Pantene Marketing in China - Research Paper Example

 Pantene Marketing Introduction The Chinese shampoo industry has been rapidly growing due to a number of factors. An impressive standard of living has created the need for luxury goods and products. Shampoos are in demand due to their ability to look after the hair requirements of consumer segments. China is a growing market for many products because of sound and efficient investment policies. Proctor & Gamble is a renowned organization that has enjoyed robust growth and success in the Chinese market. Its main brand is Pantene which has become a household name in China. Pantene is associated with quality and excellence in the Chinese market. This is due to the efficient and effective marketing strategies of the business organization. This research report seeks to conduct a comprehensive marketing audit of Pantene in the Chinese consumer segment. Company Overview P&G has been operating in the international market for decades. The company has achieved success due to its simple and straightforward growth strategies. It offers an exclusive line of products that cater to personal grooming and hygiene. P&G brands have become household names due to aggressive marketing and promotional schemes (Deseret News, 2007: Pg 5). The success of the company is due to its focus on customer and value added services. It operates by using a decentralized growth and management strategy. Product Overview Pantene is a shampoo product which has been highly successful in the world. It comes in different styles depending upon the hair groups of individuals. It has been rapidly popular in China because of its tangible and intangible benefits. P&G has marketed the product by focusing on the entire consumer segment. This has enabled the organization to register phenomenal economic growth and development. Macro-environment (PEST) Political Factors The Chinese government retains tight political control inside the country. However the government has been pragmatic enough to create transparency and accountability in order to attract foreign investors. Further the shampoo industry has been exempted from taxes in the coastal zones. The government has significantly reduced tariffs for the industry in order to target the rising middle class. Proctor and Gamble dominates seventy percent of the Chinese shampoo market. Pantene as a brand is available at affordable rates for the majority of Chinese citizens. P&G’s strategy has been to ensure that lower end segments are targeted through the use of innovative and creative strategies (Pacific Research Consulting, 2004: Pg 1). Pantene is available for various consumer segments depending upon their tastes and preferences. Consumers have helped to transform the brand into a personal necessity. Political conditions in China are currently favorable because the government seeks to expand its economic clout and authority. It retains tight political control but desires to open the economy for investors. This means that P&G will continue to enjoy tax exemptions and reduced tariffs for its products (Pacific Research Consulting, 2004: Pg 1). However the Chinese government is also moving towards the promotion and protection of local shampoo companies like Bawang Shampoo and Clear Shampoo. These organizations are receiving government stimulus in order to cater to the domestic industry. Such a situation could pose a serious threat to the domination and influence of companies like P&G. Economic Factors The economic factors play a major role in assessing the macro environment of any organization. These factors seek to determine the state of the business environment that impacts the productivity and output of business organizations (Clover & Balsley, 2006: Pg 134). The Chinese economy is considered to be the third largest in the world in terms of purchasing power parity. For the past decade, it has been growing at a constant rate of 10% with the rapid rise of the middle class. This middle class is considered to be around 300-400 million strong and it is annually growing at a rate of 8%. The economic recession has severely impacted the ability of organizations to perform in a competitive environment. Inflation, unemployment, and reduced consumer spending pose a threat for the promotion and marketing of Pantene. P&G will need to develop a cost effective strategy to maintain its market edge in the Chinese shampoo market. This can be accomplished through the application of innovative and creative strategies. There is the need to implement smart and prudent measures for ensuring economic growth and stability. The use of multiple strategies will help to produce excellent outcomes. Social Factors Social factors involve the consumer desires and preferences for specific products. These factors play a major role in the development of marketing strategies and techniques (Davis & Cosenza, 2004: Pg 156). Chinese consumers in recent decades have been used to western products and services. Such products hold considerable appeal due to their quality and excellence. Pantene is a well known brand that is popular among the Chinese segments. It has been associated with personal grooming and care. Pantene has enjoyed success in the Chinese market due to its quality and excellence. A superior branding strategy has helped to create a loyal consumer base. Pantene is offered in a number of brands that are suitable for various consumer segments. For instance there are specific Pantene products that cater to individuals who suffer from alopecia. Teenagers and women are an attractive consumer segment for the organization. Further Pantene is a mass market product that is highly popular and reputed in the Chinese shampoo market. The entry of foreign shampoo brands like L’Oreal and domestic brands like Banwang poses serious threats for the dominance of Pantene. P&G