Steven Perdoch Matthew Dymit Carrie Loera Dan McGowan Elana Muradova

Strategic Management, Spring 2012

History
Founded

in 1837 William Procter and James Gamble Incorporated in Ohio on May 5, 1905

In the beginning

Proctor and Gamble came to be by manufacturing soap and candles.

After the invention of the electric light bulb, the demand for candles fell significantly, thus causing the newly formed P&G to cease their production.
During the Civil War, the government began to order mass quantities of soap from P&G for the Soldiers usethis significantly led to P&Gs return to the market and their second chance at rising in the business world.

Organizational Structure

Acquisition Summary

Between 1905 (Incorporated) 2010, P&G invested in 34 acquisitions Periods of frequent acquisitions occur in the 1930s, 50s, 80s and 90s. Some of the larger acquisitions include:

Charmin, Clorox, Crush, Revlon, and Gillette

P&G Today

Products sold in > 180 Countries On the ground operations in 80 countries Organized into 2 Global Business Units (GBUs)
Health Care

&
Beauty & Grooming Household Care

Fabric and Home Care Baby and Family Care Snacks and Pet Care

Grooming

Beauty

P&G: Who we are.

http://www.youtube.com/watch?v=tAT-cFFGNQg

Health Care

Segment includes products in oral care, feminine care, respiratory, toothpaste, OTC drugs and other personal care categories

Health Care - Overview

14% of Net Sales in 2011 Products sold in drug stores supermarkets, and mass merchandisers Mature market Name Brand & Private Label competitors

Health Care Core Competencies

Strong, Dependable, High Quality Products

Strict internal standards and guidelines to comply with FDA Most recent recall was early 2010 - Vicks Vicks 4-Hour Nasal Spray (wrong expiration date)

Health Care Research Center

Promote innovation and bring new products to the market quicker

PGT Healthcare

Threats

Intense competition

Private labels are much cheaper

Top Cough Syrup Makers - Market Share

Company Wyeth Labs, Inc. (Pfizer) Reckitt Benckiser Private label Procter and Gamble Co. Other Novartis Consumer Health Blacksmith Brands Health Care Products Boiron-Borneman Qualitest Products % - 2010 % - 2011 25.17 25.87 26.82 24.23 24.78 22.17 13.59 19 3 3.31 2.61 3.02 0.65 1.12 1.36 0.73 1.13 0.55 0.9 0 % Change 0.7 -2.59 -2.61 5.41 0.31 0.41 0.47 -0.63 -0.58 -0.9

Baby Care and Family Care

Segment includes diapers, baby wipes, paper towels, and toilet paper

Baby Care & Family Care Key Info.

19 % Of Net Sales Products sold in supermarkets, convenience stores, hotels,motels,and other industries Baby Care and Family Care competitors

Beauty Segment

This segment includes cosmetics, fragrances, hair care, and skin care products

Beauty Segment

Beauty accounts for approximately 34% of P&Gs product portfolio. 24% of Net Sales & Net Earnings

Head & Shoulders, Olay, and Pantene are some of the biggest brands within this segment.

P&G Beauty in The Marketplace

P&Gs beauty products are highly recognizable; brand differentiation is a strength. Product availably is great; products are sold at practically all domestic retailer chain and drug stores. Proctor & Gamble is associated with tried and true, trusted products.

Beauty Segment Competition and Growth

Competitors

Unilever LOreal Private Labels

3% Net sales growth from 2010

24% of P&Gs Net Sales are from the Beauty segment

Threats to Beauty Segment

Greatest threat to P&Gs Beauty Segment is the Threat of Rivalry

Unilever, LOreal, Private Labels

Mature Market Threat of Buyers and/or Suppliers?

Relatively low, due to the working relationship between both categories and the trust created in order to maximize that relationship.

Suppliers are even involved in P&Gs creative process in developing new products.

Fabric and Homecare

Segment contains products including laundry cleaning products and fabric conditioners; home care products, including dishwashing liquids and detergents, surface cleaners and air fresheners; and batteries Fabric care dominates the market with over 30% of the global market share Global home care market share is over 15% across the categories in which we compete

Fabric and Homecare (Cont.)

Proctor and Gambles largest, and most profitable division - 30% of net sales Has been increasing steadily - 6% in 2011 Mature Market Market made up of Brand name and Generic brands

Snack and Pet Care

This segment includes food products and pet food products Smallest segment

Snack and Pet Care Overview

Least profitable P&G business segment 4% of P&Gs net sales in 2011 Pringles was the only existing snack brand* Pringles owned 3% of US Snack Food Production Industys market share Utilizes Eukanoba and Iams to appeal to all types of pet owners

Threats

Lack of presence in the industries Mature market Fierce competition Extension would require major investment into creating new products and brands Competition has more industry-focused product lines

Recommendations

Disinvest/Sell off Snack & Pet Care Business Segment

Least profitable business segment (4% net sales 11) Pringles sold for $2.7 Billion Iams and Eukanoba (value?) Increased focus on profitable business segments Increased opportunity to innovate in successful segments

Growth in Developing Markets

Company-wide initiative: Acquire 1 billion additional consumers by 2014/2015

P&G Sales Growth: 2000 to 2012
90% 80%

% of Total Company Sales

80% 70% 60% 50% 40%

77% 63%

Developed Developing

37%
23%

30%
20% 20% 10% 0% FY '00

FY '05

FY '12

Demographic/Socioeconomic Trends

Population is forecasted to grow 700 million people by 2020 (Think of all those diapers?) 95% of this growth will come from developing markets Wealth and Per Capita income increasing Plan of attack?

Expand geographically and fill in the White Space

Improve Productivity in All Areas

Cost of Goods

Reduce RM costs

Long-term contracts Increase # of Suppliers?

Reduce excess inventory Develop partnerships (PGT Healthcare) Continuous improvement Product Innovation

Research & Development ~ $2 billion annually

Open Innovate Connect + Develop

Continue to nurture the Open Innovate: Connect + Develop method of research and development. What is OIC+D?

Connect + Develop

Today, open innovation at P&G works both ways inbound and outbound and encompasses everything from trademarks to packaging, marketing models to engineering, and business services to design. It's so much more than technology. -Bruce Brown, CTO

Why is OIC+D Important?

Collaboration

Ultra-fast product-to-market delivery

Marketing Opportunities

Proctor and Gamble wants to cut $10 Billion in expenses In 2010 P&G spent $2.2 million on Television advertising While many of its advertising campaigns boost sales is it too much? Focus on digital marketing & social media and spend more efficiently
http://www.youtube.com/watch?v=PvYP_d2S1Pg

Top 10 Advertisers in 2010

Thank you Any Questions?