A Marketing Analysis of Procter & Gamble - Research Paper Example

? A marketing analysis of Procter & Gamble BY YOU YOUR SCHOOL INFO HERE HERE TABLE OF CONTENTS Purpose/Objective of Study……………………………………………………….. 2. Executive Overview………………………………………………………………. 3. History and Background of P&G…………………………………………………. 4. P&G’s Current Industry Position………………………………………………….. 5. The P&G Product Portfolio………………………………………………………... 6. Brand Management at P&G………………………………………………………... 7. Competition………………………………………………………………………… 8. Current Market Share………………………………………………………………. 9. Individual Product Branding……………………………………………………….. 10. Extending the Product Life Cycle of Existing Products………………………….. 11. Summary/Conclusions…………………………………………………………….. 12. Recommendations…………………………………………………………………. 13. Personal Learning through the Study……………………………………………… Works Cited Appendices A marketing analysis of Procter & Gamble 1. Purpose/Objective of Study The purpose of the research study is to examine the marketing prowess and strategies of the multi-national company Procter & Gamble (P&G), a business reporting $10.75 billion in net income in 2012. How Procter & Gamble is able to accomplish such significant revenues is likely attributable to not only the relevancy and sustainability of its products, but to its marketing prowess to gain consumer attention in multiple international and domestic markets. The objective of the study is to determine what aspects linked to marketing theory and practices contribute successfully to P&G’s capabilities to sustain its business longevity. 2. Executive Overview Research has identified that P&G is considerably competent in understanding how to market its products successfully to consumer segments with profit potential. Through a blend of psychographic segmentation and lifestyle-centric targeting and using quality-centric positioning tactics, the business is able to create a successful brand management strategy. Research has indicated that Procter & Gamble not only understands consumer behavior, but is able to translate this important knowledge successfully in its diverse portfolio of brands. Based on the findings, it is recommended that Procter & Gamble conduct further market research to gain a new perspective on the social condition for the contemporary buyer segments. 3. History and background of P&G Headquartered in Cincinnati, Ohio, Procter & Gamble was founded in 1837 by William Procter and James Gamble, a candle-making expert and soap producer in early America. By the time of the Civil War, P&G sales had topped $1 million. In today’s economy, adjusting for inflation between 1865 and 2012, this would be equivalent to $14.8 million (Friedman 1). During the Civil War, P&G was contracted to supply the Northern Army with much-needed candles and soap supplies, which provided P&G with much more visibility across the country. By 1911, Procter & Gamble could no longer sustain the high national demand for its products produced in Ohio, requiring development of new manufacturing and logistics centers across the country. Shortly thereafter, the business began producing Crisco which was a revolutionary food shortening product made from vegetable oil rather than the traditional method of using fats extracted from slaughtered animals. While P&G still continued to focus on household soap products, Procter & Gamble diversified into foods production that drove much of its strategic focus through the 1970s. Procter & Gamble also began sponsoring radio programs with the advent of the consumer radio network, which coined the phrase known today as soap operas, thereby giving P&G considerable brand recognition throughout the United States and abroad. By 1972, P&G had diversified to include a variety of product lines that included such brands still in the sales market today such as Tide laundry soap, Crest toothpaste, Charmin toilet tissue, and Bounce dryer sheets (to name only a few products). 4. P&G’s Current Industry Position The diversity of available products produced by Procter & Gamble today include personal grooming and beauty products as well as household consumer care products (P&G 2012). Such products include a variety of make-up products targeted at women consumers, paper and soap products, fragrances, health medications, and batteries. Many products were developed decades ago, but are still considered relevant products for loyal consumer segments today. 5. The P&G Product Portfolio Table 1 illustrates the vast portfolio of brand under P&G’s current business model. Tide Charmin Ivory Venus Razors Tampax Pantene Clairol Herbal Essences Always Safeguard Hugo Boss Pampers Duracell Cascade Dawn Gain Eukanuba Downy Ariel Bounty IAMS 6. Brand Management at P&G Procter & Gamble utilizes very focused targeting strategies that are not aligned with the parent company, but on individual brands that are relevant to certain target consumer segments. For instance, P&G believed the most relevant consumer segment interested in the shampoo brand Pantene was the female buyer market between the ages of 18 and 44 (Microsoft Advertising 1). For this particular product, the goal was to establish brand recognition (awareness) with this market segment, investing into a series of advertisements and market research studies to attain this objective. Brand management activities are supported by gaining valuable consumer behavior characteristics in which P&G believes are relatively universal as it relates to the company’s products (P&G 2012). Product brands produced by Procter & Gamble are typically marketed to the mainstream consumer audience, which is representative of 70 percent of all consumers internationally and domestically. Price is a major consideration with the mainstream (mass market) customers for many of P&G’s product brands, which is emphasized in many of its brand management and positioning strategies. Procter & Gamble is unique from other competition in this market related to brand strategy, as P&G has decentralized brand management for individual brands rather than focusing on branding the parent company (Cavusgill, Yeniyurt and Townsend 713). Therefore, brand management strategies are highly localized for the U.S. and other foreign markets based on known consumer characteristics and purchasing patterns that are supported quantitatively in order to develop long-run brand strategies for each product brand in the firm’s portfolio. 