Strategic management<br />Report on:<br />Business plan of proctor and gamble shampoos<br />Submitted To:<br />M. Ekhlaque Ahmed<br />Submitted by:<br />Idrees waris<br />Nazia sahar<br />Romana ashfaque<br />PROCTER & GAMBLE SHAMPOOS<br />Business Scope<br />Nineteen years ago Procter and gamble started the journey in Pakistan to provide the world famous quality brands to Pakistani consumers. Procter and Gamble Corporation have been well known in the eyes of customers for serving the needs in fast moving consumer’s goods. Proctor and gamble has a mission to improve the lives of consumers wherever it operates.<br /> <br />Regions: <br />Where we are operating?<br /><ul><li>Islamabad
Sialkot</li></ul>P & G operates in all major cities of Pakistan and their expansion plan is to cater the rural area as well.<br />Internationally they are in the markets of 190 countries.<br />Functions and Application:<br />People have become more conscious about their hair problems and they want solution and better results. Different customers have different problems related to their hair like dandruff, splinted hair, fizzy hair, hair fall etc. Now Proctor and gamble is providing different products with solution for almost every hair problem. The demand of hair care shampoos keep on increasing. As it have different ranges, head and shoulder have seven varieties and Pantene is available in 5 varieties.<br />Head and shoulder is anti-dandruff and Pantene is beauty hair care.<br /><ul><li>Anti-Dandruff shampoos
Hair care shampoo for milky extra treatment </li></ul>Customers and Users:<br />The user of proctor and gamble shampoo are 15 to 35 years old people and they are using more shampoo and more conscious about their hairs. Students are having more demand of shampoo. Demand of shampoo in house wives and older age people is relatively less then others. Procter & Gamble considers the different factors while choosing its primary users. The primary users of Procter & Gamble are mentioned below.<br />Young adults<br />Middle-aged adults<br />Families belonging to SEC (socio-economic class) A to C.<br />Beauty saloons<br />Cosmetic shops<br />Hotels <br />Value Addition<br />Recently proctor and gamble introduced new Pantene with the power of oil; it will help in addressing the toughest hair issues of Pakistani consumers with in just 14 days i.e. due to breakage and Split it caused to hair fall of the hair. The shampoo in the name of New Pantene that combines oil benefits which helps to nourish hairs and it also helps to address the issue of hair fall and split ends and in just 14-days. The shampoo contain the natural herbs that provide the oil benefits which not only helps to nourish the hair but it also helps to tangle free and makes your hair healthy and strong.<br />Considerations:<br />Currently the company has following variants in shampoo, each catering to a different segment which is mentioned below:<br /><ul><li>Hair fall defenseGuaranteed 100%* Dandruff gone and a solution for hair fallRefreshingCleans your hair and refreshes your scalp.Smooth and SleekIt contains the amino Pro-V complex which makes hair glowing finish, and sleek.Sheer VolumeSpecially designed for shining and body.Daily Moisture Renewalit helps to protect your hair from polluted environmentColor RevivalSpecially designed for maintaining the true color of your hairClassic CareHelp in balancing the hair and to give shine and health look to your hair.Full and ThickSpecially made for the thin hair to make your hair full of body.Classic cleanMakes your scalp cleanses and regenerates your gorgeous hair</li></ul>Intended Business:<br />They want to penetrate in existing market and also planning for distribution extension.<br />But these all are segmented according to the general needs of customer. The company doesn’t have the specific segmentation of shampoo for men.<br />Today the shopping trends of customers are change and they are very specific in selecting their personal care products. So in order to expand its business in future, the company needs to come up with different varieties which will fulfill the needs of customers. Men usually prefer to Shampoos which address their problems like dandruff, hair fall and fizzy hairs.<br />All Pakistan shampoo is 18%.<br />Urban areas 67%<br />Rural areas 23%<br />A-C segment is the fastest growing segment in Pakistan.<br />Competitors and their Businesses:<br />There are many local and multinational direct competitors operating in Pakistan which are mentioned below:<br /><ul><li>Sunsilk, (Uniliver)
