Procter & Gamble was founded in 1837 by William Procter and James Gamble. It originally produced candles and soap but pivoted to soap production for the Union army during the Civil War. Today, P&G operates across 180 countries and is organized into two global business units: Health and Well-Being and Beauty. Its largest segments are Fabric and Home Care, Beauty, and Baby Care and Family Care. P&G aims to acquire 1 billion new consumers by 2015 through expansion in developing markets and increasing productivity across operations.

2. Steven Perdoch
Matthew Dymit
Carrie Loera
Dan McGowan
Elana Muradova
Strategic Management, Spring 2012

3. History
 Founded in 1837
 William Procter and James
Gamble
 Incorporated in Ohio on May 5,
1905

4. In the beginning…
 Proctor and Gamble came to be by manufacturing
soap and candles.
 After the invention of the electric light bulb, the
demand for candles fell significantly, thus causing
the newly formed P&G to cease their production.
 During the Civil War, the government began to
order mass quantities of soap from P&G for the
Soldiers’ use—this significantly led to P&G’s return
to the market and their second chance at rising in
the business world.

5. Organizational Structure

6. Acquisition Summary
 Between 1905 (Incorporated) – 2010, P&G
invested in 34 acquisitions
 Periods of frequent acquisitions occur in the
1930’s, 50’s, 80’s and 90’s.
 Some of the larger acquisitions include:
– Charmin, Clorox, Crush, Revlon, and Gillette

7. P&G Today
 Products sold in > 180 Countries
 On the ground operations in 80 countries
 Organized into 2 Global Business Units (GBU’s)
Health Care Fabric and
& Home Care
Beauty & Household Baby and
Grooming
Grooming Care Family Care
Beauty Snacks and
Pet Care

8. P&G: Who we are.
 http://www.youtube.com/watch?v=tAT-cFFGNQg

9. Health Care
 Segment includes products in oral care, feminine
care, respiratory, toothpaste, OTC drugs and other
personal care categories

10. Health Care - Overview
 14% of Net Sales in 2011
 Products sold in drug stores
supermarkets, and mass
merchandisers
 Mature market
 Name Brand & Private Label competitors

11. Health Care – Core Competencies
 Strong, Dependable, High Quality Products
– Strict internal standards and guidelines to comply
with FDA
– Most recent recall was early 2010 - Vicks
– Vicks 4-Hour Nasal Spray (wrong expiration date)
 Health Care Research Center
– Promote innovation and bring new products to the
market quicker

12. PGT Healthcare

13. Threats
 Intense competition
– Private labels are much cheaper
Top Cough Syrup Makers - Market Share
Company % - 2010 % - 2011 % Change
Wyeth Labs, Inc. (Pfizer) 25.17 25.87 0.7
Reckitt Benckiser 26.82 24.23 -2.59
Private label 24.78 22.17 -2.61
Procter and Gamble Co. 13.59 19 5.41
Other 3 3.31 0.31
Novartis Consumer Health 2.61 3.02 0.41
Blacksmith Brands 0.65 1.12 0.47
Health Care Products 1.36 0.73 -0.63
Boiron-Borneman 1.13 0.55 -0.58
Qualitest Products 0.9 0 -0.9

14. Baby Care and Family Care
• Segment includes diapers, baby wipes, paper
towels, and toilet paper

15. Baby Care & Family Care Key Info.
• 19 % Of Net Sales
• Products sold in supermarkets, convenience
stores, hotels,motels,and other industries
• Baby Care and Family Care competitors

16. Beauty Segment
 This segment includes cosmetics, fragrances,
hair care, and skin care products

17. Beauty Segment
 Beauty accounts for approximately 34% of
P&G’s product portfolio.
 24% of Net Sales & Net Earnings
– Head & Shoulders, Olay, and Pantene are some of
the biggest brands within this segment.

18. P&G Beauty in The Marketplace
 P&G’s beauty products are highly
recognizable; brand differentiation is a
strength.
 Product availably is great; products are sold at
practically all domestic retailer chain and drug
stores.
 Proctor & Gamble is associated with tried and
true, trusted products.

