Case Study # 9
Procter & Gamble in Europe
A roll-out launch
Group 5
Group Members
Mauricio Gonzalez
Bui Thi Thuy
Chantharas Kanchanakool
Nina Krapf
Vincent Tenchavez
Julia Vassiljeva
Outline
I. P&G Case Background
II. Pan-European Introduction Strategy
III. Marketing Objectives
IV. Roll-out Launch
V. Media Spending Budget
VI. Europe-wide Introduction Program
Implications
P&G Case Background
Vince
P&G Case Background
• This case is concerned with the issue of
international suppliers of consumer
goods – that of the relationship
between global or regional approaches.
• This case examines the introduction of a
new haircare technology into the
European
market
by
the
US
manufacturer Procter & Gamble (P&G).
P&G Case Background
Key Facts
• P&G was founded in the USA in 1837
and is today’s larges manufacturer of
packaged consumer goods.
• More than 1/3 of P&G’s total profit is
generated
by
its
international
operations, which are the fastest
growing part of total business.
• P&G’s basic principle: provide superior
total value and meet basic consumer
needs.
P&G Case Background
Key Facts
• P&G is known for its legendary
brand management system.
• The need for marketing strategies
from a European perspective arose
in the 1980’s.
Pan-European Introduction Strategy
Mod
Pan-European Introduction Strategy
BC-18
- A technology that enables a
combination
of
shampoo
and
conditioner in one product.
- Replacement of an old brand ‘Pert’
with ‘Pert Plus’ in the US. in 1986.
BC-18 going to Europe
Pan-European Introduction Strategy
P & G in Europe
However, suppliers and brands were
already crowded in Europe due to the
differentiation in nationalities
The most important competitors of P & G were
Unilever, Colgate and L’Oreal
Also there was a huge gap between the price
classes: higher price for the same quantity
Pan-European Introduction Strategy
To balance a Pan-European strategy
with local market needs:
- Closer coordination particular for the new
brands
- Marketing strategies thought through from
European perspective
- Euro-Brand Team brings out the concept of
“Euro-Balancing”
Pan-European Introduction Strategy
The main question: under what
brand name to introduce the
product in the individual European
markets?
Consumer research undertaken by testing 4
possible brands showed no significant
differences result.
BC-18 should be introduced with a panEuropean name suitable for all European
countries.
Pan-European Introduction Strategy
Longer-term Marketing Objectives
- Compete with Unilever, Colgate and L’Oreal
- Increase its market share and revenues
- Gain recognition in European market and
strengthen its position as a market leader
Pan-European Introduction Strategy
Other possibilities
- Pricing Strategy: whether premium
pricing would be accepted by the
European consumers
- Packaging: whether 250ml bottle of
shampoo-conditioner would be
accepted in the European market?
Marketing Objectives
Thuy
Marketing Objectives
Short and long term objectives
• The aim of Procter & Gamble is to become a
leader in the European market of two in one
hair products.
• The first year objective is to attract new
European customers who never used
conditioner and customers from competing
brands to shift to the use of conditioner and/or
shampoo to BC-18.
• The aim is to exert a pull on the population in
order to create a new market niche inside the
shampoo market and encourage the people to
use the new BC-18.
Marketing Objectives
Short and long term objectives
• Another main objective is to establish
brand loyalty as this will encourage
customers to continue buying the
product and will enable them to
become more familiar with the range of
products available at Procter & Gamble.
• The company wants to create brand
loyalty, which is especially important, as
this is the most difficult stage in the
consumer's purchasing behaviour.
Marketing Objectives
Short and long term objectives
• The long-term objective is the continuation of
the short-term objective i.e. establish a
market share that will expand and gain in
recognition.
• Procter & Gamble will aim to increase steadily
the market share of the market in Europe.
• The penetration into new geographical
territories would ensure that the company
benefits from revenues and strengthens its
position as a market leader.
• This is particularly important, as competitors
are quick to imitate the new developments
(me too products).
