Case Study About Procter and Gamble Company Essay

Procter and encounter Company Case AnalysisThis character study analysis foc employ on Procter and Gamble Companys merchandiseing plans and strategic excerptions on its light-duty liquid secern strike outs (LDL). Procter & Gamble is the instaurations largest producer of crime syndicate and hygiene products. By 1981 P&G operated in 26 countries and sales totaled $11.4 billion with 90 consumer and industrial products manufactured in the United States. The incident study provided some actually detailed data analysis and reports in terms of the company floor and background, organizational structure, key factors to its success in the commercializeplace, the relationship among advertising, sales, product increment (PDD), manufacturing, and finance incisions, and its light-duty liquid bulls eyes (LDL). Highlight of Company History, Organization, and Key supremacy Factors * In 1890, Procter & Gamble Company was incorporated with a capital banal value of $4,500,000. The c apital allowed the company to build plans, buy untested equipment, and bristle new products. * Sales volume doubles every 10 age.* advantage factors are 1) dedicated and talented human resources, 2) a reputation for truthfulness and trust, 3) prudent and conservative management philosophy, 4) innovation in superior pure tone of products at competitive charges, and 5) substantial marketing expertise. * The company organized its products in terms of 8 categories 1) package soap and detergent, 2) bar soup and domicilehold cleaning, 3) toilet goods, 4) paper products, 5) food products, 6) coffee, 7) Food Service and lodging products, and 8) peculiar(a) products. * Brand group planned, developed, and directed the total marketing effort for its dirt through development of the annual marketing plan.* Brand group worked well-nigh with other four lines. Sales department provided important perspective on consumer and trade furtherance acceptance, stock requirement to support compe titive pricing. * proceeds development department ensured continued improvement on brands quality through extensive consumer and laboratory tests. * Brand group worked with manufacturing department on detailed brand volume estimates. Their interaction was crucial to new product development process. * Based on the volume and marketing disbursal forecasts provided by the brand groups, financial/ appeal analyst developed and ply back brand profit and pricing analyses as well as profit and rate of return forecasts on new products andpromotion.Using the information, Mr. Chris Wright, swain advertising manager of the Packaged Soap and Detergent Division (PS&D) of the Procter & Gamble Co., was trying to determine how the division could increase volume of its light-duty liquid detergents (LDLs), capture more treats from the market, and increase long-term or short-run profit. The lead options that Wright considered are new brand demonstration, product improvement on an living brand, and an increase in marketing expenditures on existing brands. Each option is analyzed as follows New Brand inceptionPros* P&Gs current LDL played a leading subroutine in the market place. The success of its Dawn brand clearly indicated a likelihood of another new brand with a distinctive improvement could increase further P&Gs LDL Volume. * Wright dictum new product potential in all three market segments ( process, mildness, and price brands) * For performance brand, market research indicated that 80% of U.S. households scour and rub their dishes at least once a week. H-80 invented by new engineering as a high-performance product which potentiometer fulfill a clear consumer need based on research. The 4-week blind in house use test of H-80 and established competitive LDL, was a strong index number of its potential success. * For mildness segment, a new brand which differentiates its mildness earn can help the declining segment recapture the consumers. * Although P&Gss price segment had been in decline, it was expected to stabilize at its current share level due to the increasing consumer sensitivity to price resulting from the depressed state of economy. * Wright considered the potential of producing a brand with parity performance benefits to existing price brand competition at a approach that allowed PS&D to maintain a good profit. Cons* The new brand would require $20 one cardinal zillion million in capital coronation to direct additional production capacity and bottle molds. * The new LDL brand also needs at least $60 million for first-year introductory marketing expenditures. * The introduction of new product would take slightly two years improver one year if test market was needed. So three years indicated that the profit return would be a long-term investment. Product Improvement on anExisting BrandPros* opposed new opportunity, product improvement such as introduction of H-80 polity to one of the current LDL brands would require less investment. It would cost $20 million for the improvement and $10 million as incremental stain expenditures, which was $50 million less than a new brand. * On pass on of it, Joy brand could cut its cost of goods by $3 million per year if this new formula was introduced. The brand relaunch would cost $10 million in marketing expense with no capital investment. Cons* Although there is a data supporting how H-80 formula would capture the market, there was lack of data of the introduction of H-80 formula to the existing current LDL brands. * If consumers have already established a certain image of Joy brand group, can the change of formula attract new consumers and retain the existing consumers? * The introduction of new product would take about one year plus two year if test market was needed. So three years indicated that the profit return would be a long-term investment. Increase marketing Expenditures on Existing BrandsPros* Since the market has been static with the LDL category, Wright might subjugate increasing the capital investment and reduce investment risk. * Wright could expand the boilersuit profits by capturing larger market shares using extra advertising and promotion techniques. Cons* There was lack of data supporting the increase in marketing expenditures on existing brands could produce the desired market share increase. * For some segments such as price brands, increasing advertising and promotion would not increase sales and market share if the price didnt decrement accordingly. This was especially true in the depressed state of economy. RecommendationsThe pass was to go with the commixd feature of having both long-term and short-term investment. Introduction of a new product such asH-80 appeared to be a too costly investment. In such a depressed state of economy, it was not a smart decision to invest $80 million for the new product. Out of $80 million, $60 million was only used to cover the cost of the first year, not to mention increment al cost for the next few years. The product would require 3 years in order to be introduced to the market. Using the cost/benefit analysis, I speak out the first option of new brand introduction was too risky. We could combine option 2 (product improvement) as a long-term investment with the option 3 (increase marketing expenditure on existing brands) as the short-term investment. Combining these two options could increase the sales volume with very stripped-down capital investment. In return, it meant less risk for Procter & Gamble. The timeframe with one long-term investment and one short-term investment allowed Procter & Gamble the time, resources, and capital to focus on two endeavors strategizing more efficient plans to tackle the charging and competitive market. Especially the case also indicated that increased marketing expenditures could be approved almost promptly if the plan was financially attractive.