P&G: Marketing Capabilities HBS case
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Transcript of P&G: Marketing Capabilities HBS case
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Procter & Gamble: Marketing Capabilities
Harvard Business School case
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William Procter and James Gambler
Founders:
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We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.
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To be recognized as, the best consumer products and Services
Company in the world.
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Case Facts
• Global Leader in Branded Consumer goods
• Has 2 dozen $1bn brands known worldwide
• First company to advertise directly to
consumers.
• 2010, total sales=$78.94bn
• Net Income=$12 bn
• Market capitalization=$186.63bn
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Current Picture of its success
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Organizational Structure
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Analysis of Net Sales
Source: Procter&Gamble,2010 Annual Report
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1)How firm struggled with
controlling costs and how
they fixed it?
2)How to build business with
unserved and underserved
customers?
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Is INNOVATION and intensive R&D a key
ingredient for their prominent success?
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How firm struggled with controlling costs and how they fixed it?
• In 1999, Net sales slowed to 2.6% growth.
• Firm promised to deliver more innovation.
• 7 Global Business Units(GBU) replaced existing 4 Geographic
Business Units.
• This helped in achieving Innovation vitality- bigger innovations,
faster speed to market and greater growth.
• Started a “Connect-and-Develop” program.
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• Under this program, 6 connect-and-develop hubs(in China, India,
Japan, Western Europe, Latin America and US) were established.
• Hubs focused on products and technologies specific to the
specialties of the hub’s region.
• Connect-and-develop helped P&G adapt and develop new skills.
• by 2006, P&G’s R&D productivity increased by 60% and firms
innovation success doubled.
• This also led to a simultaneous drop in cost of innovation.
• R&D investment as a percentage of sales dropped from 4.8% in
2000 to 3.4% in 2006.
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How to build business with unserved and underserved customers?
Building business with unserved and underserved consumers through consumer-centric, digital, direct and neuromarketing, multibranding and interactive community promotion.
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• Multibrand Stratergy: Brands of different product lines got
individual support and satisfied a segment of the market.
• Design Innovation & Strategy unit: A culture of design
introduced in P&G which complemented function driven
process.
• Consumer centric marketing: keeping itself relevant and
customized with respect to the needs of people.
• Focused on two moments of truth-
1. On the store shelf.
2. customer satisfaction and feedback.
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Commitment to the
Consumer
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• Firm conducted various Qualitative and Quantitative
researches like interviews, ran focus group discussions, instore
interviews, etc.
• They started Personal Endorsement Approach.
VOCALPOINT, P&G’s word-of-mouth program was a huge
hit.
• Consumer interests, habits and satisfaction were measured by
online grocer sites and Neuromarketing, building one-to-one
relationship with customers.
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• P&G relied on developing long standing partnerships with
advertising agencies to develop robust brand identities for its
portfolio of consumer goods.
• P&G advertised directly to consumers by passing the
established network of wholesalers, distributors and retailers.
• “Media Neutral” Advertised in different and relevant local
languages in less familiar markets.
• P&G advertised through innovative channels like dramas, T.V
commercials and Operas.
• Soon firm shifted its aim towards a more “Design and Emotion
driven advertising” along with the benefits and functionality.
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• P&G sponsored the US Olympic team in 2010, 2012 and 2016 games.• P&G was indulged in Fitness campaign through NFL sponsorship.
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Celebrity Endorsements
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Media Spending• During the recession, P&G shifted to coupons and in-store
promotional activities to maintain the same media presence.
• P&G increased ad spending by $1 billion with a 20% increase
in media impressions.
• McDonald maintained same level of spending, while shifting
dollars to digital advertising and other new media to broaden the
audience.
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• Niche Experimentation through online serials, video games and
YouTube channels for specific products.
• Mobile Marketing ad campaign, TV commercials and print
media advertisements had an online presence.
• “My Black is Beautiful” line of products showcased with 2 web
series attracted over 3 million views.
• Old Spice television commercial and YouTube sensation “The
Man Your Man Could Smell Like” gave P&G its greatest
exposure.
• It bridged the power of digital and social media.
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Social Media
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• Launched two social media sites: Capessa for
women on Yahoo! Health and the People’s Choice
Community, associated with the People’s Choice
awards.
• Started using FACEBOOK as a marketing
supplement.
• In 2011, P&G rolled out Manofthehouse.com which
featured advice for men and aimed to “speak to the
whole man”.
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• P&G started highly successful post Katrina campaign, “Loads of
Hope”.
• T-shirts having slogans “Be seen, not spotted” were endorsed
celebrities to promote tide and Febreze.
• A mass promotional activity held in Times Square targeted
holiday shoppers, generated YouTube ads and attracted youth.
• An innovative and including restrooms and spotless toilets used
to promote Charmin toilet paper, and tourists loved it.
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