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Corporate Story – P&G

Before we trace the strategic moves of P&G lets refresh some basic
theories of generic strategies and new market/product matrix (Ansoff
matrix). 1980s, Michael Porter gave the principle of generic strategies.
These generic strategies open optons to organization that wish to
achieve a sustainable competitive advantage. Cost leadership,
differentiation and Focus strategy were the three thumb rule of poters
generic strategy model. The basic context was on cometative
advantage and competative scope. Ansoff Matix lights the options in
the deminsions of product and market ( for more information on
theoritical aspect you can request an article).

In the following paragraphs we will see how P&G used these tools to
secure leadership and compete with the existing players.

Year 1951, Vicks Product Inc. USA established India. It entered the
Indian market with VICKS, today India's Number One Health Care
brand. The idea became quite clear in 1964 with the formation of a
public limited company, Richardson Hindustan Limited (RHL) which
obtains an Industrial License to undertake manufacture of Menthol and
de mentholised peppermint oil and the brand extensions of Vicks such
as Vicks VapoRub, Vicks Cough Drops and Vicks Inhaler.

In May 1967, RHL introduces CLEARASIL, America's number one

pimple cream of that time. In 1979, a research revealed that the
brand Vicks VapoRub, originally positioned for children was mostly
consumed by adults. This gave a route to another brand extension of
Vicks as Vicks Action 500 in the form of capsules. The 500 was added
to the brand name as to make it remembered by rural consumers.
P&G also designed the shape (capsules) so it as to make it different
from other products. Previously, the brand was sold through
prescription but later routed through OTC channel. This brand
extension in VICKS was to strengthen P&G’s market leadership in cold
and cough. The extensions were to cover all consumption modes and
market (adults and children). The methodology matches with that of
chess player who first makes all the squares safer which might
threaten the queen (VICKS) and then play the game of competition.

Plotting these brand extensions on the Ansoff matrix will make the
explanation more clear.

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Determination for product differentiation gave birth to an Ayurvedic

Research Laboratory in 1984 by RHL. This was to keep align with
Company's mission of delivering products of superior quality in cough
and colds segment. A strategic decision in October 1985 of getting
affiliated with Proctor and Gamble, USA revamped the whole
manufacturing process and units. The RHL was renamed as P&G. The
strategy at the corporate level was to work with different SBUs for
broader categorization like P&G Home and P&G Health and Hygiene.

Till that time, J&J Health and Hygiene was enjoying the monopoly in
sanitary napkin segment with Stayfree brand, which was launched in
the late '80s.

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Year 1989, P&G stepped out for head-on with J&J in the sanitary
napkin market. With great technology, it revolutionized the Indian
feminine hygiene market with the brand Whisper against the Stayfree
of J&J. It was then that the Silky Dry variant was launched to
compete with the superior technology of the Whisper brand. But the
Silky Dry variant was not able to compete on value-for-money with
Whisper as consumers were unwilling to pay a premium for the
product. The target market was mid-segment. The next entry was in
the detergent market with the brand Ariel. The lucrative growth in
India represented a mouth-watering proposition to P&G International
that has increased its stake in Procter & Gamble India to 51% and
then to 65%.

In 1993, Procter & Gamble India divested the Detergents business to

Procter & Gamble Home Products. In the same year P&G India started
marketing Old Spice Brand of products.

To perfectly fit in its corporate strategy, Procter & Gamble India

Limited changed the name of the Company to Procter & Gamble
Hygiene and Health Care Limited. In the same year Mediker Shampoo
business was divested to Marico Industries. This step of P&G revealed
the mind set of the company to follow the niche strategy. The focus
was on three brands; Ariel, Vicks, and Whisper.

