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
P&G’s Structure Division

Market Development Global Business Corporate Functions Global Business

Organization Services 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 strategies
business and won consumers’ good’s and on going
customers industries innovation in
products and
marketing to
build major
global brands.
Product Basket
Product Basket
HAIR PRODUCTS SKIN PRODUCTS FEMENINE PRODUCTS
•Offered a variety of hair •Offered products like creams, •Offered products like tampons

products like shampoos, pads, astringents, gels, and sanitary pads for females to
conditioners, leave-ins, styling mosturizers, toners and after use during their menstrual cycle.
aids etc for different kind of hair shave etc for three basic skin •Targeted females between 12yrs

like, dry, normal, greasy, types – dry, normal, oily. – 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, Pantene, and Olay. Always.
Aussie & Head and Shoulders.
Product Basket
FINE FRAGNANCES COSMETICS PERSONAL CLEANSING
•Was a major distributor of •Offered products like •Offered products like bar soaps,
various fine fragrance brands. foundation, eye shadow, body wash, etc.
•Targeted both men & women. mascara, lip gloss etc for lips, •Targeted everybody for such

face, nails, eyes. products.

•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
 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
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
Financial Data
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 •Decreased Revenues in their

product Portfolio Northeast Asian Market

•Strong Finances in past years

Opportunities Threats
•Developing Markets •Competitors

•Demographic trends across the •Rising cost of raw materials

world •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….