7. Competition The major competitors for P&G include Johnson and Johnson, Kimberly-Clark and Unilever, three major multinationals that operate in the consumer household goods and personal grooming sectors. Kimberly-Clark produces many paper products utilized in the household sector including such well-known brands as Kleenex, Kotex feminine products, Cottonelle toilet tissue, as well as Huggies brand disposable diapers. Johnson and Johnson produces such brands as Band-Aid bandages, Tylenol medicines, and Neutrogena personal care products. Unilever competes with such products as Dove, Tresemme, and the hair care product brand V05. All of these companies utilize different brand management philosophies and consumer targeting strategies that are either centralized or focused depending on known or perceived market characteristics and consumption behaviors. 8. Current Market Share P&G maintains such a diverse portfolio of brands that it is difficult to understand the total market share the business maintains in all of its markets. For instance, in 2000, the toothpaste brand Crest maintained 27.4 percent market share (Pearson Education 4). Currently, the company’s total international market share in the laundry and soap category is 31 percent (Trefis 1). Thus, the evidence would point toward a rather equally-distributed market share between P&G and its major competition that offer products in the similar household goods and personal grooming categories. 9. Individual Product Branding Though Procter & Gamble attempts to create individualized and focused branding strategies for many of its diverse products, the company (with most products) attempts to build on a foundational set of brand ideologies that were established in the early 1900s. Evidence indicates that Procter & Gamble has been, historically and currently, successful with utilizing integrated marketing communications that emphasize needs, essentially creating demand where none might exist or working to inform desirable segments that they require P&G products. (See Appendices for samples of this branding foundation). This same strategy is ever-prevalent in the current branding strategies with many of P&G’s contemporary advertising efforts. For instance, the male market personal grooming product Gillette has been utilizing the marketing tagline “The Best a Man Can Get” for well over two decades, in an effort to express how Procter & Gamble can sustain the tangible needs of consumer segments. Branding theory indicates that when a product brand is able to provide psychological perceptions that the product can assist in self-expansion, loyalties are likely to be developed (Greenwald et al. 5). By linking quality with demand creation strategies, P&G stays true to its historical linkage to the parent company as both a provider of perceived consumer self-expansion while also directing consumers that they have a tangible need that only P&G product brands can fulfill. For the younger consumer segment, P&G utilizes psychographic branding strategies, those that are aligned with lifestyle, values and beliefs that are referred to as unique social capital with desirable target consumer segments. For instance, a recent advertisement for the P&G soap Zest illustrated a young, attractive male utilizing the product while enjoying its ability to enhance his musical prowess and enjoyment. (See Appendices for an illustration of this lifestyle-centric advertisement). Procter & Gamble has indicated that the strengths of its branding strategies are aligned with considerable knowledge of many different demographics. Psychographic segmentation assists in developing relevant advertisements and other integrated marketing communications associated with particular brands in order to gain psycho-social interest in markets that identify with actors or messages similar to their lifestyles. Elements of lifestyle marketing are also apparent with such contemporary television commercials associated with such brands as Cascade and Charmin, which depict scenarios that would be common in the consumers’ lifestyle. For instance, a recent television advertising for Cascade illustrates two sisters arguing over lifestyle-related situations, interrupted by a Cascade dishwasher expert to attempt to reduce the conflict outcomes. After presenting the premium quality and efficiency of Cascade, the sisters resume their arguments which serves as the catalyst for the expert’s exit from the environment. This is effective due to the fact that Procter & Gamble conducts considerable market research on consumer lifestyles to create advertising messages and scenarios that strike a nerve with the target segments most likely to favor P&G products. Lifestyle (psychographics) marketing is fast being recognized as a new methodology by which important emotional connections can be made between the consumer and the product brand or company (Boone and Kurtz 217). Consumer behaviors and characteristics are constantly evolving, based on evolutions in the social condition and the method by which P&G products would be considered relevant to fulfilling a need in consumer markets. The evidence seems to point toward a great deal of branding knowledge and expertise with Procter & Gamble as a company that is flexible and one that understands how to create a perception of need with the modern consumer. 