In 1999, on one side, P&G’s Vicks Action 500 (OTC) was covered with
Coldarin umbrella of J&J (with two brand extensions; Coldarin Plus and
Coldarin Cough & Cold with total market share of nearly 3.2 %).
Another side was D’Cold from Paras. Reckitt Piramal, the marketing JV
of Reckitt & Colman with Nicholas Piramal, was gearing up to launch
Disprin Cough and Flu tablets. Its not that competition was restricted
to OTC brands, Glaxo’s brand Actifed was eating up the share but
through the prescription route.

In 2000, Procter & Gamble Hygiene and Health Care Limited

introduced Whisper Ultra - a revolutionary and unique product in the
history of menstrual products in India for premium segment. J&J, the
then market leader, with out losing time counter-attacked with
Stayfree Sure and other ultrathin sub brands**. The mid segment
market was threatened by low-priced sanitary napkins (from ambitious
contenders such as Johnson and Johnson and Kimberly Clark Lever).

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In August 2000, the next extension was Vicks Plus Medicated
Lozenges, a product that provides medicinal relief from sore throat.
The plan was to add new consumer base to the existing one. The USP
of Vicks Plus Medicated Lozenges lies in its anti-bacterial ingredient
CPC (Cetylpyridinium Chloride), which actually provides medicinal
relief from a sore throat. The over all strategy was to increase entry
barriers in cold and cough market and to invade in the mid and
premium segment of menstrual products with break through
technology. The basic strategy pivots around bifurcation of brands that
will be in competition and that will be away. The differentiation
strategy was not sufficient In Indian market to generate volume sales
so the next move was to focus on cost. The targeted area was its
distribution channel, making it more cost-effective and streamlining
the distribution channels to focus on the promising markets alone.
Initiative to follow the first principle of generic strategies for cost-focus
worked for P&G.

Year-ended June 2000, witnesses 100% profit growth. It was clear

that the launch of the product from the parent will be streamline to the
respective SBU. Tide detergent and Tempo tissues from the P&G
Worldwide was routed in Indian through solely own subsidiary of
parent. Only Tampax -- a feminine hygiene brand -- was through
PGHH.

In August 2000, Vicks Action 500+ was relaunched in an attractive

True Blue pack. The change in packing color from green to blue was to
inline the products with the international brands.

In April 2001, Procter & Gamble Hygiene and Health Care Limited
reduced the prices of Whisper Ultra from Rs.80 to Rs.65 for a pack of
ten, making it affordable to Indian consumers. This was to fade the
effect of competitors in premium market. After nine months J&J
decided to phase out its Stayfree Silky Dry sub-brand in the wake of
launching its latest offering in the premium end of the market --
Stayfree Sure.

P&G took the different route to influence consumers in sanitary napkin

market .In May 2002; Whisper announced a unique knowledge sharing
initiative for women, The Whisper Diary of Secrets. The story did not
end there. With the killer instinct PGHH announced the launch of

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Whisper “Money Back” offer. No performance experience will return
the money.

In June 2002, Vicks VapoRub was repositioned on multiple benefits.

The USP was six symptoms relief of a child cold, namely blocked nose,
cough, body ache, headache, muscle-stiffness and breathing difficulty.
The target consumer segment was children. The benefit was faster,
longer-lasting relief from these six symptoms of cold. This phase was
of differentiation of queen brand. The step was to outfit intruders like
D’Cold, Amrutanjan and Acti-V from Nestle which introduced in two
variants — honey lemon and menthol eucalyptus. Quite ridiculous
Nestle jumped in this market. The underline fact is that all the
products were ayurvedic and natural.

In July 2002, Procter & Gamble announced the launch of Vicks

Action500+ Night tablets, a specially designed cold medicine that gives
consumers multi-symptom relief from bothersome cold symptoms like
headache and breathing difficulty, hence allowing restful sleep at
night. Don’t ask more about it as I can’t explain to you why it was a
big flop.

Next we will cover the story beyond 2002. About feminine health and
hygiene market and more on competitive side of VICKS we will cover
in different articles. If its in use for you in coming days, please request
an article.

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