CASE STUDY Procter & Gamble Going Global in Cosmetics Q1. Critically review the current marketing situation facing P&G. Company, which wants to grow, develops ambitious aims and a plan to achieve it. A feasible plan is based on an analyse of the strengths and weaknesses of the company (the internal analyse) and opportunities and threats (the external analyse). Together it is called the situation analyse.
Marketing Audit Internal analyse The financial opportunities of P&G are very good according to the annual report. It has bought important cosmetic lines, like Max Factor, Cover Girl and Clarion to gain more market. One can talk about a blue-ship company. The used product technology is of high quality. The capacity of the representatives and the reputation of the company are very positive by its customers. However, the quality of the marketing department and the composition of the assortment are weak. Those internal factors of a situation analyse are controllable variables for the business. External analyse In the external environment, we are especially looking for opportunities, which have not been, took yet by other businesses.
Those can proceed from changes of Social, Legal, Economical, Political or technological factors. P&G have already a good production technology. More important, is the social environment. Because it changes very fast and rapidly under young women. The company must be aware of using the four Ps in a right way.
For example, if P&G want to sell its cosmetics in a Moslem country, the products should not consist alcohol. Another social factor is the age of the target group. It must be aware of composition of the population. In Japan for example, there is no problem such as a growing grey. That is a good choice of a country to operate in.
This because P&G target group is an especially young woman now. Swot-analyse Internal analyse External analyse Strengths Opportunities The brand name Expansion of the assortment Distinguished capacity Set foot on new markets Good name by its buyers Contacts with competitors Possibilities for scale benefits Fast growing market Abilities for product innovation Vertical integration Weaknesses Threats Lack of experience/expertise in the Growing competitive press Cosmetic industry Fast changing wishes and Complex strategic direction needs of buyers Limited assortment Possible entrance of new Insufficient marketing knowledge competitors Deficiency on particular skills Threat of demographically Changes Increasing sales of substitutes When we take off the strengths against the opportunities in the environment and against the weaknesses of the competitors, we can see the competitive advantages of P&G. Confrontation matrix Strengths Weaknesses Opportunities Exploit Improving (e.g. mar- Growing keting department) Bend into strengths Threats Defence Avoid or retreat Compete with strongest Searching for co-operation Recommendations To compete successfully, P&G has to improve its marketing skills and expand its assortment to provide in the different and fast changing needs of the consumers. They have the possibilities to achieve this. Q2.
Propose an international marketing strategy for P&G. It is very important to use correctly the four P?s. if one companies sales are decreasing, it has to look and consider adapting one or all of the four P?s. Marketing Mix Product Cosmetics are convenience products. To make it available of those products, at many places is very important for the marketer. To expand its assortment, the company could use the strategy of Trading up; add products of high quality to the existing assortment. The aim of this is to improve the image of the total assortment.
Customers find the brand name, reputation of the manufacturer, the guarantee definitions and the offered service very important. What P&G should do in order to achieve a much better brand name is the following: ? Keep the brand name short, easy and easy to spell ? Easy to recognise and remember ? One way pronunciation of the brand name ? International useful A product strategy is the adaptation of the product. P&G could take off the articles out of the market, which are not providing in the needs of the consumer anymore. Like, the product Betrix, the sales decreased enormously. It can change the packaging of other cosmetics. Like they did before with the packaging of Max Factor.
More styling and elegant. The packaging has also other functions such as: ? Recognisable and attractive ? Emotional appeal, the packaging can achieve a certain position for the product It can develop new and better guarantee definitions and the giving service. One of the most important services is to keep an expanded assortment. 1. In the introduction phase (1993-1995) ? The product is just introduced ? The gross margin and growth is limited ? Adoption and diffusion has still to come ? Possibilities for lost, because of high launching costs 2.
The growth (1995-1997) ? High growth in gross margin and revenues ? The appearance of competitors on markets ? Increasing profits 3. Satiation (1997-1999) ? The growth is out of market ? Less possibilities for expansion ? The profits become stable ? Increasing competitiveness Personal expectations for Cover Girl in Europe: 4. Sediment (1999-2005) ? Decreasing demand for the product ? New products/substitutes which better provides the needs of the consumers Price The decision of the right price is very important and even more difficult for the Marketer. Too high price will scare off the customers. However, a low price will influence badly the profits.
Some important issues, which P&G have to consider, are: Which discounts can be given? Are the buyers ready to pay a higher price? In Japan the cosmetics are much cheaper then Europe of P&G. Actually, it could raise its prices in Japan. That is because of, it distinguishes itself especially in the packaging and brand name. However, we should consider if the decision of the price must lead to a profit on short term or on long term? P&G want to go global. That is related in a long-term profit choice.
More profits will be fetched in the future. That means P&G should start asking lower prices for its cosmetics, in spite of the distinguished character of its products. However, according to the annual report, the financial results of P&G: The revenues are higher in countries where the prices are lower, like Japan for example. This strategy is called a penetration pricing. The aim of this strategy is to gain more market.
It is a strategy of low prices. Nevertheless the margin per product becomes lower, but this will cover, because of the big sales. P&G should use this strategy, because; ? It can join economic scales, relative high fixed costs and relative low variable costs ? The demand for the product is sensitive for pricing ? The competitors could following it very fast and easy ? Fast diffusion of consumers Place An effective distribution system means the obtainabilty of the right products on the right time and at the right place. Efficiency is necessary. Which strategy of distribution will fit for P&G? The company wants to go global in cosmetics. The products must be the quantitative available which means the following: ? At least at 80% of all relevant distribution points ? 80% of the revenues should be achieved at the relevant distribution points Which motif is there for the distributor? The distributor takes a certain brand name, because he knows that the brand name positions its self compared to other competitive suppliers.
The product must fit at the shop?s formula. Examples: private labels, very selective/exclusive distributed brand names. For P&G products, an intensive channel design is for granted. P&G should be direct in business with the retailer. This results in two benefits. Firstly, the wholesaler wil …