10. Extending the Product Life Cycle of Existing Products Procter & Gamble relies heavily on the research and development teams at the company to assist in extending the life cycle and avoiding the decline stage. This is apparent with the longevity of such brands as Tide and Duracell. P&G innovates methods to improve on existing product formulas and benefits of many of its diverse products, thereby giving them a new brand reputation and extending the life cycle in the process. For instance, P&G has redeveloped the Gillette shaving cream brand to include Sensitive Skin formulas. The deodorant brand Secret has been reformulated to also include new benefits, such as with Secret Clinical Strength, for those that maintain problematic odor and perspiration problems (P&G 1). Being equipped with the technologies and research prowess of many product developers and chemists assists in the process of ensuring that the products stay in growth or at least do not exit the maturity stage to meet with ultimate declines. When products reach the decline stage, abandonment in the market as well as inventory management costs become significant considerations. P&G is very adept at being able to make minor changes to a well-established brand to provide a new type of scientific-supported benefit to the modern consumer segments. 11. Summary/Conclusions As illustrated by the research, Procter & Gamble is very proficient in utilizing its knowledge of modern consumer characteristics in order to create relevant promotions and sustain a quality brand management strategy to achieve gains in profitability and in creating connections that lead to brand loyalty. The diversity of products available on the consumer market absolutely requires a blend of psychographics and demand-creation marketing since so many brands are not necessarily recognized by their relationship to the parent company. None of the products can be fully supported, in terms of brand strategy, under a single brand umbrella associated with the P&G parent name. Changing consumer characteristics, additionally, demand that P&G maintain flexibility in advertising strategy and the messages that are delivered to desirable consumer segments. Brand loyalty, in a highly competitive market with very adept competition with similar products, requires differentiation to achieve a positive brand positioning. P&G is a prime example of effective brand management and advertising efficiency with the majority of its diverse product portfolio. 12. Recommendations Contemporary literature on the concept of consumer behavior indicates that many customer segments make social comparisons to others as a method of boosting self-esteem and well-being (Suls, Martin and Wheeler 160). While P&G understands that using lifestyle messages and relevant actors in promotion and marketing communications builds a connection with the brand, there does not seem to be much focus on concentrating on the social condition as a means of boosting brand loyalty. Procter & Gamble should be conducting more market research using smaller samples of participants in a qualitative study environment, such as focus groups, to gain knowledge of how social comparisons occur that can be translated into more effective psychographic promotions. 13. Personal Learning through the Study This research effort emphasized the relevancy of a great deal of marketing literature that described consumer behavior, how to build a successful brand management strategy, and improve positioning among competition through a variety of differentiation strategies. It was not until analyzing the successes of a major multinational company like Procter & Gamble that the researcher was able to realize the linkage between theory and practice. Oftentimes, when reading literature and case studies on marketing theory, it seems stagnant and bland without any real connection with important consumer characteristics. By delving with intensity into the P&G model for marketing, the researcher was able to understand the legitimacy of many different research studies and how this knowledge can apply to a real-life organization, especially one that maintains such a broad product line of brands. The researcher not only secured pre-existing knowledge of marketing theory, but also became prepared for a future position in marketing by understanding the inter-dependent dynamics of branding and advertising strategy with a major multinational firm. The research study, therefore, provided the foundation for applying theory to actual practice and also enhanced research capabilities. This would be highly important in the future role of marketing expert by equipping the researcher with the foundational knowledge needed to conduct market research on consumer behavior and the link between brand loyalty development. Works Cited Boone, Louis and David Kurtz. Contemporary Marketing, 12th ed. Thompson South Western, 2007. Print. Cavusgill, S. Tamer, Sengun Yeniyurt and Janell D. Townsend. The Framework of a Global Company: A Conceputalization and Preliminary Validation, Industrial Marketing Management. 33 (2004): 711-716. Print. Friedman, S. Morgan. The Inflation Calculator. 2012. Web. April 10, 2013 Greenwald, Anthony G., Mahzarin R. Banaji, Laurie A. Rudman, Shelly D. Farnham, Brian A. Nosek and Deborah S. Mellott. A Unified Theory of Implicit Attitudes, Stereotypes, Self-Esteem and Self-Concept, Psychological Review. 109.1 (2002): 3-25. Print. Microsoft Advertising. Procter & Gamble – A Fresh Approach to Branding. 2010. Web. April 5, 2013 P&G. Beauty and Grooming. 2012. Web. April 11, 2013 P&G. Latest Innovations – Secret Clinical Strength Fact Sheet. 2012. Web. April 7, 2013 P&G. Products and Packaging. 2012. Web. April 6, 2013 Pearson Education. Procter & Gamble Crest Toothpaste. 2007. Web. April 7, 2013 Suls, Jerry, Rene Martin and Ladd Wheeler. Social Comparison: Why, with Whom, and with what Effect?. Current Directions in Psychological Science. 11.5 (2002): 159-163. Print. Trefis. Upside to P&G’s Laundry Products Market Share. February 2, 2011. Web. April 7, 2013 Appendices A: Historical Needs Marketing for Demand Creation Source: Vintage Ad Browser. Beauty and Hygiene Ads of the 1940s. Web. April 7, 2013 Appendices B: Historical Needs Marketing for Demand Creation Source: Ebay. 1909 Ad Ivory Soap Procter & Gamble Alice Beach Winter – Original Advertising. 2013. Web. April 8, 2013 Appendices C: Lifestyle Branding Strategy (Psychographic) Source: Churba, Hernan. Zest. 2013. Web. April 7, 2013 Read More