needs to revitalize its strategy in order to increase the product lifestyle of Pantene products (Pacific Research Consulting, 2004: Pg 1). This will involve the availability of new product lines that are appealing to the younger generation. Currently Pantene does not exclusively target the new Chinese generation which enjoys highly disposable incomes and increased awareness about shampoo brands. Technological Factors Technological factors can impact organizational performance in a number of diverse and robust ways. These factors help to determine the overall efficiency and effectiveness of business establishments (Davis & Cosenza, 2004: Pg 158). P&G manufactures and distributes the Pantene product line in China using local production centers and distribution networks. This strategy is successful because it can reduce operational and technological costs. It ensures the rapid availability of the product for the mass market. Pantene products are available at major and minor retail outlets. Since P&G is targeting a mass market, Pantene is available even in remote areas. This is acquired through strategic partnerships with local organizations and distribution networks. P&G needs to apply innovative and creative strategies to ensure technology assimilation in its supply chain management system. The use of RFID for its Pantene products will assist in streamlining and automating the process. The use of satellite networks can be used to connect all major outlets and distribution centers. Such a strategy will ensure the rapid delivery of inventory to cover replenished stocks. Further through the use of smart and prudent strategies, Pantene can be effectively marketed in the country. The organization needs to have a specific Chinese website that provides information about Pantene products. The use of the internet for advertising and marketing has been considered to be essential for ensuring competitive edge in the era of globalization. Strategic Triangle Kenichi Ohmae devised a marketing paradigm that was known as strategic triangle. Business establishments can succeed only through the application of creative and ingenious strategies. However it is essential to coordinate and integrate these strategies by focusing on corporation, customer, and competitors. Customers A business organization can succeed through customer oriented approaches and procedures. Customers are the backbone of business organizations because they help to improve revenues and profits (Jobber, 2001: Pg 92). Pantene has enjoyed success due to its vast appeal and attraction by the Chinese consumer segments. P&G has developed a strategy that seeks to maintain the long term profitability of the Chinese consumers. The Chinese middle class has been identified as the highest valued consumer segments. Such segments must be targeted in a logical and practical manner. Pantene offers product lines based upon different hair types. This is a remarkable strategy to ensure the competitive edge of the business organization (Penhirin, 2004: Pg 47). It helps to ensure that customer loyalty is retained through a robust and flexible strategy. P&G provides appropriate information about its product through packages and brochures. It regularly conducts advertising campaigns which highlight the specific advantages of Pantene products. The overall impact of these strategies has been to create high levels of awareness and understanding among the Chinese consumers. Corporation This element of the strategic triangle seeks to develop flexible and agile business strategies in accordance with the threats and opportunities present in the corporate environment (McDonald, 2002: Pg 98). Ohmae argues that an organization should seek to develop expertise and knowledge in specific competencies. It should not seek to achieve a decisive edge in all business processes and functions. This strategy has been followed by P&G by its marketing activities in China for the Pantene product line. The organization has focused on its brand image and customer loyalty in order to achieve its corporate goals. The organizational strategy has been to target a mass market in order to create high levels of awareness and perception. Another strategy is to ensure that expenses are reduced in an efficient and effective manner. P&G utilizes local manufacturing and distribution facilities to promote Pantene products (Sellers, 2004: Pg 62). This strategy helps to offset manufacturing costs and leads to efficient allocation of Pantene products to different areas in China. Competitors Competitor based strategies are devised according to the strengths and weaknesses of business rivals. The organization must conduct an extensive appraisal and evaluation of the business environment (McDonald, 2002: Pg 98). Market research will help the organization to determine the business and marketing strategies of its competitors. P&G has established itself as a leading player in the Chinese shampoo market due to its heavy marketing and promotional schemes. It regularly improves and modifies its advertising content for Pantene products. Press releases, seminars, workshops, and other strategies are implemented to create a powerful and vibrant brand. The result is that Pantene has become a household brand that is known for its excellence and quality. P&G has been facing stiff competition from local and international brands in the Chinese shampoo industry. The organization has responded by developing an advertising strategy that seeks to offer bonuses and promotional schemes. Regular discount offers are available for the Pantene product line in China. Such promotional activities help the organization to achieve its marketing and corporate goals. Marketing Strategy P&G had traditionally ignored the potential of the Pantene brand because it focused on other products and services. Pantene was