products Europe-wide

ETC technical groups were seen as the developers of new technologies (“putting the molecules
together,” as one R&D manager described it), while the subsidiaries took responsibility for testing and
refining the products in the field. After a couple of painful years, the new process seemed to be working.

Other KEY discoveries:

• “Europeanization” of Marketing was not successful
• although coordination and planning could be effectively centralized on a European basis, the
day-to-day management of the business had to be executed at the local subsidiary level.
THE VIZIR PROJECT launching new product/market entry) :
( liquid detergent want to launch in Europe must substitute 3 types of
powders):
In Europe people used 3 powder compartments in multiple cycles in washing machine which
included whitening

• Awwal shi P&G tried the first liquid detergent version which failed
• They then tried a powdered version which failed Alot
• They then worked on developing and improving their liquid detergent with multiple
factors which their market wanted: cleaning, whitening, kaza, kaza, kaza
➔ With every blind test with people, the results got better, until they beat main competitors in
europe!!!!!

VIZIR LAUNCH DECISION:

Vizir gave superior cleaning performance on greasy stains at low temperatures and (following the
product improvements) matched powder performance on enzymatic stains and whiteness. The problem
was that P&G’s Ariel, the leading low-temperature laundry powder in Germany, made similar
performance claims, and management feared that Vizir would cannibalize Ariel’s sales before launching
vizir liquid detergent. Copy the new product/ patent issues

Eurobrand Decision
Within P&G’s European organization, the budding Euro brand concept was controversial. Although it
fostered coordination of marketing strategies of brands in Europe, some managers thought that it
conflicted with the existing philosophy that allowed country subsidiary managers to decide what
products were most likely to succeed in their local markets, in what form, and when.

Artzt, Ferguson, and other managers countered by arguing that the time was ripe for a

common European laundry detergent. Opponents quickly pointed out that, despite the trends, the
differences in washing habits still outweighed the similarities.

Eurobrand strategy effect ( ywa7dou strategies) on organization structure & decision-

making process:

➔ If product market decisions were to be made in relation to Europe-wide strategic assessments

and less in response to locally perceived opportunities, what implications did that have for the
role and responsibility of the country general manager?
 ➔ if the Eurobrand concept was accepted, what organizational means were necessary to
coordinate activities among the various country subsidiaries?

HOW TO DO IT:
Ferguson was convinced that his predecessor, Artzt, had been moving in the right direction in trying to
inject a Pan-European perspective into decisions( not country to country) and by aiming to coordinate
more activities among subsidiaries. Ferguson wanted to reinforce the more integrated perspective by
changing the responsibilities of the three geographic division managers that reported to him. Besides
their existing responsibilities for several subsidiaries, Ferguson gave each of these managers Europe-
wide responsibility for one or more lines of business. For example, the division manager responsible for
the British, French, Belgian, and Dutch subsidiaries was also given responsibility for packaged soaps and
detergents for Europe as a whole. So manager sar 3am manage with subsidiaries and with Europe kela
kamen . mas2oul 3an soap be kel Europe

➔ For the first time, this change permitted clear Europe-wide objectives and priorities to be set by
line of business, product group, or brand. Some country subsidiary managers Wondered
whether their authority and autonomy were being eroded. Partly to deal with this problem and
partly because the division managers had neither the time nor the resources to adequately
manage their product responsibilities, Ferguson proposed an organizational forum: the Euro
Brand Team.
Ferguson would assign each key brand a team headed by a “lead country.” Typically the country
subsidiary with the most leading market positions (market control-2a2we shee) would be given the lead
role so that it could spread its knowledge, expertise, and commitment. The charter of the lead country
would be to coordinate the analysis of opportunities for the standardization of the product formula, its
promotion, and its packaging. The team concept also aimed at coordinating activities across subsidiaries
and eliminating needless duplication of the brand’s management.

Ferguson does a team for every brand. The team contains subsidiaries

Ken abel: Subsidaries responsible for each country la kel balad howe yestelmou kelou la brand

But now gayr:

Stages:
1- Preliminary growth ( before) Subsidiaries: each subsidiaries was given the freedom for each
country whereby the ETC did not interfere much with the decisions of the subsidiary. So the
subsidiary manager directed the growth of the organization.

1- Countries had high difference in consumer needs between countries in Europe

➔ Result: Country subsidiaries where given freedom to run their country business with minimal
interference from headquarters (ETC) in Europe

2- Another phase came : A time with different situation. Competition intensified + growth slowed:
- SO, Coordination and cost control system where put on subsidiaries.
- ETC groups were seen as developers of new technology while subsiders tested and refined
products. They are trying to encourage inter-dependance and cooperation between (etc +
subsidiaries)
- Coordination and planning could be centralized and implemented on a European basis but
marketing and day to day management had to be executed by local subsidiaries.