Bio amla </li></ul>Proctor and gamble:<br />It is expected that the usage of shampoo in rural areas will rise in 2011, So P&G have a plan to expand in rural areas where they are behind unilever shampoo, prices are relatively low as compared to P&G, but we are focusing on the quality. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption.<br /><ul><li>EXTERNAL ANALYSIS</li></ul>Market structure<br />ApplicationsAnti-dandruffBeauty (shine, healthy, straight, smooth and silk)HerbalUser & productsHead and shoulder (P&G)Lifebuoy Anti Dandruff (unilever)Selsun anti- dandruff shampooSun silk Anti – Dandruff (unilever)Life buoy (unilever)Sun silk for shinny hair(unilever)Decrease(unilever)Pantene smooth & strong (P&G)Lifebuoy anti-hair fall (unilever) Dove (unilever)OrganicsFlexSelsun Blue for Itchy Dry ScalpBio AmlaGarnier frutcisHerbal essence (p &g) Darbar vatika (Dabar)<br /> Household Consumer<br />DISTRIBUTION STRUCTURES<br /> UTILITY STORESGENERAL STORES MEDICAL STORES<br />RETAILER<br />WHOLESALER<br />MODERN RETAIL GLOBAL CUSTOMERS<br /> DISTRIBUTORS <br /> WAREHOUSE <br /> MANUFACTURING PLANTS<br />It is showing that from factory floor it reaches to agility warehouse of the company then it moves to distributor (abu dawood) the only distributor, then from distributor to global customers, modern stores, high frequency stores and the wholesaler who directly buy from distributors. it will move to the distributor premises as well as to wholesalers. They forward inventory to the retailers. the retailer sells the products to utility stores, medical stores and general stores and final consumers as well.<br />GLOBAL CUSTOMERS:<br />Our global customers are metro and macro. There are five metros in Pakistan, two are in Lahore, and 1 is in Karachi, Islamabad, and Faisalabad. And out of five macros, three are in Karachi and two are in Lahore.<br />MODERN RETAILS:<br />In modern retail we have Naheed, Aghas, and Imtiaz.<br />HIGH FREQUENCY STORES:<br />High frequency stores include.<br />Wholesaler<br />Retailer <br />General stores<br />Medical stores<br />Utility stores<br />Cosmetic shops<br />Beauty saloons<br />Market Size<br />Analysis <br />Market share of the shampoo companies are shown above, which is indicating that Procter and gamble has 31% market share in shampoo industry, unilever 26%, bio amla 14%, garnier 11% and remaining 18% are the other local and international companies. Proctor and gamble shampoos are anti-dandruff, beauty and herbal. Procter and gamble capturing the major share in market due to high share in anti-dandruff segment, which is providing the world No.1 anti-dandruff shampoo. Unilever shampoos stand in second position and it has 26% market share but the share of unilever in beauty segment is more than Procter and gamble, so proctor and gamble need to focus more on beauty segment.<br /><ul><li>Market Size (Past) Volume in msu (million in state unit)Market Segment2006200720082009Growth P.AAnti-dandruff483.760500.691550.259604.7742.7%Beauty 683.760744.715818.332914.0766.9%Herbal 305.190316.482336.736360.6445.6%Overall growth5.06% Market Size(past) Value in millionsMarket Segment2010201120122013Growth P.AAnti-dandruff665.856721.122774.485837.2182.7%Beauty 1016.4521126.2281239.9771382.5746.9%Herbal 389.13412.208433.636462.6895.6%Overall growth 5.06%Market Size (future) Volume in msu (million in state unit)Market Segment2010201120122013Growth P.AAnti-dandruff6496626957182.1%Beauty 10681149121413067.8%Herbal 3944384815146.3%Overall growth5.4%Market Size (future) Volume in msu (million in state unit)Market Segment2010201120122013Growth P.AAnti-dandruff8929219569982.1%Beauty 14681548163617097.8%Herbal 5085836787566.3%Overall growth5.4%Major Changes for Sales IncreasePopulation is keep on increasing with an average annual rate of 1.6% and the problem of dandruff and hair fall is increasing day by day and the women have become more conscious about their hair style.Constant innovation and aggressive marketing by hair care companies also lead sales trends upward of almost all segments. As Procter and gamble has vast array of advertising campaign.Delight the consumer with sustainable innovations that improve the environmental profile and sales of our products.Increasing awareness of hair care issues and the growing influence of western lifestyle trends and consumption habits were the main factors that extend the consumption of the shampoos. P&G Shampoos sale can also be increase if they provides the extra benefits to the customers like if they provide the more solutions in one productAssumptions For Future