considered to be a premium product that would target the US market. However in the 1980s, the organization embarked upon a massive marketing and advertising campaign to position and aligns the brand into the international market. Pantene would eventually transform P&G into a multinational corporation with a loyal customer segment and diverse product line. Since the 1990s, Pantene has become a popular and healthy brand in the Chinese shampoo market. It offers various products including conditioners and styling products that have become a part of Chinese lifestyle. P&G has developed a number of assumptions regarding the marketing of Pantene in the Chinese market. It has sought to develop perception and awareness about Chinese consumer behavior (Teresko, 2004: Pg 28). It has aimed to create brand images that are attractive to the Chinese market. Finally P&G developed an innovative advertising campaign to ensure that Pantene products are sold to mass markets. The results have been spectacular for the organization in the shampoo market. Pantene remains the top performing brand in China for the past five years. P&G controls 70% of the Chinese shampoo industry. It enjoyed $500 million profits from Pantene sales in the years 2008. Recently Pantene has been packaged and branded with new designs and styles. This strategy is being implemented in order to improve the product lifecycle inside the Chinese market. P&G has also streamlined its Pantene product line to ensure its efficiency and effective. This strategy enables consumers to select the appropriate Pantene product based upon their hair types, preferences, and requirements. Chinese consumers are able to select customized products that achieve their hair requirements (Brookman, 2003: Pg 9). P&G faces stiff competition in the Chinese shampoo market due to the advent of international and local rivals. The Pantene brand needs to be redesigned and packaged according to the requirements of the new generation. Bottle shapes, brand graphics, and aesthetic concepts need to be rejuvenated. P&G needs to develop a marketing strategy that utilizes graphic updates. This will help in achieving its business and marketing goals by seeking to improve product lifecycle and brand equity. P&G penetrated the Chinese market by offering affordable products to the Chinese market. It did not concentrate on specific consumer segments like the upper class and upper middle class. P&G needs to adopt a marketing strategy that specifically targets special segments (Brookman, 2003: Pg 9). It should design premium products that offer superior features and attributes to the exclusive classes in China. Further product diversification and innovation are recommended in order to ensure the competitive edge of the organization. Its current strategy of focusing on mass markets will not work in the future. Organization P&G has focused on brand leadership for its Pantene product lines. This reflects the innovative and competitive nature of its organizational strategies. Pantene was initially promoted in the Chinese market through a system that would result in maximum returns. Local retail stores were extensively targeted in order to ensure the strategic positioning of the product. Pantene’s integrated marketing communications strategy was highly successful due to the development of robust and flexible business structures (Harrington, 1998: Pg 3). Finally P&G sought to develop the local market by offering diverse product lines. Salon quality is another indicator of Pantene’s success in the Chinese market. The historical theme of the product has been to develop rapport and sympathy with the local consumer. This theme has been used in numerous advertising campaigns and promotional schemes. It has been responsible for the success of the brand in the Chinese market. P&G’s operational strategy in China has been to implement technology in order to enhance productivity and output. These procedures have been carried in order to mass produce its brands so that they can reach the powerful Chinese market. P&G has adopted a strategy of creating partnerships with Chinese distributors and suppliers. Retailers are contacted in a vibrant and dynamic manner (Henkoff, 2004: Pg 5). This is done in order to ensure efficiency and effectiveness for the operational strategy of the organization. P&G applies a multifaceted and multidimensional growth strategy in order to achieve its objectives and goals. The Chinese market was targeted by positioning Pantene in the coastal areas. Expansion in the Chinese market involved targeting other areas in the interior. Systems P&G maintains a network of offices and production centers in China for its Pantene product line. It deploys a proactive management philosophy that makes continuous appraisals of the business environment. Strategy formulation is done through consensus and feedback from the employees. This is unique because Chinese business organizations normally adhere to an autocratic leadership style. P&G has modified its management principles by integrating Chinese and Western concepts. Pantene marketing and advertising remains its top most priority. Usually such activities are accomplished by devising accurate goals and objectives. Annual and quarterly sales reports are analyzed and assessed by the managers (Henkoff, 2004: Pg 5). Such a strategy enables the managers to develop contingency plans to augment the revenues and sales of the Pantene brand in the Chinese market. P&G hires a talented and expert work force in order to achieve its business and corporate targets. A system of rewards and incentives helps to develop the organizational commitment and job satisfaction of the work force. Customer services are another key component for the success of the organization. P&G has an efficient and dynamic customer services team that provides real