P&G

Internal & external situation analysis.

Internal factors
William Procter, a candlemaker, and James Gamble, a soapmaker, formed the
company known as Procter & Gamble in 1837.
Procter & Gamble Co is a Fortune 500, American global corporation based in
Cincinnati, Ohio, that manufactures a wide range of consumer goods. As of 2008, P&G
is the 23rd largest US company by revenue and 14th largest by profit. It is 10th in
Fortune's Most Admired Companies list (as of 2007). P&G is credited with many
business innovations including brand management, the soap opera, and "Connect &
Develop" innovation.
According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising than
any other company; the $2.62 billion it spent is almost twice as much as General
Motors, the next company on the Nielsen list. P&G was named 2008 Advertiser of the
Year by Cannes International Advertising Festival.
The company markets it brands over more than 140 countries in the world. The
company introduced theme selves in there official website is as below – “Three billion
times a day, P&G brands touch the lives of people around the world. Our corporate
tradition is rooted in the principles of personal integrity, respect for the individual and
doing what's right for the long-term”.
The companies’ objective is to provide branded product & services of superior quality
& Value that improve the lives of the world’s consumers. As a result consumer will
reward us with leadership, sales, profit & value creation allowing our people our share
holders & the communities in which we live & work to prosper. The company wants to
achieve their goal by continuing innovation, strategic planning & the continuous
pursuit of excellence in everything we do.

Product
P&G has five operating division organized by product category. Each division had its
own brand management, sales, finance, and product development & operation line
management group. The company values their employees & honors their skill.
Some of the major brands are –

1. Paper product: Royale, Pamper, Luvs, Attends, Always.

2. Food & beverage: Duncan, Hines, Crisco, Pringles, Sunny daylight.
3. Beauty care: Head & shoulder, Pantene, Pert, Vidal Sassoon, Clearasil, Clarion,
Cover Girl, Max factor, Oil of Olay, ,Noxzema, Secret.
4. Health care: Crest, Scope, Vicks, Pepto-Bismol, and Metamucil.
5. Laundry & cleaning: Tide, Cheer, Bounce, Bold, Oxydol, Joy, Cascade, Comet,
Mr. Clean.

The key to the success of the P&G is there ability to develop their product. They are
truly innovative & their products truly meet the customer needs. While developing
product they consider the need of the customer first.

SWOT analysis
STRENGTHS

• Scope was long experience in the oral hygiene industry since 1967.
 • The taste or flavor of Scope better than other mouthwashes.
• High-quality product, quality processes and procedures.
• Have a first rating in mouthwash market share.
WEAKNESSES
• Not enough make a distribution channel.
• Lack of canning or packaging.
• Undifferentiated products or services with other competitor.
OPPORTUNITIES
• Brand which it concentrate for a healthy oral.
• Move into new market segment that offer improves profit.
• A developing market such as in the Internet.
• Place more distribution channel such as more drugstore and food store
THREAT
• Too many competitors in this industry.
• Price wars with other competitor.
• Not patentable , competitor can attempt to duplicate a product

Personal behavior in the work place-

P&G’s fundamental policy is to treat all the employees with respect. Company strives
to provide a safe, healthful & productive work environment. P&G policy is to recruit
employee on the basis of merit & expect support from the employees. P&G policy
forbids any discrimination, harassment or intimidation because of race, color, religion,
gender, age, national origin, citizenship, sexual orientation or disability.

The company had net earnings of $1.6 billion in 1990. The Canadian subsidiary
contributed $1.4 billion in sales & $ 100 million in net earnings in 1990. Between
1987 & 1990 world wide sales of P&G had increased by $8 billion & net earnings by $
1.3 billion.

External factors-

In the mouth wash market P&G have 33 % market share in Canada & 21.6% in USA.
The product name is Scope it is a green mint taste mouth wash which protect bad
breath & tests good.

Competitor-
P&G always want to treat competitors appropriately they always want to deal them in
fair means-
In the mouth wash market there are several competitor those are Listerine, Listermint,
Cepacol, Plax, & other store brands. In fact the mouth wash market was initially
developed by Warner-Lambert with it’s pioneer brand Listerine. This is a therapeutic
germ killing mouth wash & dominated the mouth wash market until the entry of
Scope by P&G.
Still now Listerine has a good image in the market & have 17% market share. The
other competitors are Listermint by Warner-Lambert having a similar mint taste
mouth wash has 10.6% market share.
Another competitor is Merrell Dow’s Cepacol having a 10.3% market share.
Plax by Pfizer Pharmaceutical is another emerging competitor. In fact they are not the
traditional mouth wash type, they are introducing themselves as a “pre brush” rinse.
They have claimed that those who use Plax before brushing make the brushing
effective. They have 10.00% market share. & some other store brands sharing another
16%.

