HBS Case Study - Procter and Gamble : Marketing Capabilities

1. Procter & Gamble :
Marketing Capabilities
Sajal Gupta
Harvard Business School Case

2. PRESENTED BY
SAJAL GUPTA
NSIT Delhi
(During a marketing internship
under Prof. Sameer Mathur,
IIM Lucknow)

3. Your Footer Goes Here 3
What is P&G?
What is

4. P&G is one of the largest and amongst the fastest
growing consumer goods companies
in the world. P&G touches and improves the lives
of about 4.4 billionpeople in 180 countries
around the world with its portfolio of trusted,
quality brands.
Your Footer Goes Here 4

5. Portfolio of P&G

6. P&G Facts
• P&G was a global leader in branded consumer goods.
• Has many > $ 1 billion brand known worldwide.
• First company that advertised directly to customers.
• P&G was a seasoned marketer with strong consumer
research, a powerful innovation network, an
evolving marketing strategy, strong marketing talent,
and the world’s largest financial commitment to
advertising.

7. P&G Financial Commitment to Advertising
• $8.68 billion ADVERTISING BUDGET (2010).
• $78.94 billion SALES HIT (2010)
• $12.74 billion NET INCOME (2010)
• $186.63 billion MARKET CAPITALIZATION

8. Company Background

9. P&G Vision and Mission
Vision
Be, and be recognized as, the best consumer products and
services company in the world.
Mission
P&G’s stated corporate mission was to build on its company
purpose to improve the lives of its customers through continued
innovation to reach “More Consumers, In More Parts of the
World, More Completely.”

10. Foundation - 1837

11. 1930s International Expansion

12. 1945 to 1980 it began to
enter markets in Latin
America, Western Europe, and
Japan.

13. Expanded new lines of business through acquisitions
P&G’s approach to entering new markets was via acquisition or
joint venture on a small scale.

15. Today…
Procter & Gamble is one of the most skilful marketers
of consumer-packaged goods in the world and hold one of the
most powerful portfolios of trusted brands.
It sustained market leadership rests on a number of
different capabilities and philosophies.

16. Why study
this case?

17. Objectives of the Case (1/4)
To learnfrom and analysethe best practices
of P&G the world's largest advertising spender and a renowned
marketer of consumer products.

18. Objectives of the Case (2/4)
To understand their marketing strategies:
• where marketing innovation is developed
• how it is applied across different categories
• and how marketing shifts with changes in structure
and culture.

19. Objectives of the Case (3/4)
To analyse the gapsin their marketing strategies and
suggest improvement points.

20. Objectives of the Case (4/4)
To understand and analyze the potential risksP&G may
face in future.

21. BEST PRACTICES (1/4)1
Innovation and R&D
Trial-and-error methods
for new products.
P&G took a scientific
approach and connected
R&D with the company’s
sales and marketing.
Better brands are based on innovations and continuous
improvement that delivers the customer value.

22. BEST PRACTICES (2/4)1
Global Business Units
Seven global business units (GBUs) based on
product categories replaced the company’s
four geographic business units. P&G felt the
GBUs would help with global product
development and quick-to-market strategies.

24. BEST PRACTICES (3/4)1
Sub-divisions under GBUs
1. a business development team focused on innovating in existing
categories
2. a venture team tasked with acquiring brands in new areas and
nurturing ideas created by the business development team that did
not relate to an existing brand
3. and market development organizations that would perform
intensive market research to ensure global products’ success in
local markets.
P&G hoped the net result would be “bigger innovations, faster speed to
market, greater growth—innovation vitality.”

25. BEST PRACTICES (4/4)1
P&G aims to partner with the world’s most innovative minds– from
individual inventors and small businesses, to Fortune 500 companies–
to deliver on the company’s most challenging opportunities.
Connect + Develop helps P&G engage with innovators and patent-
holders to meet needs across the P&G business: for products,
technology, in-store, ecommerce and the supply chain.

26. Results of connect + develop
By 2006,
• more than 35%of P&G’s new products had elements that originated
from outsidethe firm
•45% of P&G’s initiatives had key elements discovered externally
• P&G’s R&D productivityincreased by nearly 60%
• firm’s innovation success doubled
• drop in cost of innovation

27. P&G had pursued a multi-brand strategy, and it managed
brands across a category carefully, with each getting individual
support and satisfying a segment of the market. P&G’s detergent
category illustrated this:
MARKETING STRATEGIES2
Premium brand “cleaned colours safely” “had fresh scent” “contained bleach”

28. MARKETING STRATEGIES2
1.Function
2.Performance
3.Price
Design

29. MARKETING STRATEGIES (3/)2
“First moment of truth”

30. Design every component of the product:
communication experience
user experience
The influx of design had a strong impact on
P&G’s product development; design informed
the innovation process and even changed the
function of some products .