time support to clients. P&G has a well developed systems management program. This system enables the rapidly allocation of resources for mass manufacturing of Pantene products (Henkoff, 2004: Pg 5). It helps in creating a supply chain management system that targets numerous consumer segments in China. Productivity P&G is a global corporation that has enjoyed success due to a number of reasons. It has been able to offer diverse product lines for different customer segments. It adopts a strategy of penetrating new markets in a logical and smart manner. Goals are developed through the evaluation of the business market. The purpose of strategic marketing is to develop robust strategies that will help determine the success of product lines. The Pantene product has been marketed through the use of efficient and effective manufacturing procedures. P&G has adopted a local strategy of selecting and recruiting Chinese managers and workers (Larkin, 2005: Pg 3). Chinese managers are provided with training and orientation about management principles and theories. The focus is on brand equity and image in order to produce excellent outcomes. P&G enhances its productivity by focusing on local talent. Every year university graduates are selected based upon their competencies and skills. This localized approach helps the organization to understand the dynamics of the business environment in China. It reduces costs without the need to hire and retain foreign managers. Managers are transferred to overseas operations and other subsidiaries in order to enhance their skills and competencies. P&G pursues an approach in strategic management and marketing that takes into account various variables. Outcomes are determined in a clear and accurate manner in order to ensure maximum returns on investments. Proper planning and organization is conducted in order to achieve superior outcomes. This strategy has helped P&G to develop agile, flexible, and decentralized management structures. Managers are empowered to make decisions based upon organizational strengths and weaknesses. A participative environment with the employees enables the creation of superior and effective decisions (Graham, 2005: Pg 123). Time management is a crucial element of P&G productivity and output. Appropriate timetables for manufacture of Pantene products and their distribution are created by the management. This approach helps the organization to achieve business and corporate goals. It helps in the development of a structural framework that is suitable for conducting business in the Chinese business market. Pantene has been a highly successful brand due to the efficient productivity and output. A well developed logistics system enables the distribution of the products to major centres in China. It helps in the formulation of efficient and effective strategies for growth and development. P&G utilizes a value oriented approach towards designing its basic management philosophies. Pantene is a value added service which is assigned top priority by the management. Such an approach has enabled the organization to divide various consumer segments in China. Customer profitability and long term association with the product are used as variables to measure the success of business and marketing strategy (Larkin, 2005: Pg 3). The use of a decentralized management systems helps to achieve corporate targets. It helps Pantene to become strategically positioned in various consumer segments that are present in China. Marketing mix management Marketing mix is a comprehensive paradigm that helps organizations to promote the significance of their components. It is composed of product, price, promotion, and place. These elements must be amalgamated in order to ensure proficiency and accuracy in marketing strategies and techniques. Product Product is defined as the tangible and intangible benefits that are offered to consumer segments (Phillips, 2005: Pg 70). Pantene is a product that enjoys exclusive class and elegance in the Chinese shampoo industry. It offers quality and excellence for individuals that are conscious of their individual hair needs. It is an affordable product that is marketed in an efficient and effective manner. P&G offers a number of exclusive discounts and bonus schemes for loyal customers. Pantene has 70% share of the entire shampoo market in China. However P&G needs to redesign labels and bottle shapes in order to reflect the changing consumer market of the twenty first century. Price Price is the part of the marketing mix which seeks to determine the profits enjoyed by the organization (Phillips, 2005: Pg 69). It involves making accurate assessment of costs so that revenues can be calculated in a robust manner. Pantene is an affordable and cheap product in the Chinese shampoo market. P&G has applied a mass market strategy which seeks to target the majority of Chinese consumers. The Chinese middle class has been growing in recent decades due to economic reforms. They enjoy disposable incomes and awareness about their personal hygiene. Pantene is a powerful brand that is synonymous with their lifestyle and habits. Promotion Promotion refers to the various advertising campaigns and strategies used to create perception and understanding about specific products (Phillips, 2005: Pg 67). It can involve the use of mass media and new media. P&G promotes its products using the conventional media. It uses advertising boards, televisions, and newspapers as the main promotional channels. This strategy is successful because 80% of Chinese consumers purchase products based upon advertising content and appeal. However there is the need to improve online promotion of Pantene products in the country. The number of internet shoppers in China has been steadily increasing. P&G should develop an exclusive Chinese website that offers product