Consumer Packaged Goods In The Following Six Segments Marketing Essay

Consumer Packaged Goods In The Following Six Segments Marketing EssayProcter and assay is a global multinational comp each, headquartered in Cincinnati Ohio Proctor and Gamble Wikipedia 2012. It manufactures by internal and third party manufacturers (3PM) consumer packaged faithfuls in the following six parts (Beauty, Grooming, Healthcare, Pet Care, Fabric and home care, Baby family care) as per its 2011 Annual report. well-nigh linked to its current point of inter atom portfolio of productions, PGs vision is Be, and be recognized as, the lift out consumer products and services company in the world whereas its mission statement is We will support branded products and services of superior quality and value that improve the lives of the worlds consumers. As a result, consumers will reward us with attractership sales, profit and value creation, allowing our mint, our percentageholders, and the communities in which we live and work to prosper. (PG Annual Report)It was not onl y until 2011 that the Pringles brand was under the PG umbrella. PG sells a myriad of products with multiple parts, tar nourish consumers and specific positioning. It is so mind boggling that it could d earthy from a Duracell battery to SKII a premium skin care product manufactured in Japan. In Australia, a bottle of 75ml facial treatment essence- unmatchable of its more popular SKUs sells for AUD100.The beauty segment offers cosmetics, female antiperspirant and deodorant, female person-to-person cleansing, female s bring care, hair care, hair color, hair styling, pharmacy channel, prestige products, beauty parlor professional, and skin care products. The Grooming segment provides electronic hair removal devices, home small appliances, male blades and razors, and male personal care. The Health Care segment comprises feminine care, gastrointestinal, incontinence, rapid diagnostics, respiratory, toothbrush, toothpaste, water filtration, and early(a) oral care. The Pet Care segm ent offers pet care products. The Fabric Care and Home Care segment includes laundry additives, air care, batteries, dish care, fabric enhancers, laundry detergents, and surface care products. The Baby Care and Family Care segment consists of baby wipes, diapers, paper towels, tissues, and toilet cover products. (PG Profile, Yahoo Finance)PGs vision of the best consumer products and services company in the world seems realistic and attainable as its consistently ranked as iodin of the as maven of the Most Admired Companies in the Fortune ranking (CNN Money, World most admired companies) earning cabbage spot in the consumer products industry and No 9 overall on the 2012 list. Over the recent years, PG has consistently earned the top spot within the Consumer Packaged Goods (CPG) industry firearm ranking in the top 10 of the overall list. Whereas PGs mission statement is in tandem with its actions as its presently the CPG in the world based on sales revenues and continues to stri ve for sustain dexterity in its business actions.It is currently the worlds grownst producer of household and personal products by revenue standing at USD82billion for 2011. PGs products reach 4 billion people worldwide and arrest 22 brands with over USD1billion in annual sales with another 19 brands generating over USD500 million in sales. The USD1billion brands include flow, Pampers, Gillette, Pantene, Bounty, Oral B and so onWith selling spend of nearly $10 billion a year on TV, print and online advertising, PG is the worlds largest marter. (PG ad spending hits $9.3 billion, Marketwatch 2012) However, the company has recently discovered the benefits of cost hard-hitting social and digital media and is gradually gaining traction in that arena which is mostly they believe was more cost legal and equally efficient as compared to handed-d line up media.In the hawkish Fast Moving Consumer Goods (FMCG) industry, PGs brands are important to the company. It has spent a great dea l of period and money to establish its brand motion-picture show by develop superior products through extensive Research Development (RD), innovative packaging, ensuring its on shelf availability and backing it with engaging integrated trade communications and reliable service. However, the company seems to suffer from the fame of its company rather than its brands as compared to say its close challenger Unilever. Many people do not shaft of the company Unilever but have heard of its brands worry Lipton, Magnum, Dove, Knorr etc. Whereas for PG, legion(predicate) people have strong associations and recognition of the company but when you ask people to mention its billion dollar brands, people normal stumble over that.Because of the competitive landscape, PG is fools the initiative to reach out to the voice of the consumer through multiple consumer brain wave activities. They have realized that at the heart of their success will be a successful trade schema. PGs products are based on a sullen understanding of who their customers are. This of course doesnt imply that the company manufactures products to meet the whims and fancies of e precise consumer. However, PG aggressively exploits opportunities in the grocery store to their advantage and are continuously