Growth (2010 onward)Due to intense competition in FMCG industry, P&G should place strong emphasis on innovation across all functions and activities. Head & shoulder safeguard and Pantene are the leadings products of P&G and they are catering the 20% markets of dandruff they should also focus upon the hair falling by doing the more research .Still people has hair falling problem in our society so p&g should be take more concern on the shampoo and insert those quality which protects customers from hair fallingThey should build separate brands for men as men has also become style conscious about their hair.In rural area, people are still unaware about hair care problems and their solutions. As per our research during 1950-2008, Pakistan's urban population expanded over sevenfold and it corresponds to 32.34%. This shows that majority of our population is living in the rural area so it is huge segment which need to be cater in future.PRODUCT LIFE CYCLE STAGE: REPRESENT INDUSTRYMarket SegmentIntroductoryGrowthMaturityDeclineAnti- DandruffBeauty Herbal AnalysisAntidandruff market of P& G has achieved the position in the minds of consumer and now it is on the maturity stage while the industry is growing.In beauty P&G is behind the industry because its competitor is already on the top of the mind of customers.Herbal shampoos are also on the growing segment in both the industry and Proctor and Gamble product herbal essence is in the induction stage.COMPETITION MATRIXCompetitionOverallAnti dandruffBeautyHerbal 1.P&G24%66%10%100%2.GARNIER -33%67%100%3. UNILEVER19% 65% 16% 100%4. Bio Amla12%25% 63%100%Historical Growth2.7% 6.9% 5.6%Projected Growth2.1% 7.8% 6.3%Company Profitability14%12%8%ANALYSIS:As Unilever is having neck to neck competition with P&G. So P&G needs improvement in hair care products, personal care products specially they should keep focus upon the men hair care product. Because men have also become more style oriented as compare to the previous year. But the overall business of P&G is in profit. Rural market is the best segment to capture more market share along with the new segment identification which is targeting all the customers.20% shampoo users are using Head & Shoulder as they are dandruff conscious people. 99% of the people are influenced by the advertisement of Head & Shoulder on daily use to get rid of dandruff and more over they are getting the promised results. They have targeted both males and females due to which they have got more number of shares in market Beauty wise .Pantene is the strongest hair care product of P&G both formula and advertisement wise. Pantene has 35% market share in beauty.Areas to be focused P&G has to focus more on growing market of beauty segments.Areas of new opportunities P&G is almost present in all segments and the competitors are following P&G. Distribution structure: % SHAMPOO MARKET2009 2013 HIGH FREQUENCY STORES 78%60 %MODERN RETAILS13%23%GLOBAL CUSTOMERS9%17%100 % 100% ANALYSIS: The above mention distribution structure shows that how hair cares industry transfers their goods to the end user. P & G has only one distributor across Pakistan through which the product of P&G Company reaches to end user. Further the company is divided into high frequency stores, modern retails, and global customers. The trend which is mentioned in the distribution structure shows that the consumers are moving towards the key accounts and modern trade because the standard of living is increasing day by day so every segment is increasing their sales through key accounts and modern trades. In 2009 78% sales of shampoos is being done by the high frequency stores as P&G provides transportation facilities to its distributors and retailers which attract these distributors and retailers to buy The P&G’s shampoo as compared to Lever Brothers Pakistan Limited’s one.As already explained they are giving top incentive to retailers and distributors. P&G sales staff pays more visits to their retailers and stores to check the shelf space of their shampoo. Thus due to these efforts they were getting 78% of market share. </li></ul>Top Key External Trends<br />TREND POTENTIAL IMPACT Proctor and gamble Unilever Bio AmlaGarnierTechnological Trends Increase in costIncrease in efficiency Yes Yes Yes Yes Bargaining power of supplier due to inflationCustomer might compromise on quality and not willing to pay higher prices.yesyesNOYesGrowth of rural markets and focus of companies on this area Increasing competition, Price Erosion NoYes YesNo Application segmentation Customization Yes Yes No Yes <br />Analysis:<br />Current trends in the market bring opportunities as well as threats for the organization so it is the company’s competency how to cope up the external trends. Proctor and gamble is one of the top company in Pakistan their main focus is to uplift the shampoo industry by changing products with changing demands. Proctor and gamble is willing to avail all the opportunities present in the external environment and cope up with the threats through its strengths.