Roll-out Launch
Mau
Roll-out Launch
• Recommended in Europe:
– There is "a steady growth of the
shampoo market and the conditioner
market"
– Statistics show an increase in hair
washing
– Southern European countries have
quite an underdeveloped conditioner
market compared to the USA.
– P&G should focus upon West
Germany, Great Britain, France,
Scandinavia and Benelux.
Roll-out Launch
Roll-out Launch
Objetive:
Attract new European customers who
never used conditioner.
Decision criteria for this order:
• Value (TDM)
• Volume (MSU)
• Use Per head
Roll-out Launch
• Introduce a new product to the
biggest market.
• Not change their washing-hair
customs.
• Provide a developed product in
the same that they are used to
use (2 in 1).
Media Spending Budget
Nina
Media Spending Budget
Country with the highest priority:
France
• Highest market share of shampoo within Europe
– concerning value and volume of shampoo use
• Low market shares of conditioner alone – still not
yet totally accepted
• Huge opportunities to catch the French market
with a new product including shampoo and
conditioner into one product – easy and
convenient to use!!!
Media Spending Budget
Possible media and promotion activities:
•
•
•
•
•
Adds on TV
Adds on Web-pages
Adds on radio channels
Adds in newspapers
Product-sampling – household
sampling, giving free samples
together with other P&G-products
Media Spending Budget
Media plan for the first year:
• Eight strong TV advertising months
(April-November)
• Seven strong Web-page advertising
months (June-December)
• Household sampling (50% of
households- May-September)
• “With P&G-product” sampling (JanuaryMarch, October-December )
Media Spending Budget
Media Budget for the first year (TDM):
•
•
•
•
•
TV-advertisement (4800)
Web-advertisement (2000)
Household-sampling (4200)
“With P&G-product”-sampling (4700)
Total Media Budget for the first year: 15700
Media Spending Budget
Promotion activities:
• Household sampling
• “With P&G-product” sampling
• Event sampling – going to fares or
mass-events
• Market sampling
Media Spending Budget
Activities in the following years:
• Eight normal TV advertising months
(January-April, July-October)
• Seven normal Web-page advertising
months (February-April, SeptemberDecember)
• Household sampling (15% of
households – March-August)
• Display activities in hypermarkets or
hairdresser’s shops
Media Spending Budget
Media Budget for the following years
(TDM):
•
•
•
•
•
TV-advertisement (2400)
Web-advertisement (1000)
Household-sampling (2100)
Display activities (2300)
Total Media Budget for the
following years: 7800
European-wide Introduction Program
Implications
Julia
European-wide Introduction Program
Assumptions (1)
• Based on the U.S. marketing strategy:
– 1st year: 10 strong TV advertising months
household sampling (60% of hh)
listing funds
– 2nd year: 10 normal TV advertising months
sample distribution (10% of hh)
Display activities in supermarkets
European-wide Introduction Program
Assumptions (1)
• Optimistic scenario – all capacity is in
use
– 1st year 2 000 MSU
– 2nd year 4 000 MSU
• Existing 200 ml US bottle is in use
• Wholesale price 4.99 DM/200 ml
European-wide Introduction Program
Profit/Loss statement
TDM
Revenue
Production costs
Gross Profit
Overhead costs
Advertising costs
EBIT
Year 1
124 750
44 000
80 750
11 200
61 170
8 380
Year 2
249 500
88 000
161 500
22 400
33 570
105 530
European-wide Introduction Program
Other scenarios
• A 6% discount is allowed during the
first year, so that the company will
still be in profit
• The production should work at at
least 88% of its total capacity to keep
it profitable during the first year
• A 19% increase in production costs
would still keep the business in profit
European-wide Introduction Program
Decision
• As there is no loss expected during the first 2
years, there is no need to modify the order of
the local market entries
• All target countries should be covered to
seize larger market share in Europe
Thank you!
Procter & Gamble in Europe
A roll-out launch
Group 5