vigilant in the observe of those opportunities. Customer knowledge is thus important to PG which studies both end consumers and trade partners through continuous market inquiry and intelligence gathering. As proof of their commitment, PG currently spends more than $100 million no small change on over 10,000 formal consumer research projects annually and generates more than 3 million consumer contacts via its email and phone center. It also emphasizes numberting its marketers and researchers out into the field, where they can interact with consumers and retailers face to face in their natural environment. (PG kisses up to the boss, Advertising Age)PGs market oriented strategy continues to play a vital role in the company with the economic d taketurn and the onslaught of private label brands and consumers increasing makeing low monetary value and good quality products. At this moment, PG brands still dominate the premium end of most of the categories in which they compete in and while their aspirational qualities resonate with consumers, PG will have to rub at the top of the game in the fickle consumer goods market.Issue 2 PGs leading market position (Top 3) in almost all its categories provides it with significant competitive advantage. However, with the economic slowdown and consumers starting to penny pinch, it is increasing difficult for branded product manufacturers like PG to entertain their sales volume and revenue growth while preventing discounting which dilutes brand image.Looking at the SWOT Analysis (Datamonitor), we can identify the current PG positionStrengthsStrong RD and set up culture. Spends more than twice on RD compared to its hot rival Unilever.Leading market position in most categoriesDiversified Product PortfolioStrong brand portfolio- 24 USD1 billion brands.WeaknessesIncreasing instance of product recall thus implication of poorer manufacturing qualityDependant on Walmart and few other major retailers for majority of its revenuesToo many products, easily to get overextended, date for capital amongst brandsOpportunitiesExpansion in underdeveloped and emerging markets in Brazil, Russia, India China(BRIC) Mexico, Indonesia, South Africa, Turkey(MIST)Future growth plans and new segmentsThreatsRegulatory environmentSlowing global economic conditionsRaw material cyclical pricesCounterfeit goods or rip offs of innovation by Chinese manufacturersOther competitors like Unilever, Reckitt Benckiser (RB)Essentially PG is its own competitor. Its strength of having such(prenominal) a diversified product portfolio is also its helplessness because with so many products, its easy for PG management to get distracted, what mo re so its consumers who might be misidentify with too many choices. One of its main weaknesses is over-reliance on Walmart for majority of revenues. To increase distribution choices, PG could consider selling via its own website considering the popularity of ecommerce. Although, since this is not its core competency, it might not be a feasible strategy with some market research and feasibility studies. Its main external holy terrors are controlling its cost base and also stiff competition between other FMCG giants. To control cyclical raw material prices, PG could work out long term deals with raw material prices and it needfully to revolve around on improving its value proposition to its customers to prevent price wars.Customers PGs customer base is unique. Because not only would PGs customers include those in the modern and handed-down trade. They also encompass the end consumers both you and me.Modern trade refers to retailing at large format storehouses whereas general t rade refers to retailing at the thousands of self-sustaining retail, wholesale and mom and pop stores. Some examples of its customer would include Walmart, Carrefour and Tesco who are more prevalent and dominant in the developed world. Whereas, the smaller mom and pop stores are the distribution channels of choice in developing economies like India or Mexico where consumers buy sachets worth a few cents with high absolute frequency than a large retail store.PGs biggest customer is Walmart, contributing more than 16% or revenue in 2011 down from 20% in the early 2000s.(Wikinvest) In this case, customer power with Walmart is very strong and PG normally has to concede to Walmarts request for certain promotions or price discounts. At this moment, PG has not except discovered any alternative to Walmart and might have to yield to their demands. On the other hand, PG could use this to their advantage, using the judo move and utilizing the clout of Walmart and sell more products with s ustainable profits.In harm of end consumers, end consumers are fickle and are subjected to Moments of Truth. The best known is the First moment of Truth (FMOT), coined by PG where in just 3-7 seconds, a shopper encounters a product on the store shelf and decides in those short moments whether to buy it. If the consumer does not find the product, she moves on to a competitors product. There is basically little consumer fealty when it comes to soap and wash.The Second Moment of Truth (SMOT), is the moment when a consumer uses the product and is another powerful merchandising opportunity but it is harder for the manufacturer to control