Proctor & Gamble (P&G) is one of the most skillful marketers of consumer packaged goods. The company’s scope and accomplishments are staggering. It employs 138,000 people in more than 180 countries; is a global leader in the majority of the 22 different product categories in which it competes; has $23 billion global brands, spends more than $5 million a day on R&D; and has total worldwide sale of more than $76 billion a year. Its sustained market leadership rests on a number of different capabilities and philosophies:
P&G studies its customer- both end consumers and trade partners- through continuous marketing research and intelligence gathering. It spends more than $100 million annually on more than 10,000 formal consumer research projects every year and generates more than 3 million consumer contacts via email and phone center. It also puts more emphasis on getting its marketers and researchers out into the field, where they can interact with consumers and retailers in their natural environment.
P&G takes the time to analyze each opportunity carefully and prepares the best product, and then commits itself to making this product a success.
P&G design products of above-average quality and continuously improves them. When P&G says “new and improved,” it means it.
Brand extension strategy:
P&G produces its brands in several sizes and forms. This strategy gains more shelf space and prevents competitors from moving in to satisfy unmet market needs. P&G also uses its strong brand names to launch new products with instant recognition and much less advertising outlay. The Mr. Clean brand has been extended from household cleaner to bathroom cleaner, and even to a carwash system. Old spice was successfully extended from men’s fragrances to deodorant.
Multi Brand strategy:
P&G markets several brands in the same product category, such as Luvs and Pampers diapers and Oral-B and Crest toothbrushes. Each brand meets a different consumer want and competes against specific competitors brands. At the same time, P&G has begun carefully not to sell too many brands and has reduced its vast array of products sizes, flavors and varieties in recent years to assemble a stronger portfolio.
With its acquisition of Gillette, P&G became the nation’s largest advertiser, spending over $5 billion a year on advertising. A pioneer in using the power of television to create strong consumer awareness and preference, P&G is now taking a leading role in building its brands on the Web. It’s also infusing stronger emotional appeals into its communications to create deeper consumer connections.
Aggressive sales force:
P&G’s sales force has been named one of the top 25 sales forces by Sales & Marketing Management magazine. A key to its success is the close ties its sales force forms with retailers, notably Wal-Mart. The 150 person team that serves the retail giant works closely with Wal-Mart to improve both the products that go to the stores and the process by which they get there.
Manufacturing efficiency and cost cutting:
P&G reputation as a great marketing company is matched by its excellence as a manufacturing company. P&G spends large sums developing and improving production operations to keep its costs among the lowest in the industry, allowing it to reduce the premium prices at which some of its goods sell.
Brand – management system:
P&G originated the brand-management system, in which one executive is responsible for each brand. The system has been copied by many competitors but not often with P&G’s success. Recently, P&G modified its general management structure so that each brand category is now run by a category manager with volume and profit responsibility. Although this new organisation does not replace the brand-management system, it helps to sharpen strategic focus on key consumer needs and competition in the category.
It’s easy to see that P&G success is based not on doing one thing well, but on successfully orchestrating the myriad factors that contribute to market leadership.
The only value your company will ever create is the value that comes from customers-the ones you have now and the ones you will have in the future. Businesses succeed by getting, keeping and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fiber-optic lines, or engage in any business activity. Without customers, you don’t have a business.