Procter & Gamble Company Essay

In November 1981, Mr. Chris Wright, Associate Advertising Manager of the Packaged Soap & detergent Division (PS&D) of the Procter & Gamble Co. (P&G) was evaluating how the division could increase volume of its light-duty luculent detergents (beta-lipoproteins). 1 The excellent heightenth of Dawn dishwashing liquid since its issue introduction in 1976 meant that P&G now manufactured and change three leading LDL shits, holding a 42% overlap (by weight) of the industrys $850 million in factory gross revenue. Based on input from the three LDL snitch managers who reported to him, as advantageously as his own knowledge of the LDL grade, Wright believed there were three major(ip) opportunities for volume growth (1) the introduction of a impertinent brand, (2) a harvest-festival feeler on an existing brand, and/or (3) increased commercialiseing expenditures on existing brands. In preparation for an upcoming meeting with Bruce Demill,, PS&D ad manager, Wright began evaluating t he volume and profit potential of the three options.Company administration The company comprised eight major operating divisions organized by typecast of return Packaged Soap & Detergents, Bar Soap & Household killing Products, Toilet Goods, Paper Products, Food Products, Coffee, Food Service & Lodging Products, and finical Products. Each division had its own brand management, gross revenue, finance, manufacturing and product training place management groups. One of the most important responsibilities of the brand group was the cultivation of the annual marketing plan, which established volume objectives, marketing support levels, strategies and simulated military operation for the coming year. The brand manager promoted the interests of his brand while the associate advertising manager assumed responsibility for building the business of all P&G brands in his or her family.The brand groups worked closely with the following foursome line surgical incisions in both the deve lopment and the implementation of their marketing plans sales The brand groups and sales push up browsely interacted. While the brand groups managed categories and brands, the sales force managed markets and accounts. As such, the sales force provided important perspective and way on trade and consumer promotional material acceptance, stock requirements to support promotions, competitive price and promotion activity, and newproduct activity. Each brand group worked closely with the sales force to develop the optimal sales promotion plan for its brand in concert with appropriate merchandising aids.LDLS are defined as all indulgent liquid soaps and detergents designed primarily for washing dishes.Product development department (PDD). Since superior product work was key to the success of P&G products, each brand group worked closely with PDD to ensure continued improvement of its brands quality. Fifteen professionals worked exclusively on question and development for LDLs. The PDD continually strove to upgrade product quality or explore new product formulations. If a potential new product was developed, it was extensively tried and true in consumer and laboratory trial runs before any test marketing began. Manufacturing department. The brand group provided the manufacturing department with detailed brand volume estimates (by month, size, and form/flavor) to advance efficient production, as well as five-year volume base forecasts for subject matter planning. In addition, the brand group discussed promotions requiring label or packaging changes with manufacturing to larn the most efficient production methods.Manufacturing informed brand groups about on-going manufacturing costs and provided potential cost-savings ideas. Interaction between the advertising and manufacturing departments was particularly frequent during any new-product development process, and include discussions on manufacturing requirements, custom-packing options for test markets, and critical paths for production. finance department Based on volume and marketing expenditure forecasts provided by the brand groups, financial/cost analysts developed and fed back brand profit and pricing analyses as well as profit and rate-of-return forecasts on new products and promotions. This information was key in helping the brand groups to preach action which would maximize volume and profit growth. Advertising services department. within the department, there were nine staff groups which serviced the advertising department.These were market research, art and computer software design, TV commercial production, media, copy services, field advertising, marketing systems and computer services, promotion and marketing services, and advertising personnel. PS&D market research included the following 1. Market analysis, including bimonthlysyndicated market data that P&G purchased from A.C. Nielsen Co., as well as selected data purchased from Nielsen, Selling Areas Marketing, Inc. (SAMI) and other suppliers for test markets. 2. Consumer research, including studies to a. monitor how consumers used products and track consumer usage of, attitude towards, and image of P&G and competitive brands b. test the performance of current products and possible product modifications under in-home usage conditions and c. evaluate the advertising, packaging, promotion and pricing of P&G brands also, to evaluate the potential of new-product ideas, using such techniques as concept research and simulated test markets.LDLs could be conceptually divided on the understructure of product benefit into three major fractions (1) the performance incision (35% of category volume) provided primarily a cleaning benefit (2) the benignity segment (37% of category volume) provided primarily the benefit of being gentle to hands and the price segment (28% of category volume) whose primary benefit was low cost.Volume is measured in P&G statistical cases, each containing 310 ounces. Househol d growth was a better indicator of LDL volume than population growth (research indicated LDL household consumption varied only slightly with the number of good deal in the household). 4 ADW households still used LDL for pots and pans and small cleanups. equipment casualty brands were sold to retailers for an average of $7.50 per statistical case versus $17.00 per statistical case for the premium-priced mildness and performance brands.the greatest growth in the past 10 years. approximately LDL brand managers expected the performance segment to continue to grow at the expense of the mildness segment, since market research indicated that more consumers rated performance attributes (such as grease cutting and longlasting suds) as the most important (see edge 2). The price segment had been in decline, but was expected to stabilize at its current share level due to increasing consumer price sensitivity resulting from the depressed state of the economy. LDL brand managers did not expec t this segment to grow because most price brands were not a good value, requiring dickens or three times as much volume to develop the same amount of suds as a premium brand. P&Gs Ivory Liquid, the market leader, used this comparison in its advertising to persuade consumers that Ivory was a better value.The LDL market was relatively stable, with one new premium brand introduced every devil and a-half years and an average of two price brands introduced and discontinued per year. As possess 3 shows, 3 companies sold almost 75% of LDLs, with P&G holding a 42% share 6 of the market, Colgate-Palmolive Company a 24% share, and Lever Brothers, the U.S. subsidiary of Unilever, a 7% share. 7 The stay 27% of the market consisted mainly of generic and private-label brands. As shown in indicate 4, marketing expenditures including advertising and promotion typically represented 20% of the sales of an established LDL brand.