Competitive change in the mouthwash market-

During 1980’s companies change there product idea. Before 1980’s the strategy was
“bad breath” & Listerine introduced that it “fights plaque & helps prevent inflamed
gums caused by plaque”. In 1987 many companies introduced flavors to their product.
That means every one tried to make their product unique. Every brand tried to add
something extra to attract the customer resulting more market share.

Customer trend

A current survey say’s that 75% of Canadian household use mouthwash. Total market
can be categorized as user & non user. User’s are three types Heavy users (once per
day or more), medium users (two to six times a week), & light user (less then once
week).

There are some users who like to use mouth wash for fresh breath & some those want
to use mouth wash to prevent plaque & cavity. There is some other group those who
don’t like the medicine taste in the mouth wash.

The influence of other organizations-

There are some other organizations like health protection Branch & Dental
association; they have some requirements to pass their standard or nomination. A seal
from this organization makes the product trustworthy to customer. There are different
health care agencies in different countries & they have different standard of measure.
This standard vary country to country so it is very important to have a certification
from this organizations, specially I it is a health care product.

02. Define problem.

Mouth wash market was developed in Canada by Warner Lambert with its Pioneer
brand Listerine. This brand dominates the market until the entry of Scope by P&G in
1967. Then Scope becomes the market leader in mouth wash market in 1976. After
1980’s the mouth wash companies changed their strategy & add some new ingredients
to make the product unique from others. As a result they add the claims like our
product fights with plaque & prevent inflamed gums. Plax also launched with a
different claim than regular mouth wash. They say it is a pre brushing rinse & by
using it the brushing became effective.
After the Plax entry P&G found that they are loosing market share & as because the
product is different than Scope they are a bit confused whether to develop a new
product or improve the existing one. So the main problem they face how to pursue it at
all.

Mouthwash market is increasing everyday & it is segmented one segment claims that
they fight with plaque, another keeps the mouth fresh & other one claim that it makes
the brushing effective. So now to gain the market share Scope need a change & they
need to take a decision from their available alternatives.

Scope is a green mint testing mouth wash; it is a great testing mouth refreshing brand
that provides bad breath as well as good taste. Customer liked it & became a market
leader. But now compared to other brands it is threat to P&G and they need a change.

So Gewen Hearst needs to take decision from the alternative, there are three ways one
way to not enter the market rather improve the marketing for existing products.
Another approach is to add a plaque reducing gent to scope to allow it to compete with
Plax in the market. The last one would be launch a new product which does not share
the name Scope. It will compete individually in the plaque market. Some decision that
influence their decision are the consumer perception of the product, cost involved with
making the switch and additional need for a product such as this.

3. Alternative courses of action.

When Hearst was preparing three year plan, the key issue in her mind was how P&G
should capitalize on the emerging market segment within the rinse category which is
more focused on health benefits. The threat is come when Plax came in the market
with a new benefit. Plax claimed that it is a pre brushing rinse & using this brushing
became more effective.

P&G can do product development & improvement; there are some marketing &
positioning strategies that can be worked through. If Scope can say that it contains
anti bacterial agents that can kill germs & in terms reduce plaque then it can create a
new value to the customer & which will increase the market share. But in the mean
time the present customer’s those are satisfied with the product may be upset. And
marketing people also think that a plaque reassurance on current Scope did not seem
to increase the competitive users. Also with a new product feature it will take time to
accept by the customer. It can only keep the customers those want to switch from
Scope because they need a plaque fighter. In terms of finance it will need more money
to invest for the new raw material which means it will increase the price also.
Advertising agencies also think that making a new claim for the Scope will be a huge
strategically changes.

Secondly P&G can launch a new product with similar benefit to Plax means a new
product line. And at the same time a very different approach from Scopes strategy.
Hearst also thinks like the same to develop a new product line is the only to protect
the market share. Product development of P&G developed a new product which is
similar to the Plax in performance but works no better than Plax. Now Hearst pointed
out that a new product similar to Plax but with a better taste can be the key to
success because the same strategy worked for the P&G when Scope launched first
time in the market. But a product of P&G with the same clinical result of Plax may
impact the image to the dentists. Because the product will not give any extra benefit to
the customers. There is a fear that a new product similar to Plax can reduce the sales
of Scope. A new product will add variable cost & there is a $20000 product testing cost
is associated with new product launch. However the price of Plax is high so it could be
assumed that the new product of P&G will be high also. If P&G can set a price slightly
below the Plax then there will have a lower version that customer can buy. As per ad
agencies the plaque claim is a very different approach. Scope was focused only on the
fresh breath. A new product launch can be confused the customer & Scope may loose
its market share.

