Touching Lives, Improving Life

INTRODUCTION

• Founded in 1837 by William Procter and James Gamble• Is an American multinational consumer goods company• Has a revenue of US$ 84.17 billion and net income

of US$ 11.31 billion• Total number of brands – 300• Operating in 180 countries• Headquartered in Downtown, Cincinnati, Ohio, United States

HISTORY

• Procter’s candle making company merged with Gamble’s soap making business in 1837

• First company in US to offer a profit sharing program for its employees

• First to create a Market Research department• The invention of electric bulbs, ceased the production

of candles • P&G started supplying soaps to the soldiers in mass

quantities• Gave an opportunity to return to

the market again

VISION & MISSION “Be, and be recognised as, the best consumer

products and services company in the world.”

“ We will provide branded products and services of superior quality and value that improve the lives of the world’s customers, now and generation to come.”

Company Product Portfolio

• Products sold in > 180 Countries• On the ground operations in 80 countries• Organized into 2 Global Business Units (GBU’s)

Health Care

Grooming

Beauty

Beauty & Grooming

Fabric and Home Care

Baby and Family Care

Snacks and Pet Care

Household Care&

SWOT ANALYSISStrengths • Powerful collection of well-known brands

• Massive world-wide distribution network

• Impressive and historically successful R&D efforts

Weaknesses• Focus on high-end of the market

• Growth hard to achieve for such a large and diversified

portfolio, particularly in mature product categories

Opportunities • Growth of the middle class in developing markets

Threats

• Fierce competitive landscape, with well-heeled participants like DABUR and HUL

• Often unstable economies and political structures in emerging markets

• Consumer price sensitivity, particularly in emerging markets.

• Raw material cost increases

PORTER’S FIVE FORCES MODEL

Intensity of Rivals

• The intensity of rivalry is very high in this industry.

• P&G has several strong competitors like Amway corporation, Colgate-Palmolive, Unilever, Kimberly-Clark, Johnson & Johnson

Threat of new entrants

• The enormous amount of products that are distributed under Procter & Gamble’s name creates a challenge for new entrants.

• Since the P&G possess a significant amount of market shares around the world, a potential competitor that lacks large sums of capital for heavy marketing, R&D, would hardly be able to effectively compete

Bargaining Power of Buyers

• P&G is heavily dependent on Wal-Mart and its affiliates for generating a major part of its revenue.

• Sales to Wal-Mart and its affiliates have represented approximately 15% of its total revenue since 2006 thus creating the “ Wal-Mart Effect”.

• High dependence upon Wal-Mart reduces the bargaining power of P&G. Wal-Mart could use its bargaining power to impose unfavorable terms of the company

Bargaining Power of Suppliers

• P&G has a codependent relationship with most of its suppliers. Suppliers of materials also need key customers like P&G for profitable revenue generation and will vary likely have little bargaining power because of its small size

• P&G can use its tremendous size and large amounts of available cash to its advantage during this current credit crisis

Threat of Substitutes

• This is substantial number of substitutes for all of P&G’s product offerings, creating an intense competitive environment

• In order to differentiate itself, the P&G must continue to provide new, cutting-edge and innovative products and branding to the customer

CORPORATE STRATEGY

• Strengthening Core Business– Top 20 in Household Care and 20 in beauty &

grooming• Improving Productivity and Creating cost-Saving

Culture– Reduction of 5700 non-manufacturing overhead

positions in 2013• Strengthening Innovation Program– Dedicating R&D resources and funding to develop

new innovations

STRATEGIC FOCUS

• Focus on company’s core markets such as the US, to strengthen and grow these businesses

• Focus on company’s developing market investments on the categories and countries with the largest size of price and highest likelihood of winning

• Focus on portfolio, allocating resources to businesses where company can create disproportionate value

INITIAL STRATEGIES BY P&G

• 1998,P&G faced losses and EPS fell below 14% to 15 %

• Revenue growth rate which varied from 1.4% to 5% during 1995 to 1999,was also below P&G’s internal target of 7%.

• To deal with this situation DURK JAGER was appointed as CEO.