<br />DRIVING FORCES <br />Political-Legal ForcesEconomic ForcesSocial & Culture ForcesTechnological ForcesInternal Environment Proctor and gamble Social Interest Groups GovernmentSuppliersIndustryCustomers Competitors <br />Political forces<br />The changes occurring due to uncertain political situation have made the businesses uncertain for its survival in the country and also terrorism prevailing in the important cities of the country like Karachi, Peshawar, swat, Quetta and Lahore which are affecting the business activities. Policies about taxes are changing continuously due to changing government. The shampoo market is very much dependant on Political & Legal forces. In other words we can say that Political & Legal forces can dictate the sales and profitability of the shampoo selling firms. Taxes and Excise duty are of real importance to these organizations because it directly affects the prices which affect the consumers buying decision. <br />Economic Forces<br /> The rate of inflation reaches its peak level and it is affected the purchasing power of consumers due to which consumers are shifting towards the low price local products and its adding fuel to local business man to enter into the market of shampoos. The imports duty and excise duty on the other hand become the cause of increased in the prices of raw materials which is ultimately bear by the consumers. The shift in prices in consumers’ product will force them to switch for low priced shampoos.<br />Technological Forces<br /> Technology is also connected with proctor and gamble to benefit the consumer. Proctor and gamble newly introduced the shampoo with the power of oil but there is a need of rapid breakthrough in the technology of shampoo and their manufacturing process to produce the shampoos which keeps eyes lenses safe from harmful chemicals.<br />INTERNAL ANALYSIS:<br />SWOT ANALYSIS<br />STRENGTHS:<br /><ul><li>Financially strong company.
Growing rural market</li></ul>THREATS <br />Local and Foreign competition.<br />New entrance in shampoo industry<br />Country’s inflation rate is high.<br />The prices of electricity increasing.<br />Changing policies of the government.<br />Threats and Weaknesses which could be converted into Opportunities and Strength <br />External AnalysisInternal Analysis<br />weakenessesStrength ThreatsOpportunities <br /><ul><li>High urbanizationIncreased awareness about new advancements</li></ul>Major players are still weak in rural areas <br />Don’t serve low income market.<br />Covering all variants in shampoos through R & D<br />Analysis<br />P&G is weak in serving low income groups while competitors have the ability to serve the low income peoples. Through capturing in rural markets they can avail the opportunities in terms of more customers.<br />The Customer: Basis Of proctor and gamble Business<br />What DOES Customer want?Customer wants to have strong, healthy, shiny, smooth, anti dandruff and anti-hair fall all the time at an economical price. The factors which consumers want in shampoos are given below. Use of natural herb, Affordability, Availability, Convenient Packaging, Brand name, Variety, good foam, no side effect, compatible with hard water, no irritation to the eyes <br /><ul><li>What most important Aspects?AffordabilityAvailabilityVarietyConvenient PackagingUse of Natural HerbsGood FoamPrevent from hair damageShine Fragrance support hair growth</li></ul>Do you really know that?Yes<br /><ul><li>How do we score?VarietyPrevent hair damage Availability support hair growthConvenient PackagingAffordability Use of Natural Herbsfragrance shine Good FoamHow do competitors (Unilever& bio amla) score?Variety AvailabilityAffordability Prevent hair damage Use of Natural Herbssupport hair growthshine fragranceConvenient PackagingGood Foam