because this is when the consumer uses the Pantene shampoo and decides whether she likes the texture, smell or after results of the shampoo.Then it progresses to the Zero Moment of Truth (ZMOT) where consumers are going online using blogs, facebook or twitter to find inspiration for their own looks and get tips and tricks from experts or take cues fro m a favorite celebrity.Because of this progression and the influence of the internet of consumer behaviors, PG has started to re-evaluate the brands true FMOT and is looking to shift to focus on the notion of store back which means that ad agencies need to start formulating ideas at the retail store, working backwards to outside the store. This also means that marketers need work on their pull marketing strategies which gets demand forecast from consumers, not only the traditional push strategies and find ways to match the two. PG puts on its priority list the grandness that the end consumer perpetually has a consistent and positive experience from ZMOT to point of purchase and beyond, and has strived to get in front of the consumer with the right brand message upstream in the process of discovery and to continue staying there.Collaborators PG has many collaborators. They would include direct and indirect material vendors like raw material suppliers, advertising agencies, marketing research firms, independent product testing laboratories, logistics partners, communication companies, banks and financial institutions, travel agencies and hotels etc.Of special mention would be its hang on chain partners which would include warehousing, transportation, software providers and carriers as PG has one of the worlds best supply chain. In the 2012 survey, it placed in the Top 5 just behind Apple, Amazon, McDonalds and Dell. PG has showcased its ability to make efficient decisions across the supply network. It is a consistent challenge to ensure the right forecast demand and that shelves are filled, but PG has managed to find the right balance. With its best in class, open innovation platform, combined with an impressive new product operational capability that synchronized with its clockwork run supply chain, it taps a deep well of understanding its consumers, positioning to their ZMOT and FMOT, to continue to deliver new products on term and on demand. (The Gartner S upply Chain Top 25 2012)In modulate for all cogs to move in sync, PG has to maintain a win-win partnership with its collaborators to create sustainable competitive advantages.Competitors Due to PGs diverse product range, there is no one for one direct competitor with this behemoth. Some of PGs competitors include other FMCG multinationals like Unilever, Clorox, Kimberly Clark, Johnson Johnson (consumer division) and also Japanese FMCG companies like Kao, Lion etc. It faces strong competition from its competitors and has to constantly innovate, cut cost to maintain its position as the market leader. Its closest competitor would be the Anglo Dutch company Unilever but even then, Unilevers sales revenue is only half of PGs. PG also possess a higher operating margin than its competitors at 20.3% versus Unilever at 14.8% in the year 2010.Although PG has many competitors, it has established itself as a market leader and is thus well positioned to ward off competition or make necessary a cquisitions of smaller companies. Its last notable acquisition was in 2005 of Gillette, forming the largest consumer goods company in the world and placing Unilever in second place. This added brands such as Gillette, Duracell, Braun and Oral B to their stable.Therefore, for new start ups to the consumer goods industry, they would find the barriers to entry pretty high. Whereas for the vivacious competitors like Unilever, Colgate Palmolive, they have to continue to play the catch up game, in terms of market share.Context A PESTLE analysis will be conducted to construe the current situation for PG in the global market.Political With local operations in more than a hundred countries, based in different succession zones and continents, PG has to manage the complexity of different political regimes, rules and regulations and political trends influencing its business operations. On one hand, PG has to conciliate and thrive to the changing political pressures in different nations, yet on the other hand, due to its scale and size, it plays integral roles to cooperate and affect local government policy with its clout and manufacturing size. Therefore, It has considerable clout due to its ability to move and shift hundreds of jobs out of a country.Economic The world economy is having shorter cyclical patterns and PG is seeing market share stagnant or decline in the developed areas like US and Europe. However, world demand is forecasted to grow in the next few years due to growing populations and development of economies in the developing continents like Latin America and Asia. Due to the different nuances and different cultural and consumer habits, PG has to be attuned to the changes in order to continue to grow and thrive and it must take note that developments in the different markets and nations will cause an uneven growth situation in different regions. It might thus have to focus its marketing firepower on previously neglected upon