Durk Jager introduced the foll. Strategies- • Corporate restructuring program ––Global Business Units:-• Earlier there was 4 business units based on

geographical regions to seven GBUs based on global product line

• Market Development Organisations:-– P&G established eight MDOs

• Global Business Services:-– overhead functions such as HR, Operations, etc.

were centralised• Corporate Functions:-– most of the corporate function were transferred to

one of the new business units.• Company culture:-– P&G redesigned reward systems and training

programs to improve result orientation among employees.

• Secondly, focus was on cost reduction– P&G reduced the work force approx 10000 by

2004• Thirdly, for employee retainment– P&G adopted strategies like pension policy,

career development programs etc.• Fourthly, P&G focused taking new initiatives in

underdeveloped markets.

• In 2000 ,Alan George Lafley became the CEO.

• Under Lafley, strategies were changed according to upcoming competitive environment.

• During 2000-2005, company strategies changed from taking initiatives in underdeveloped market to focusing on big countries and big products.

• Priority was given to best selling brands

• More cost reduction was done around 9600 workforce was reduced

• Company focused on acquisitions to have big brands under P&G umbrella

CURRENT STRATEGIES

• Expanding by Acquisition• Heavy ads- Marketing Strategy• Supply Chain Strategy• Heavy R&D and Innovation Strategy

SUPPLY CHAIN STRATEGY

• The major supply chain initiatives were:– Collaborative Planning Forecasting and

Replenishment (CPFR)– Consumer Driven Supply Network

CSDN• P&G decided to have a connection between actual

sales and supply chain process• Paradigm shift in viewing supply chain management

from forecast driven to actual demand driven • Supply Network instead of supply chain because of

information flow in all directions• This operating strategy is called as Consumer Driven

Supply Network• P&G used CSDN to create a responsive supply chain

that would produce and supply products as per demand at the customer level

EXPANDING BY ACQUISITION

• Between 1905-2010, P&G invested in 34 acquisitions

• In 2005, P&G acquired Gillette, making it the biggest acquisition in company history

• This enabled P&G to go from having 16 to 21 “superbrands”

• Acquired Natura and Nioxin, which were leaders in pet products and hair care

• Some of the biggest acquisitions are • Charmin, Clorox, Crush, Revlon, and Gillette

MARKETING STRATEGY

• P&G spends 15% of their sales on advertising beating all of their competitors

• P&G was named “2008 Advertiser of the Year” by Cannes International Advertising Festival

• In 2014, P&G has decided to invest almost one-third of its media spending in Digital, Social and Mobile platforms

• Focus is to improve marketing efficiency through clearer messages and better

targeting

Distribution Strategy

• Intensive Distribution strategy

• Introduced “Project Golden Eye”– Reducing the number of

distributors– Providing better ROI to the

distributors– Better Infrastructure– Cost Saving– Large Investment in

Advertising

Customers

Retailers/Wholesalers/Distributors

Marketing Agents – State wise

Manufacturers (P&G India)

Promotion Strategy

• P&G insists on Pull Strategy• Heavy advertising and media pioneer• Advertising Creativity• P&G-A click mortar company• Coupons

Pricing Strategy

• P&G adjusts their pricing according to different types of customers and situations

• P&G adopted different pricing strategies like: – Optional Features strategy– Product-line pricing – Cost-plus pricing– Competitive pricing – Distribution pricing

INNOVATION STRATEGY

• P&G spends about US$ 2 billion a year in R&D with 8000 employees in 26 labs around the world

• P&G conducts most of its new product development in R&D labs

Connect & Develop

• P&G’s version of Open Innovation

• P&G’s internal global team is dedicated to empower the concept of C+D

• Connects innovators with the P&G’s needs, allowing anyone to submit their ideas to the company

Growth Factory

• The problem of Growth-– Only 15% of innovation projects were meeting the success targets

• Innovation Assembly Lines-– Sustaining Innovation– Disruptive Innovation– Transformative Innovation– Commercial Innovation

• Small Bets Labs- – tapping into university research for potentially transformative

innovation. Eg-Tide Dry Cleaners• Innovation Transformation

– This resulted in 15% to 50% improvement in its innovation success rate

Presented By:Arkaprava SadhuK GauravKushagra ShuklaPrateek BhargavaPrateek SorteSourabh VerdiaVibhor Shukla