31. The new emphasis shifted the company towards a more
consumer-centric marketing approach.

32. Shift in
Marketing &
Advertising…

33. Traditional Marketing  Digital Marketing ?

34. Why?
To measure
ROMI
(Return on Marketing Investment)

35. Shift
from
T.V
and
Print

36. Soap Operas, Radio and TV Broadcasts….

37. To Digital and Direct Marketing…

38. How does this helps?
The data collected, along with information
about online usage and grocery purchases,
and frequent surveys of attitudes and lifestyle
choices, helped subscribers such as P&G
understand its marketing tactics’ performance.

39. P&G’s Tide #LoadsofHope team providing
relief services by washing laundry for
families impacted by the #TexasFloods.
Social Cause Marketing

40. Leveraging Secondary Associations by Sponsorships

41. Emotional Branding…

42. Celebrity Endorsements…

43. Gillette YouTube channel

44. Shift in
Market
Research

45. Traditionally….
• P&G ran focus group discussions,
•interviewed consumers at home, and performed in-context
visits and in- store interviews .
• Quantitatively, the firm gathered data on consumers utilizing
blind tests, concept and use tests, and quality monitoring, and
doing large-scale studies of the habits and practices of
consumers who purchased P&G products.

46. VocalPoint, P&G’s word-of-mouth program

47. New technologies also continued to provide P&G with
ways to engage and measure consumer interests, habits,
and satisfaction.

48. Insights from new technologies….
Integrating these new technologies in an attempt to gain more hard data on
consumers dovetailed with P&G’s culture of performance-driven products, as the
firm leveraged new and innovative ways to learn directly from
consumers, while also building the opportunity to create more direct, one-on-
one relationships with the target audiences.
Eye tracking Neuromarketing EEG

49. P&G sought to better understand how its customers
felt—not about a product such as Pantene, but about
having a “bad hair day.”

50. P&G maintains its level of
media spending, while
shifting $s to digital and other
new media to broaden the
audience.

51. Gaps in Marketing Strategies (1/2)3
Across the industry, many were finding that
while television was still the best way to reach
many customers at once, they were not
necessarily all repeat customers. Still, in 2011,
the bulk of P&G’s advertising spending went
toward television.
Excessive focus on Television

52. Gaps in Marketing Strategies (2/2)3
Digital marketing efforts were a large part of
P&G’s plan. Although, in 2010, only 5% of
P&G’s $3.2 billion was spent on online
marketing.
Less emphasis on Digital and Social Media

53. Though…
P&G’s Old Spice television commercial and YouTube sensation,
“The Man Your Man Could Smell Like,”
gave P&G its greatest exposure in the online community in 2010,
and bridged the power of digital and social media.
And more efforts like Mobile Advertising, YouTube , Expert Advise
websites etc. have changed the way P&G advertise.
Still…

54. To maintain its brand image, it has to
increase its presence online…

55. Improvement points
• P&G should partner with e-commerce websites to increase its presence online.
• A stronger presence could be ensured by marketing using Twitter, Pinterest,
Facebook, YouTube , Instagram etc.
• A strong Ad Words campaign for its core products can strengthen its online
presence.
• Applications could be launched pertaining to specific product categories.
• Extra incentives and offers like coupons, loyalty points or cards etc. could be
incorporated.
• Social cause marketing campaigns for best performing brands can be launched.
• Online quizzes or competitions (Selfie Contest with product) or flash sales on
Facebook pages, Twitter can be immensely helpful.

56. Potential Risks4
Competition from local products which may offer a cheaper price.
Limited growth for innovation may not satisfy customer’s expectation.
Customer Knowledge: It might be difficult to maintain a face-to-face
interaction of R&D team with customers and trade partners for feedback,
owing to increasing number of brands.
Numerous line extensions may cause the brand name to be less strongly
identified with any one product.
Marketing of such a large pool of brands, especially with the rise of social
media.
Brand Dilution
Brand extension harming the parent brand in case of failure.
Inefficient Brand-Management system for large number of brands