nations.Social PG has to pla ce great attention and importance to the different social norms when expanding overseas due to various cultural backgrounds in different market in order not to step on any taboo landmines. For instance, due to the changing masculinity trends, we have the advent of the metrosexual and the demand for men grooming is seen as a growth area for the FMCG market. Or for example, due to the increasing drive towards beingness socially responsible, PG inevitably to source its raw materials like tomatoes or palm oil from sustainable sources or face wrath from watchdogs like Greenpeace of other tree huggers. Because of this sustainability trend, PG has committed to developing USD50billion worth of products that have a sustainable impact.Technological As the overall market of fast moving consumer products is very large and diversified, PG has invested significantly to gain technological advantage in order to maintain and expand its market position. As a result, technology investment in product formulation, packaging, product design is heavy and development is fast. PG has its own RD function reporting directly to the CEO and based on 2010 numbers PG invested nearly USD2billion in RD up from USD1.95 billion in 2008.Legal PG has to obey and fall out with different legal and tax requirements on its products, manufacturing process and business operations. With the rising prices in commodities, FMCG companies would like to raise prices but are contained by certain price ceilings by governments and thus PG has to battle with price ceilings yet remain profitable. For example, it tried to raise prices but suffered mandated price cuts in Venezuela and import curbs in Argentina.Ethical Because personal products are daily essentials, the quality and safety of the products are extremely important for the brands. Any scandals or rumors about the product can lead to significant and unconceivable toll on the image. For eg the recall in 2011 for their Oral B products due to Microbial contamination in Canada, China, Chile, Columbia and Mexico caused dissatisfaction amongst consumers in the way that it was handled where in China consumers who cute a refund had to send the empty product bottles, receipt and a copy of their bank account passbooks to the companys Guangzhou office which caused ire amongst the consumers as it was unreasonable for consumers to cargo hold the bottle after they consumed the mouth wash.Issue 3 PGs former CEO A.G Lafley who retired in 2010 coined a strong and simple message that the Consumer is Boss and PG followed his mantra and tried to get the true opinion of its consumers with the belief that the closer they get to the customers, the pause it was for them. (Innovation Machine PG 1 Billion $ for Consumer Insights. 2012.)PG spends more than USD400 million annual in external consumer taste activities. In those activities, they touch base with more than 5 million consumers spanning 100 countries. They also conduct over 20,000 man-to-ma n research studies every year, all this time and money spent is to understand the consumer a little bit more better to better identify opportunities for segmentation, product innovation and how to create a better overall service delivery to the consumers. (PG.com Core strengths)Apart from external sources, one famous platform that is created in-house by PG is TREMOR in 2001 under which it created the website www.vocalpoint.com which is a website for a community of mums to share knowledge and exchange opinions. Tremor is the word of mouth marketing organization developed by Procter Gamble that combines PGs wide-ranging marketing expertise with key learnings from cognitive science. (Tremor)It was founded for a dual purpose market research tool and Word of mouth (WOM) advertisement. On vocalpoint, it connects about 600,000 mothers and these mothers have an average of 25-30 touchpoints with other women as compared to 5 for a usual mom. They share product information with other mums an d this is key for PG as most household products are purchased by mothers or women in the household. They get samples and coupons to create a network effect.However, social media has changed the way in which companies gather information through traditional streams as consumers move to a digital age. It now gathers information about consumers through digital means like Facebook, twitter, launching apps that can be used on Smartphones etc and requires on website employment and analytics to spot the next trend.In terms of competitor intelligence, PG definitely closely monitors its competitors through various online sources and probably outsources this research to external companies. In turn, this information is divided up through the intranet about competitor intelligence and updates employees on what their competitors are up to. As there is no public information on this, I am assuming PG does the same if not more based on my work experience in Unilever.Competitors that currently repre sent a threat to PG would be Unilever, Colgate Palmolive, Clorox etc. The strategic group that PG is in would be the branded consumer goods section. However, PG isnt a direct competitor across all segments some of its competitors like Unilever still has a large portion of its revenue from its Food, tea