19. Beauty Segment
Competition and Growth
 Competitors
– Unilever
– L’Oreal
– Private Labels
 3% Net sales growth from 2010
– 24% of P&G’s Net Sales are from the Beauty
segment

20. Threats to Beauty Segment
 Greatest threat to P&G’s Beauty Segment is the
Threat of Rivalry
– Unilever, L’Oreal, Private Labels
 Mature Market
 Threat of Buyers and/or Suppliers?
– Relatively low, due to the working relationship between
both categories and the trust created in order to
maximize that relationship.
 Suppliers are even involved in P&G’s creative process in
developing new products.

21. Fabric and Homecare
 Segment contains products including laundry
cleaning products and fabric conditioners;
home care products, including dishwashing
liquids and detergents, surface cleaners and
air fresheners; and batteries
 Fabric care dominates the market with over
30% of the global market share
 Global home care market share is over 15%
across the categories in which we compete

22. Fabric and Homecare (Cont.)
 Proctor and Gambles largest, and most
profitable division - 30% of net sales
 Has been increasing steadily - 6% in 2011
 Mature Market
 Market made up of Brand name and Generic
brands

23. Snack and Pet Care
 This segment includes food products and pet
food products
 Smallest segment

24. Snack and Pet Care Overview
 Least profitable P&G business segment
 4% of P&G’s net sales in 2011
 Pringles was the only existing snack brand*
 Pringles owned 3% of US Snack Food
Production Industy’s market share
 Utilizes Eukanoba and Iams to appeal to all
types of pet owners

25. Threats
 Lack of presence in the industries
 Mature market
 Fierce competition
 Extension would require major investment into
creating new products and brands
 Competition has more industry-focused
product lines

26. Recommendations

27. Disinvest/Sell off Snack & Pet Care
Business Segment
 Least profitable business segment (4% net
sales ’11)
 Pringles sold for $2.7 Billion
 Iams and Eukanoba (value?)
 Increased focus on profitable business
segments
 Increased opportunity to innovate in successful
segments

28. Growth in Developing Markets
 Company-wide initiative: Acquire 1 billion additional
consumers by 2014/2015
P&G Sales Growth: 2000 to 2012
90%
80%
80% 77% Developed
% of Total Company Sales
70% 63% Developing
60%
50%
40% 37%
30% 23%
20%
20%
10%
0%
FY '00 FY '05 FY '12

29. Demographic/Socioeconomic
Trends
 Population is forecasted to grow 700 million
people by 2020 (Think of all those diapers?)
 95% of this growth will come from developing
markets
 Wealth and Per Capita income increasing
 Plan of attack?
– Expand geographically and fill in the ―White Space‖

32. Improve Productivity in All Areas
 Cost of Goods
– Reduce RM costs
 Long-term contracts
 Increase # of Suppliers?
– Reduce excess inventory
– Develop partnerships (PGT Healthcare)
 Research & Development ~ $2 billion annually
– Continuous improvement
– Product Innovation

33. Open Innovate Connect + Develop
 Continue to nurture the Open Innovate:
Connect + Develop method of research and
development.
 What is OIC+D?

34. Connect + Develop
“Today, open innovation at P&G works both ways — inbound and outbound — and
encompasses everything from trademarks to packaging, marketing models to
engineering, and business services to design. It's so much more than technology.”
-Bruce Brown, CTO

35. Why is OIC+D Important?
Collaboration
Ultra-fast
product-to-market delivery

36. Marketing Opportunities
 Proctor and Gamble wants to cut $10 Billion in
expenses
 In 2010 P&G spent $2.2 million on Television
advertising
 While many of its advertising campaigns boost
sales is it too much?
 Focus on digital marketing & social media and
spend more efficiently
http://www.youtube.com/watch?v=PvYP_d2S1Pg

37. Top 10 Advertisers in 2010

38. Thank you… Any Questions?