The third option could be no action taken. P&G Scope would do nothing in terms of
other two alternatives course of action. How ever she can increase her promotion &
advertising of the product. Another possible seatback is the possibility of experiencing
a shelving fee given to retailers. If they don’t see a distinct difference between regular
scope & new formula scope they will either cut shelf space from regular Scope or
charge $50000 per respective retailer. In addition to cost there is no proof or research
that supports the new formula will increase the sales. Customer may also not like the
product. Customer may confuse & can think that it doesn’t do everything they like
about Scope & don’t buy it. They may go for another brand. Research also says that a
new product will take long time to gain market share so do nothing will be a good
approach. Also making no change is not a long run solution. Because all the
companies are changing there business strategies & adding new things & claims to
increase their product value to customer so change is unavoidable. Without making a
good change to the product it will not continue long time.

4. Recommendations-

Now the situation that come out due to the present competitive market, P&G need to
take a decision which will solve the problem & they can be on the top of the market.

As we know, P&G had created a mouthwash product called Scope. The function of the
Scope emphasizing more to reduces bad breath rather than kills germs, removes
plaque and to have healthier teeth like others mouthwash products. In order to
sustain their credibility as a good healthcare product, P&G should come out with new
product which is more functioning and innovative.
An innovation could be implemented by trying to create a new dimension of
performance which includes the process of making an improvement of the product
available. For examples; produce a product that closely functioning like a mouthwash
products such as dental gums. Dental gums are promoted to reduced plaque, whiten
teeth, and reduce the risk of tooth decay.
Unlike a mouthwash product, chewing gum is associated with increased salivary
flow which apparently produces a beneficial buffering effect against acids in the oral
cavity. Actually these products are not present to be a substitute to the others oral
hygiene products. It is another healthcare product which is easier for those who are
unable to brush their teeth.
Instead of that, P&G had implementing a product extension which is versions of
the same parent product that serve a segment of the target market and increase the
variety of an offering. For examples in November 2004, P&G come out with their new
mouthwash product called Crest Pro-Health which present as their product extension.
This product is in the same product category of the mouthwash products. The effort is
intended to draw Listerine users who've resisted P&G's Scope.
Crest Pro-Health Rinse will be positioned as a germ-killer. Unlike Listerine, Pro-
Health does not use alcohol. More function has been added to meet the customers
demand with the improved mouthwash formula. Crest Pro-Health Rinse is effective
against a broad range of bacteria commonly associated with plaque and gingivitis
which it is provides 12-hour protection. Thus, it gives customer greater choice besides
it can helps to protect the company against the competitors.
Establish a R& D (research and development) group which able to make a new
innovation of Scope products
To form a research group (means to have a research group which will do market
research and analysis on their product as well as comparison with other products)
who can improve the existing product and can develop a market research or analysis.
Improving production by upgrading Technology
Usage of latest technology for enhancing the production, like using computer
operated machineries which are fully automated.
Brand building and better marketing strategies;
Based on the reports given by research team, better methods like advertisement to
thru media, increasing the production and presenting it to the market broadly, taking
stock of the products movement in the market, taking feedbacks from the customers
or vendors and improvement.
 • Advertising and promotion like use of the media can expand the brand names;
• Use magazines, radio, television, newspaper or internet.
• Act as a medium to attract the customers buying the products.
• Involve providing the information.
• Helps to reach a wide audience effectively.
• Creates awareness.
• Build customer trust.
• Act as a non-personal promotional efforts
Evaluate the decision
• Was a decision made?
Yes, the decision was made as u can see the comparison between Listerine
and Scope at Consumer Perceptions of Brand Images table, scope have a lower
average so we must make sure the percentage is increase by do some change
and develop a plan for implementing the chosen alternative.

Attributes Cepacol Colgate Listerine Listermint Plax Scope

Reduces bad + - + + - +
breath
Kills germs + … + - - …

Removes plaque - + + - + -

Healthier teeth … + + - + -
and gums
Good for + - + - - -
preventing colds.
Recommended by + + + - - -
dentists
Consumer Perceptions of Brand Images table

+ = scores higher than average (- ) = scores lower than average (…) = scored about average

• Was the decision appropriate, given the situation identified in the case setting?
 Yes, the decision was appropriate. As u know that the Listerine has done this
and grown up by doing this in the last few years. Examples can be cited from
cross functional industries where investment in marketing the product has
proven successful like Pepsi, Sony, Nokia, etc