and beverage business. Whereas Johnson Johnson not only consumer goods, but is also strong in medical and pharmaceutical industries. Its closest competitor in terms of direct product to product lineup in the household products market might be Colgate Palmolive.At this moment, PG is probably its own worst enemy. simply in terms of its closest competitors that represent a treat, I would think that Unilever, Colgate Palmolive are two or its nearest competitors. One point to raise is the threat of private labels brands from supermarkets themselves. This is starting to be a threat especially during the economic recession when consumers dont differentiate between Shampoo strike out X an d Shampoo Brand Y in terms of its value (reduces hair frizz) but on price alone. The in store brands by supermarkets like Coles or Woolworths compete in the same product category but obviously can afford to sell them at a lower entry price but higher profit margin. In order to mitigate this threat, PG has to spend more on branding and innovation to hopefully induce the willingness to remuneration for its products.The context of the FMCG industry is always dynamic. However, even though PG can probably use market research to stay abreast of latest developments, due to its size, it might not have the tractableness to react quickly to changes. It is clear in terms of the shift in power of the world economy USA is the superpower of the past whereas Asia is the new superpower. With its home still in Cincinnati Ohio, that in a sense is a cons paraphernaliat for PG as it is away from the business centers, away from the growth in the developing countries.PG needs the help of its collabora tors to move to the next level as they are all part of the value chain activities. For example, it would needs its global logistics providers to ensure on time shelf delivery at competitive cost, it would need the 3PM to produce quality and competitively priced products, ad agencies to produce quality and engaging ads etc. In order to select the best collaborators, PG has balanced scorecards in terms of environmental sustainability to maintain its commitment to reduce its carbon footprintIssue 4 As one of the leaders in marketing, PG has spared no efforts in its marketing segmentation. For its paper products like tissues and toilet paper, it has household brands like Charmin, Puffs, Royale and Bounty. For its shampoo segment, it has famous brands like Head Shoulders, Vidal Sasson, extraneous Plus, Ivory and Pantene, supposedly sufficient to cater to a wide range of hair oily, dry, dandruff, coloured, split ends etc. For the laundry segment, one of its cash cows has in itself 8 bra nds for sale in the United States. This would include Ivory Snow, Dreft, Oxydol, era, Gain, Bold, Cheer and its crown Jewel Tide. Because PG also is based worldwide, it has many different specially created brands in each category to cater to different international markets. In Latin America, it sells 16 laundry product brands whereas in its EMEA (Europe, Middle East, Africa) geographic segment, it has a whop 19 different brands for choice.PGs marketing strategy has clearly shifted from mass market to target marketing. It is aware that consumers have different needs through its elaborate consumer research, it has been move to develop a product for every type of need a consumer has, it seems that PG is trying to have a race with itself to develop new products for any lovely of customer. We can understand the motivation as PG wants to use its economies of scale and brand name to push out its products and expand market share to new and existing loyal customers. With the enormous num ber of brands in PG, we would imagine that each brand manager is trying to fight for publicity and capital for its brand. It is merely a sibyllic question, but could the multitude of brands be more of an internal fight for importance rather than actually meeting consumer needs?However, clearly PG positions itself in the premium section of the FMCG market. Its products like Pantene, Vidal Sasson can command higher prices than a lower end shampoo brand like Sunsilk from Unilever.As mentioned, the multitude of brands is both the strength and weakness for PG. For one, the same laundry products for example will be competing with each other for limited and precious supermarket shelf positioning and space. The fact that PG introduces several brands in one category might be economies of scale but could also crowd out the market. It could perhaps concentrate its resources on a handful of main brands and focus their targeting on specific customer segments instead of spreading itself too thin ly.Because of the multitude of PGs categories, we will just examine in detail its laundry brands in US. In order to breakdown laundry segments, PG first has to look at the job to be done segmentation. It did research and probably thought that apart from using detergents to get clean clothes, people also want other things from detergent. For example, mothers might want cheap detergent because with a family of three kids, there would be many turbid clothes and washing cycles to do in a week. Thus, they would want detergent that is economical and powerful to get rid of dirt stains. On the same demographics of mothers, you get