information and benefits to the general public. Place Place is an important element of the marketing mix paradigm. It refers to the location of outlets and shops where the product will be available (Phillips, 2005: Pg 67). P&G initially promoted Pantene in the major industrial hubs of China like Shanghai, Beijing, and Hong Kong. It has steadily expanded to the rural areas and small urban centers. Currently Pantene products are available at major retail outlets. Even small shops have Pantene products which point towards its popularity. P&G has a sophisticated distribution system which enables the rapid deployment of products to different retail outlets. It has created strategic partnerships and associations which have enabled the success of the organization. SWOT Analysis The SWOT framework is a multidimensional marketing tool that helps determine the relative position of an organization when compared with its competitors and rivals. It helps the organization to identify new business opportunities and threats (Bennett, 2003: Pg 56). It enables the development of robust and flexible business strategies. Strengths Pantene is a powerful brand that enjoys loyal and dedicated customer base. Further P&G is a global company with extensive experience of international marketing and business procedures. Pantene enjoys domination in the Chinese shampoo industry due to its quality and excellence (Henkoff, 2004: Pg 5). It offers solutions for the individual hair needs of consumers. Pantene has been able to achieve success because of its ability to target a mass market. This mass marketing strategy has enabled the product to be within the reach of ordinary Chinese consumers. P&G has created a uniform and consistent marketing strategy that enables it to advertise and promote Pantene products in neighboring countries. Weaknesses Pantene’s product lifecycle has become obsolete with the passage of time. Newer products have created new appeal and allurement to the consumer segments. Further the bottle shape, logos, labels, and graphics of the product are obsolete. P&G does not market premium products for the upper classes. The mass marketing strategy prevents the focus on high end markets. Finally Pantene needs to be available in product lines for new consumer segments like teenagers and women (Henkoff, 2004: Pg 5). Pantene suffers the weakness of being unable to offer more information to its consumers. Bottles need to be packaged with additional and updated information about hair care and treatment. Threats Domestic shampoo companies are rapidly moving into the market. This is due to the encouragement by the government to promote and develop local industries. This can be a significant source of weakness for the organization. International competitors like L’Oreal have penetrated the market by using mass marketing strategies. Such an approach can threaten the competitive edge of the organization. It can shrink the market share of the business organization (Graham, 2005: Pg 123). The current economic recession can impact the sales and revenues of the organization. Consumers might not be willing to acquire products in order to cut costs and expenses. Opportunities P&G enjoys a sophisticated branding and product marketing strategy. It should create premium products for exclusive segments. These products will help the organization to target new consumer markets. Chinese teenagers are a powerful and appealing consumer segment. Further the organization needs to upgrade the product lifecycle of Pantene in order to compete with other players in the industry. Market penetration should be conducted in a logical and practical manner (Graham, 2005: Pg 123). Such a strategy will enable the organization to achieve its goals and objectives. Conclusion P&G is a global organization that offers an exclusive range of products for personal grooming and hygiene. The success of the organization has been due to its ability to focus on efficiency and effectiveness. It has developed an orientation towards the needs and requirements of consumer segments. The organization’s leading brand Pantene is highly popular in the Chinese market. This is due to its ability to deliver exhilarating and exciting experience. The Chinese consumer segment is highly conscious about the strength of their hair. Pantene fulfills this role by providing quality and excellence. The marketing audit conducted in this paper reveals that the product remains the top most brands in the Chinese market. It is affordable and within the reach of all consumer segments. P&G has streamlined and automated its management and business processes in order to achieve corporate goals. However with the advent of domestic and international competitors, Pantene will require a restructuring of its basic marketing and business activities. It needs to be targeted towards specific consumer segments like upper class, teenagers, and women. This can be achieved through a systematic and logical approach. It needs to be conducted by using company strengths to overcome weaknesses and limitations. P&G can maintain its market share through a combination of innovation and creativity. Smart decisions will help to extend the brand equity and image of Pantene. References Bennett, R. (2003). International Marketing Strategy, Planning, Market Entry & Implementation. London: Kogan Page Limited. Chris Phillips, I. D. a. R. L. (2005). International Marketing Strategy Analysis, Development and Implementation. London and New York: Routledge. Graham, P. R. C. J. L. (2005). International Marketing (twelfth ed.). New York Jobber, David. (2001), Principles & Practice of Marketing, 3rd ed. London: McGraw-Hill. McDonald, Malcolm. (2002), Marketing Plans: How to Prepare Them. How to Use Them, 5th ed. Oxford: Butterworth-Heinemann. Clover, V. 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