Relative Importance of Factors FactorsAbsolutely CriticalVery ImportantQuite ImportantNice to HaveNot significant54321 Variety Availability Prevent hair damage support hair growth Convenient Packaging Affordability Use of Natural Herbs Fragrance Shine Good foam </li></ul>Rating Against Customers Buying CriteriaQuality & PriceProctor and gambleUnilever Bio Alma Non-Price attributes Affecting Customer Choice% WeightProduct - Related Variety17%16%16%6% Prevent hair damage 15%9%11%12% Availability14%12%12%9% support hair growth13%12%12%13% Convenient Packaging6%4%3%2% Affordability14%9%10%12% Use of Natural Herbs10%6%6%9% Good form4%3%4%4% Shine 5%5%5%4% 2%2%2%1%Total100%78%81%72%Has quality gone up/down (+/-) In past 4 years++ + Relative Price today135 125110 Relative Price 4 years ago100100100<br />Customer Buying Criteria: Price and Quality Attributes<br />Keep it up<br />Question its Cost<br />RELATIVEPERFORMANCE<br />ShineVarietyConvenient PackagingPrevent hair damageAffordabilityUse of Natural Herb<br />Least 5% Most 20%<br />Improve Fast<br />Do Not Sweatat<br />ATTRIBUTES IMPORTANT TO CUSTOMERS<br />What strategic issue does the company face?<br />Proctor and gamble faces the following strategic problems.<br />Proctor and gamble is planning to capture the market share of rural area but they might face huge threat from local competitors because people in rural areas are quite cost conscious rather than quality and brand image. So this is difficult for proctor and gamble to market their product with such approach where they can target the majority of people.<br />Proctor and gamble needs to invest a large sum of amount to promotional activities in rural areas and launch their product in rural areas.<br />Economy play a vital role and Pakistan economy show a constant pace of inflation every year so they must need to curtail the prices of product in a competitive environment and need to stream line their operation in a cost effective manner<br /><ul><li>SUGGESTED:
To be the most trusted and preferred consumer goods company which look forward to their needs and act to create value in the eyes of consumers.</li></ul>MISSION<br />Our mission is to provide consumers the supreme, high-quality products and to be leading the industry by doing innovations. <br />OBJECTIVES<br />Expanding distribution network to all over Pakistan.<br />To increase continuously offering of new and unique products at affordable prices for all segments. <br />To increase the market shares in rural area by 20% till 2013.<br />To grow by 15% year by year for the next four years.<br />To increase the number of outlet coverage by providing commission based incentives to retailers.<br />KEY ISSUES:<br /><ul><li>Weak distribution resulting in missed sales usually in rural areas.
Increase in input cost due to ingredients imported from foreign companies.
ACTION PLAN ( FOR NEXT YEAR)</li></ul>WHAT HAS TO BE DONE REFERENCES HOW RESULT Customer Complain Weak network in rural area Should develop customer complain centre in rural area to address the issue of customers.Customer satisfaction/loyalty Enhance company reputationIncrease in sale Identification of new needs of customersIncrease the number of distributors Distribution matrixCompetition matrixShould increase the number of distributors and Improve relationship with the distributors in rural areas and seek new distributors Increase sales and value for company in rural areas because product will be available everywhere. Improve communication with external customers Market structureSWOT analysis More advertisements and promotional activities.Will become top of the mind Brand awareness Decrease Operating Costs to cope up with inflation. Production Managers.By controlling wastage and efficient and effective utilization of resources to achieve maximum output.Cost decreases and revenue increasesIncrease Production to capture rural market. Procurement and Production Managers along with workers. By master production scheduling of all production processes and operations and by truly forecasting the required demands.Profitability will increaseWill be helpful for achieving economies of scale.Expand Customer BaseSenior and Middle management (Marketing)Adopt market penetration policySales will increase. Increase in market share by capturing the competitors share and penetrating to unmet segments.Continuously improvement in Research and Development R & D DepartmentCreating synergy in value chain by making new variant of shampoos from same manufacturing plants.New market segment InnovationNew productsBuild separate brands for men and childrenBrand management, Senior managementComing up with new brand for children and men segment to cater the needs by providing more customized shampoos with different variants and combinations.Market share will increaseIncrease in sale and Profitability will increase.<br />