mothers with babies, and they would want detergents with less (zero) chemicals catered to the sensitive skin of babies. On the other spectrum, you might have some working professionals or yuppies who have a higher willingness to pay and value detergents that had a nice fresh smell and are sustainable for the environment. Thus, it is no surprise that PG has launch ed 8 brands in the US to cater to all the individual niches of customers.A quick check on www.walmart.com (Appedix A) and entering in the word Tide prompts 65 hits on the detergent in the household essentials segment. The fact is that Tide comes in three forms liquid, powder, pod forms. It also comes in many shapes, scents and sizes. This results in a minimum of 65 SKUS for just one laundry brand.By segmenting the market for laundry across multiple detergent brands, PG seems to have covered all bases for consumer laundry needs and wants. As a result, PG is the unrivalled leader in the USD7billion US laundry detergent market. Tide alone is the market leader with a respectable 38% market share. When we combine all eight of PG laundry brands, it comes up to a 60% share of the market-2.5 times that of nearest rival Unilever and much more than any single brand could obtain by itself. However, does this mean that market share is due to the fact that PG has that many brands and is successf ul in its segmentation activities or is it because of the overall value proposition PGs detergents provide to its consumers. Could PG attain its market share of 60% by optimizing the number of SKUs by half?PG recognizes that they cannot appeal to all buyers in the marketplace or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. Moreover, PG itself varies widely in its abilities to serve different segments of the market. kinda than trying to compete in an entire market, sometimes against superior competitors, PG has identified the parts of the market that it can serve best and most profitably.Thus, PG is being more selective about the consumers that they wish to capture and retain. It has been a clear leader in moving from mass marketing, toward market segmentation and targeting-successfully identifying market segments after wet market research and studies, selecting one or more of them, an d developing products and marketing programs individually tailored to the specific niche. PG clearly believes the rifle approach is more effective rather than the shotgun approach. It has achieved previous success based on this approach, but would this strategy continue to work for the fickle and fussy FMCG market? It should however be noted that Apple -one of the best marketers of technology thinks differently, with the iphone is still managed as a mass marketing concept.Issue 5 PGs reputation as being the best in marketing is indisputable. They are known to be at least 5 years ahead of competitors in terms of how they go to market. They continuously train and invest in their employees at the beginning of their careers and like to promote from within. They spend enormous amounts of money training their people to become world class marketers and many of their people leave PG to lead other companies as their Chief Marketing Officer.PG clearly puts the consumer first. As such, their marketing strategy is based on deep consumer insights. This might mean their advertising probably wont be the most creative, but they will capture revenue and market share. This however, might prove to be a stumbling block with the changing demographics in the developing world.PGs marketing orientation makes business sense strategically. With a market orientation and micro marketing approach, PG can adapt to the 4Ps. In terms of Price, PGs premium pricing has shown that it can be moved with lower prices for the more cost sensitive developing countries. In terms of product categories, it competes in 35 product categories in US but only present in an average of 19 product categories globally. Therefore, PG is focusing on the launching more product categories in more countries, targeting expansion of the global average to presence in 24 product categories by 2014-15. With regards to place, PG currently distributes broadly through four channels 1) supermarkets mass volume retail, 2) mo m pop stores which are still prevalent in the third world countries especially when shops are inaccessible, 3) wholesale and 4) modern retail stores. As part of new channel strategy, PG also is focusing on expansion in the international pharmacy and e-commerce channels. This shall contribute to PG products being available at more outlets. (PGs market share strategy set to pay off- Seeking Alpha)The PG brand plays a huge role in its marketing strategy as its one of the most recognized brands in the world. The PG brand is synonymous with premium pricing and quality. With the shift in the demographics, PG would need to shift to developing countries and the younger age segmentation. In terms of developing countries, it would be right on the ball to focus on India and China. At this moment, PG is definitely behind the foreshorten for India as Hindustan Unilever is the clear leader in the CPG industry, however, PG does better in terms of brand penetration in China. The positioning in Ch ina is also very different as compared to India