PGDFT ASSIGNMENT

MARKETING STRATEGY OF P&G

SUBMITTED TO : DR BHUSHAN D SUDHAKAR

SUBMITTED BY : IJAS ASLAM

PGDFT

Corporate Story – P&G Before we trace the strategic moves of P&G lets refresh some basic theories of generic strategies and new market/product matrix (Ansoff matrix). 1980s, Michael Porter gave the principle of generic strategies. These generic strategies open optons to organization that wish to achieve a sustainable competitive advantage. Cost leadership, differentiation and Focus strategy were the three thumb rule of poters generic strategy model. The basic context was on cometative advantage and competative scope. Ansoff Matix lights the options in the deminsions of product and market ( for more information on theoritical aspect you can request an article). In the following paragraphs we will see how P&G used these tools to secure leadership and compete with the existing players. Year 1951, Vicks Product Inc. USA established India. It entered the Indian market with VICKS, today India's Number One Health Care brand. The idea became quite clear in 1964 with the formation of a public limited company, Richardson Hindustan Limited (RHL) which obtains an Industrial License to undertake manufacture of Menthol and de mentholised peppermint oil and the brand extensions of Vicks such as Vicks VapoRub, Vicks Cough Drops and Vicks Inhaler. In May 1967, RHL introduces CLEARASIL, America's number one pimple cream of that time. In 1979, a research revealed that the brand Vicks VapoRub, originally positioned for children was mostly consumed by adults. This gave a route to another brand extension of Vicks as Vicks Action 500 in the form of capsules. The 500 was added to the brand name as to make it remembered by rural consumers. P&G also designed the shape (capsules) so it as to make it different from other products. Previously, the brand was sold through prescription but later routed through OTC channel. This brand extension in VICKS was to strengthen P&G’s market leadership in cold and cough. The extensions were to cover all consumption modes and market (adults and children). The methodology matches with that of chess player who first makes all the squares safer which might threaten the queen (VICKS) and then play the game of competition. Plotting these brand extensions on the Ansoff matrix will make the explanation more clear

Determination for product differentiation gave birth to an Ayurvedic Research Laboratory in 1984 by RHL. This was to keep align with Company's mission of delivering products of superior quality in cough and colds segment. A strategic decision in October 1985 of getting affiliated with Proctor and Gamble, USA revamped the whole manufacturing process and units. The RHL was renamed as P&G. The strategy at the corporate level was to work with different SBUs for broader categorization like P&G Home and P&G Health and Hygiene. Till that time, J&J Health and Hygiene was enjoying the monopoly in sanitary napkin segment with Stayfree brand, which was launched in the late '80s

Year 1989, P&G stepped out for head-on with J&J in the sanitary napkin market. With great technology, it revolutionized the Indian feminine hygiene market with the brand Whisper against the Stayfree of J&J. It was then that the Silky Dry variant was launched to compete with the superior technology of the Whisper brand. But the Silky Dry variant was not able to compete on value-for-money with Whisper as consumers were unwilling to pay a premium for the product. The target market was mid-segment. The next entry was in the detergent market with the brand Ariel. The lucrative growth in India represented a mouth-watering proposition to P&G International that has increased its stake in Procter & Gamble India to 51% and then to 65%. In 1993, Procter & Gamble India divested the Detergents business to Procter & Gamble Home Products. In the same year P&G India started marketing Old Spice Brand of products. To perfectly fit in its corporate strategy, Procter & Gamble India Limited changed the name of the Company to Procter & Gamble Hygiene and Health Care Limited. In the same year Mediker Shampoo business was divested to Marico Industries. This step of P&G revealed the mind set of the company to follow the niche strategy. The focus was on three brands; Ariel, Vicks, and Whisper. In 1999, on one side, P&G’s Vicks Action 500 (OTC) was covered with Coldarin umbrella of J&J (with two brand extensions; Coldarin Plus and Coldarin Cough & Cold with total market share of nearly 3.2 %). Another side was D’Cold from Paras. Reckitt Piramal, the marketing JV of Reckitt & Colman with Nicholas Piramal, was gearing up to launch Disprin Cough and Flu tablets. Its not that competition was restricted to OTC brands, Glaxo’s brand Actifed was eating up the share but through the prescription route. In 2000, Procter & Gamble Hygiene and Health Care Limited introduced Whisper Ultra - a revolutionary and unique product in the history of menstrual products in India for premium segment.

J&J, the then market leader, with out losing time counter-attacked with Stayfree Sure and other ultrathin sub brands**. The mid segment market was threatened by low-priced sanitary napkins (from ambitious contenders such as Johnson and Johnson and Kimberly Clark Lever).

. In August 2000, the next extension was Vicks Plus Medicated Lozenges, a product that provides medicinal relief from sore throat. The plan was to add new consumer base to the existing one. The USP of Vicks Plus Medicated Lozenges lies in its anti-bacterial ingredient CPC (Cetylpyridinium Chloride), which actually provides medicinal relief from a sore throat. The over all strategy was to increase entry barriers in cold and cough market and to invade in the mid and premium segment of menstrual products with break through technology. The basic strategy pivots around bifurcation of brands that will be in competition and that will be away. The differentiation strategy was not sufficient In Indian market to generate volume sales so the next move was to focus on cost. The targeted area was its distribution channel, making it more cost-effective and streamlining the distribution channels to focus on the promising markets alone. Initiative to follow the first principle of generic strategies for cost-focus worked for P&G. Year-ended June 2000, witnesses 100% profit growth. It was clear that the launch of the product from the parent will be streamline to the respective SBU. Tide detergent and Tempo tissues from the P&G Worldwide was routed in Indian through solely own subsidiary of parent. Only Tampax -- a feminine hygiene brand -- was through PGHH. In August 2000, Vicks Action 500+ was relaunched in an attractive True Blue pack. The change in packing color from green to blue was to inline the products with the international brands. In April 2001, Procter & Gamble Hygiene and Health Care Limited reduced the prices of Whisper Ultra from Rs.80 to Rs.65 for a pack of ten, making it affordable to Indian consumers. This was to fade the effect of competitors in premium market. After nine months J&J decided to phase out its Stayfree Silky Dry sub-brand in the wake of launching its latest offering in the premium end of the market -- Stayfree Sure. P&G took the different route to influence consumers in sanitary napkin market .In May 2002; Whisper announced a unique knowledge sharing initiative for women, The Whisper Diary of Secrets. The story did not end there. With the killer instinct PGHH announced the launch of Whisper “Money Back” offer. No performance experience will return the money. In June 2002, Vicks VapoRub was repositioned on multiple benefits. The USP was six symptoms relief of a child cold, namely blocked nose, cough, body ache, headache, muscle-stiffness and breathing difficulty. The target consumer segment was children. The benefit was faster, longer-lasting relief from these six symptoms of cold. This phase was of differentiation of queen brand. The step was to outfit intruders like D’Cold, Amrutanjan and Acti-V from Nestle which introduced in two variants — honey lemon and menthol eucalyptus. Quite ridiculous Nestle jumped in this market. The underline fact is that all the products were ayurvedic and natural. In July 2002, Procter & Gamble announced the launch of Vicks Action500+ Night tablets, a specially designed cold medicine that gives consumers multi-symptom relief from bothersome cold symptoms like headache and breathing difficulty, hence allowing restful sleep at night. Don’t ask more about it as I can’t explain to you why it was a big flop