p&g case study

1

Procter & Gamble Company:

Comprehensive Project Analysis

HBS Case 2 Presentation

Presented by Julie & David

Biz Pro 9th Senior

May 6th, 2016

Executive Summary

2

1 Accelerate the occupation of the performance segment.

• Though the overall LDL market slows down, the segment still grows fast.

• P&G has a strong competitive advantage in this segment.

• To achieve the goal, improve Dawn with H-80 formula and improve Joy

with no-spot formula is necessary with desirable net profit.

2 Maintain the current market share in the mildness segment.

• The mildness market goes down with CAGR -1.14%, which is unpromising.

• Colgate-Palmolive is very strong competitor in this segment.

• To achieve the goal, further advertisement on Ivory Liquid is require. The

cost can be covered if we get 0.54% further of the market share.

Strategic Analysis of Current LDL Market

3Senior Presentation

The performance market beats other segments

in both volume and growth aspects.

21.0

22.0

23.0

24.0

25.0

26.0

27.0

Case (

M)

Mildness Segment (36%)

Projected

54.0

56.0

58.0

60.0

62.0

64.0

Case (

M)

Total Market

0.62%

5.0

10.0

15.0

20.0

25.0

Case (

M)

Performance Segment (35%)

15.0

16.0

17.0

18.0

19.0

20.0

21.0

22.0

Case (

M)

Price Segment (29%)

-1.14%

Projected

Projected Projected

-1.25%

5.69%

The performance grows with CAGR 5.69%, while other segment declines.

4Source: Company Record.

No strong competitor exists in the performance segment,

but there is in the mildness segment.

P&G Lever Brother Colgate-Palmolive

No strong competitors in performance segment,

but Colgate is quite strong in mildness segment.

Performance (35%) Mildness (36%)

0%

4%

8%

12%

16%

Daw

n

Jo

y

Sun

ligh

t

C-P

Ivory

Lux

Dove

Palm

oliv

e

De

rma

ssa

ge

LD

L M

ark

et S

hare

Performance Segment

• P&G’s brands dominate the

performance segment

• No other strong competitor

Mildness Segment

• P&G’s is the largest player

in the mildness segment

• Colgate-Palmolive is strong

in the mildness segment

Key implications for the

competitors analysis:

5Source: Company Research.

We suggest accelerate in the performance segment

and develop the mildness segment.

Market Size &

Future Growth

P&G’s Competitive Position

Performance

Segment

Price

Segment

Mildness

Segment

Whole LDL

Market

Develop and maintain the

current market share.

Accelerate occupation

of performance segment

Do not invest in the

declining market

Opportunistic

Segment

6

Growth Opportunity Evaluation


Ivory

Joy

H-80 and no-spot formula fit customers’ current needs,

but Dawn has the same feature as H-80 formula has.

Key Concerns for LDL Consumers

Dawn

P&G’s Brand

H-80

8Source: Company Research.

77%

81%

85%

85%

57%

83%

82%

77%

80%

88%

93%

0% 25% 50% 75% 100%

Mildness to skin

Mildness to hand

Long-lasting suds

Economical

Plesant Odor

Not need much

No-spot

Removing cooked-on foods

Leaving dishes shiny

Getting dishes clean

Cutting grease

Score 5-6 Score 3-4 Score 1-2 No Response

No-spot

Launching product require initial cost USD 80 M.

Long payback period and cannibalization are key concerns

for launching a new brand.

9Source: Company research & modeling by the team.

Assumption:

• Based on the experience of Dawn and

Ivory, 10% market share could be reached.

• Approximately 40% of the market share of

a new brand comes from cannibalization.

23.0 22.5

13.1 13.1

-10.9 -11.2-12.0

-7.0

-2.0

3.0

8.0

13.0

18.0

23.0

28.0

1985 1986 1985 1986 1985 1986

US

D M

7.59.8 9.8

Cash Flow from New Brand

Cannibalization Cash Flow

Incremental Cash Flow

7.512.2 11.3

-3.3 -3.3

Performance

Mildness

Price

Payback 7.33 yrs

Payback 10.14 yrs

Payback 7.89 yrs

Implementing H-80 on Dawn generates $30.17 M in 5 years,

which is the best option for product improvement.

Launching product require initial cost USD 30 M.


Assumption:

• 8% market share is added.

• 15% market share of pad market is

added due to the cross selling effect.

12.412.0

12.612.1 12.3

10.2

12.1 11.3

6.1 6.35.8 5.7

-4.6 -4.7 -4.8 -4.9 -4.5 -4.7 -4.9 -5.1

-6.0

-1.0

4.0

9.0

14.0

1983 1984 1985 1986 1983 1984 1985 1986 1983 1984 1985 1986

US

D M

Cash Flow from Improvement

Cannibalization Cash Flow

Incremental Cash Flow

7.8 7.4 7.8 7.2 7.8 7.85.5 6.1

Dawn

Payback 4.91 yrs

Joy

Payback 5.57 yrs

Ivory

Payback 6.24 yrs

2 Cost reduction is the direct benefit.

Cost reduction benefit suggests us to implement

the no-spot formula on Joy.


Implement no-spot

formula on Joy

1

Metric Result (1982 – 1986)

Increase Net Profit $12.00 M

Return on Investment 20%

Payback period 4.25 year

No-spot formula fits customers’ need.

Advertising Ivory helps to increase trial rate and is profitable

if acquiring 0.54% of LDLs market.


MetricResult

(1982 – 1986)

Increase Net Profit $4.41 M

Return on

Investment10.25%

Payback period 4.54 year

The break-even point of the advertisement

is 0.54% new LDLs market share.Advertising more on Ivory.

• Increase GRP from 300 to 365

(20% larger advertisement coverage )

• Maintain the market share

Key financial metrics of advertisement

-100%

-50%

0%

50%

100%

150%

0.00% 0.50% 1.00% 1.50%

Re

turn

on

In

ve

stm

en

t (%

)

Increasing Market Share

Sensitive Analysis of IncreasedIvory Market Share

Break-even

at 0.54%

Final Conclusion


Improving Dawn with H-80, improving Joy with no-spot,

and advertising more on Ivory Liquid.

14

Segment Key Strategy Action & Result

Performance

Segment

• Focus on this segment

• Accelerate expansion

• Fit customers’ need

• Dawn with H-80 to get stable

cash flow (payback 4.91 years)

• Joy with no-spot to save the

cost (payback 4.25 years)

Mildness

Segment

• Maintain the current

market share

• Ivory with advertisement to

maintain the market share

Price

Segment

• Do not invest in the

declining market

• No action to conduct in the

price segment

Thanks for your attention.


p&g case study

Business