There is ONE (1) case study in this section. Answer ALL the questions in the answer booklet. QUESTION 1: P&G’s impressive portfolio includes some of the strongest brand names in the world. What

 There is ONE (1) case study in this section. Answer ALL the questions in the answer booklet.

CASE STUDY - PROCTER & GAMBLE

Procter & Gamble (P&G) began in 1837 when brothers -in- law William Procter and James Gamble,

whose wives were sisters, formed a small candle and soap company. From there, P&G innovated and

launched scores of revolutionary products of superior quality and va lue, including Ivory soap in 1882,

Tide laundry detergent in 1946, Crest toothpaste with fluoride in 1955, and Pampers disposable

diapers in 1961. P&G also acquired a number of companies to open the doors to new product

categories. Among these were Richard son -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 Company.

Today, P&G 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 138,000 people

in more than 80 countries worldwide and has total worldwide sales of more than $79 billion a yea r.

It is the leader in 15 of the 21 product categories in which it competes, has 23 billion -dollar global

brands, spends more than $2 billion annually on R&D, and serves more than 4 billion people in 180

different countries. Its sustained market leadership rests on a number of capabilities and

philosophies:

 Customer knowledge. P&G studies its customers - both end consumers and trade partners -

through continuous marketing research and intelligence gathering. It spends m ore than

$100 million on over 10,000 formal consumer research projects every year and generates

more than 3 million consumer contacts via its e -mail and phone center. It also emphasizes

getting its marketers and researchers out into the field, where they c an interact with

consumers and retailers in their natural environment.

 Long -term outlook. P&G takes the time to analyze each opportunity carefully and prepare

the best product, then commits itself to making this product a success. It struggled with

Pring les potato chips for almost a decade before achieving market success. Recently, P&G

has focused on increasing its presence in developing markets by concentrating on

affordability, brand awareness, and distribution through e -commerce and high frequency

stor es.

 Product innovation. P& G is an active product innovator, devoting $2 billion annually to

research and development, an impressively high amount for a packaged - goods company. It

employs more science PhDs than Harvard, Berkeley, and MIT combined and applies for

roughly 3,800 pate nts each year. Part of its innovation process is to develop brands that

offer new consumer benefits. Recent innovations that created entirely new categories

include Febreze, an odor -eliminating fabric spray; Dryel, a product that helps “dry -clean”

clothes at home in the dryer; and Swiffer, a cleaning system that more effectively removes

dust, dirt, and hair from floors and other hard surfaces.  Quality strategy. P&G designs products of above - average quality and continuously

improves them in ways that mat ter to consumers, including Tide compact detergents,

Pampers Rash Guard (a diaper that treats and prevents diaper rash), and improved two -in-

one shampoo and conditioner products for Pantene, Vidal Sassoon, and Pert Plus.

 Brand extension strategy. P&G pro duces its brands in several sizes and forms. This strategy

gains more shelf space and prevents competitors from moving in to satisfy unmet market

needs. P&G also uses its strong brand names to launch new products with instant

recognition and much less adve rtising outlay. The Mr. Clean brand has been extended from

household cleaner to bathroom cleaner, and even to a carwash system. Old Spice extended

its brand from men’s fragrances to deodorant. Crest successfully extended into a tooth -

whitening system calle d Crest Whitestrips that removes surface stains from teeth in 14 days.

 Multibrand strategy. P&G markets several brands in the same product category, such as Luvs

and Pampers diapers and Oral -B and Crest toothbrushes. Each brand meets a different

consumer want and competes against specific competitors’ brands. At the same time, P&G is

careful not to sell too many brands and has reduced its vast array of products, sizes, flavors,

and varieties in re - cent years to assemble a stronger brand portfolio.

 Comm unication pioneer. With its acquisition of Gillette, P&G became the nation’s largest

advertiser, spending over $2.3 billion a year or nearly twice as much as the number two

company, General Motors Corp. P&G pioneered the power of television to create stron g

consumer awareness and preference. In recent years, the company has shifted more of its

advertising budget to online marketing efforts and social media such as Facebook, Twitter,

and blogs. These efforts help infuse stronger emotional appeals into its co mmunications and

create deeper consumer connections.

 Aggressive sales force. P&G’s sales force has been named one of the top 25 by Sales &

Marketing Management A key to its success is the close ties its sales force forms with

retailers, notably Walmart. The 150 -person team that serves the retail giant works closely

with Walmart to improve both the products that go to the stores and the process by which

they get t here.

 Manufacturing efficiency and cost cutting. P&G’s reputation as a great marketing company is

matched by its excellence as a manufacturing company. P&G spends significant amounts

developing and improving production operations to keep its costs among th e lowest in the

industry, allowing it to reduce the premium prices at which some of its goods sell.

 Brand -management system. P&G originated the brand -management system, in which one

executive is responsible for each brand. The system has been copied by m any competitors

but not often with P&G’s success. Recently, P&G modified its general management structure

so each brand category is now run by a category manager with volume and profit

responsibility. Although this new organization does not replace the bra nd -management

system, it helps to sharpen strategic focus on key consumer needs and competition in the

category. 
 P&G’s accomplishments over the past 173 years have come from successfully

orchestrating the myriad factors that contribute to market leadershi p. 


QUESTION 1:

P&G’s impressive portfolio includes some of the strongest brand names in the world. What are some

of the marketing challenges and risks associated with being the market leader in so many

categories? (20 Marks)

QUESTION 2:

With social m edia becoming increasingly important and fewer people watching traditional

commercials on television, what does P&G need to do to maintain its strong brand images? (10

Marks)

QUESTION 3:

What risks do you feel P&G will face going forwar d? (10 Marks)