CASE STUDY

P&G
OVERVIEW
Procter & Gamble (P&G) began in 1837 when brothers in-law William Procter and James
Gamble formed a small candle and soap company. Over the next 150 years, P&G innovated
and launched scores of revolutionary products with superior quality and value, including
Ivory soap in 1882, Tide laundry detergent in 1946, Crest toothpaste with fluoride in 1955,
and Pampers disposable diapers in 1961. The company also opened the door to new
product categories by acquiring a number of companies, including Richardson-Vicks
(makers of personal care products like Pantene, Olay, and Vicks), Norwich Eaton
Pharmaceuticals (makers of Pepto-Bismol), Gillette, Noxell (makers of Noxzema), Shulton’s
Old Spice, Max Factor, and the Iams pet food company.

Today, Procter & Gamble is one of the most skillful marketers of consumer-packaged goods
in the world and holds one of the most powerful portfolios of trusted brands. The company
employs 121,000 people in about 80 countries worldwide, has 25 billion-dollar global brands,
spends more than $2 billion annually on R&D, and has total worldwide sales in excess of
$84 billion a year. Its sustained market leadership rests on a number of different capabilities
and philosophies.

MORE INFOMATION
1) P&G’s impressive portfolio includes some of the strongest brand names in the
world. What are the some of the challenges and risks associated with being the
market leader in so many companies ?

- P&G adopts a multi-brand approach a portfolio of over 300 brands, with 25 brands making
over US$1billion in annual sales in 2012, but it faces many key challenges. It uses a
multi-brand strategy, there are drawbacks: with this multi-brand strategy, one brand could
easily affect another through association. A scandal relating to another P&G brand could
undo all the good customer relationships built by another brand with a customer. This is
potentially disastrous, because if one or more of P&G’s brands erode significantly, their
financial status and market positioning will be adversely affected.

As the market leader, consumers pay closer attention to the company as such, mistakes
committed by the company would usually gain more negative publicity.

Lack of price sensitivity also hampers the company’s long term growth, since a growing
middle class might not be willing spend on premium household products despite higher
disposable incomes, with cheaper local alternatives available.

Consequently, P&G has lost its customers in developed countries like Europe to cheaper
and equally capable products made by rivals such as Unilever. As such, rivals have gained
significant market share with more successful innovations and improved their market
positioning , threatening P&G’s market leadership. Some of the Challenges and risks they
are facing are –

• Increasing retailer dependence.

• Increasing internal competition within the brand .

• Declining Profits in FMCG markets.

• Brand Dilution.

• Prioritizing Market shares over profits .

2) With Social Media becoming increasingly important and fewer people watching
traditional commercials on television, what does P&G need to do to maintain its
strong brand images?

- P&G uses the major social media sites Facebook, Youtube and Twitter. It has only a minor
presence on other sites such as Pinterest and Google+. Also, none of the Chinese sites are
used, despite China being a big market for P&G, and that the Chinese have no access to the
three sites due to government ban. Therefore, P&G has to channel more resources towards
the other major sites such as Google + as Chinese sites in order to achieve enough reach.
• Marketing tactics using platforms like Facebook, Google etc.
• Online shopping must be made easier.

• Social media should manage online word of mouth.

• Online platform should be manipulated to disseminate information.

• Extra incentives like coupons, buying points should be given etc.

3) What Risks do u feel P&G will face going forward ?

In our opinion, P&G should be aware about its mature products in largely mature markets.
Procter & Gambler’s portfolio is diverse, but filled with products in mature categories.

In addition, the company’s core brands are all category leaders, with material market share
and impressive sales. Very often the categories in which it operates are growing slowly, it at
all, leaving market share gains as ten times means of increasing revenues. That is a
challenge, since the company competes with large and equally well-financed companies.
Losing market share may be a greater risk than not gaining market share, since Just
maintaining market can be hard when you are number one in a category.

• Cut throat competition from Nestle, ITC, Hindustan Unilever Limited etc.

• Relative prices & Performance from unbranded local products.

• Risk of Brand Equity.

• Legal Barriers

• Limited room for expansion & growth.