P & G Case Study
| This case discusses the evolution and growth of the brand management system of the US based FMCG major -Procter & Gamble (P&G). |
"The brand-management aura has propagated one of the biggest myths about P&G, that it does nothing but influence consumers to buy the company's products. P&G has always been misunderstood as a marketing company. The fact is that P&G's fortunes have been built on product innovation. Brand management is an integral aspect of it, and it's the way the business is managed.
- John Smale, Former Chairman, P&G.
"Our brand is our bond with consumers. When we succeed, we convert a trademark into a trustmark, and another P&G brand becomes a valued and trusted member of the household.
- John Lafley, President & CEO, P&G.
Introduction
Based in Cincinnati, US, Procter & Gamble (P&G) was one of the largest manufacturers of fast moving consumer goods (FMCG) in the world. For the financial year ending June 2003, P&G reported revenues of $43.38 bn and net earnings of $5.18 bn. In 2003, the company was ranked 31st among the Fortune 500 companies. P&G had operations in 80 countries globally, with an employee-strength of around 1,10,000 worldwide. Analysts attributed the evolution of P&G, from a small soap and candle maker into a multi-billion dollar company, to its highly successful marketing and brand management strategies.
In 2003, the company marketed more than 300 brands to nearly five billion consumers in 160 countries across the globe. P&G had a significant market share in several product segments including laundry and cleaning (Tide, Cascade, Dawn), paper goods (Bounty, Charmin, Pampers), beauty care (Pantene, Olay, Cover Girl), food and beverages (Folgers, Pringles, Duncan Hines), and health care (Crest, Scope, Metamucil). Commending P&G's exceptional growth, an analyst said, "Within a paternalistic corporate culture, P&G pioneered in brand management, in consumer surveys for marketing research and in new product research and development.
A pioneer in introducing a formalized brand management system way back in the 1930s, P&G constantly modified its brand management strategies as and when the company expanded its product & brand portfolio and its business operations globally.
Procter & Gamble was established in 1837 when candle maker William Procter and his brother-in-law, soap maker James Gamble merged their small businesses. They set up a shop in Cincinnati and nicknamed it “porkopolis” because of its dependence on swine slaughterhouses...
The brand management system at P&G came into existence in 1931 when Neil H. McElroy (McElroy), P&G's Promotion Department Manager, formed a marketing division based on competing brands, controlled by a group of employees. The system enabled P&G to design and customize its marketing strategies for each brand...
Under the CMM, the brand managers did not compete against each other with similar product brands -contrary to the idea envisioned by McElroy. For instance, in the detergent product category, brands like Tide and Cheer shared the available marketing expenditure and other financial resources but were not allowed to compete for the same segment of customers.
Hence, while Tide was positioned as the premium brand, Cheer targeted the customers in the economy segment...
By the early 1990s, as P&G's operations expanded globally, the top management felt the need for further streamlining the brand management system. Earlier, P&G was known as "the one-page memo company." The brand managers of P&G were asked to offer their ideas, suggestions, or business plans in just one-page...
In July 1999, P&G launched Organization 2005, a six-year long organizational restructuring exercise. Under this exercise, P&G sought to reorganize its organizational structure from having four geographically-based business units to five product-based global business units.
There were four important components of P&G's new organization structure - global business units (GBUs), market development organizations (MDOs), global business services (GBS) and corporate functions (CF). Under the new structure, the GBUs defined the brand equity for each of their brands...
During the initial years of the new millennium, P&G introduced its new brand management strategy that grouped brands together to appeal to consumers with similar attitudes and needs.
The strategy (coined by Forrester Research as 'cohort management') focused on bundling many brands into online as well as offline marketing efforts aimed at similar consumer groups. This was contrary to P&G's previous practice of grouping brands according to similar product categories...
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