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.
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.
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 P’s 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.
Internal analyseExternal analyse
The brand nameExpansion of the assortment
Distinguished capacitySet foot on new markets
Good name by its buyersContacts with competitors
Possibilities for scale benefitsFast growing market
Abilities for product innovationVertical integration
Lack of experience/expertise in the Growing competitive press
Cosmetic industryFast changing wishes and
Complex strategic directionneeds of buyers
Limited assortmentPossible entrance of new
Insufficient marketing knowledge competitors
Deficiency on particular skillsThreat of demographically
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.
OpportunitiesExploitImproving (e.g. mar-
Bend into strengths
ThreatsDefenceAvoid or retreat
Compete with strongestSearching for co-operation
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.
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
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
High growth in gross margin and revenues
The appearance of competitors on markets
The growth is out of market
Less possibilities for expansion
Personal expectations for Cover Girl in Europe:
Decreasing demand for the product
New products/substitutes which better provides the needs of the consumers
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
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 will be eliminated, which results to more profit for the retailer and P&G. Secondly, if P&G operates as much as possible direct with the retailer, it will be me more up to date in the need of the buyers. That will automatically result in improvement of the marketing department. The channel choice will be then horizontal as stated following:
Saving actions, price questions, gift-articles, demonstrations and other forms of sales promotion influences positive the chance of purchasing. One knows that old people would like to be young and young people would like to be older. It could adapt its ads, because of that. P&G like to target more young people now; it could ad in popular magazines like Nikkei Woman and Sankei Live in Japan for instance. P&G have lack of experience with cosmetics it can train and motivate its sales persons and representatives. Systematically use of displays, discount actions could also be very useful. A very useful strategy for P&G could be the push– and pull-strategy.
In the push-strategy, the manufacturer tries to push more products by trade promotions through the distribution channel
In a pull strategy, the aim of the manufacturer is to desire demand by the consumer through commercials and consumer promotion.
The consumer will go to a retailer with a question. The retailer will approach P&G. At this way both the retailer and P&G will become more or less under pressure in order to take a certain product in the assortment.
Q3. Suggest a strategic international marketing plan for P&G for the period 2000- 2005.
P&G want to become a leader in the cosmetic industry.
Going global in cosmetics. Gain market, overseas as much as possible.
Gaining market in Japan for the cosmetic industry will be profitable in a long-term for P&G. This has to do with two reasons. Firstly, Japan has a young population. The company targets now more young people. Secondly, the prices in Japan for the cosmetics are lower than in Europe. When you want to benefit of a big profit in future, you should start asking low prices for your products in order to attract more consumers.
Will be very high, because of volume producing it will save costs and the presence of a young population in Japan.
Will be lower in the first place, because of the high costs for the launching of the cosmetics. Nevertheless, that will be make up within a year, because of the very suitable choice of the market.
Market penetration and coverage,
P&G launch an existing product in its domestic market into a new market. We can count the market penetration for Japan with the following formula:
Market penetration = ————————————–
For Japan, this will be as stated as follow:
A very high penetration grade for Japan, that means at the same time a huge market coverage.
The company will carry on its growth. It has the possibilities to carry it out. It should use its advantages before the competitors start to gain market in Japan.
Marketing Audit and Swot Analyse see question 1.
Here we have to carry out the strategies we already made before. We should do this according to the marketing mix. P&G have to divide the tasks for the projects and point out the persons who will be responsible for those projects. After this, we can give concrete form to action plans. The brand name has an important role by purchasing of consumers for a certain cosmetic. P&G have to position its cosmetics then very strong. It must have a positive distinguished character. To manage this, it should use the best media for ads and commercials for the right target group. Central is here: Young people would like to be older and old people would like to be young.
Budgeting could be used as part of the tactical plan. The best way to make sure that a planned investment or launch of a new product is going to benefit the company is budget every aspects of the company including the new plans. Many articles and books have been written about it. Starting with the sales budget and then moving on to the production budget, the direct and indirect costs as well as fixed and variable costs are going to be included. The aim of this process is to create a budgeted (predicted) balance sheet that will be use later in the process. ‘What if’ situation could be used as well. Budgets are going to be compared to the actual and real figures in order to achieve the best results. In some case budgets are also use for other purposes such as control.
When we compare the achieved results with the formulated objectives, we can see if the plan has succeeded. In addition, a comparing between times of the marketing spending and –results with the drawn-up budgets and with the predicted cash flow, profit or other financial indicators can motivate to corrections. Including the employees in the setting of the budgets could bring more motivation. On the other hand, this approach could lead to lower budgets level. The controls and achievements for both the employees and top managers could be improved.
The mission of P&G is to become a leader in the cosmetic industry. Most of the important objective is to going global in cosmetics. We can assume that P&G is ready to go global in cosmetics. It carries on its growth. The most powerful strength of P&G is its brand name. It can benefit of that in the promotion, positioning and pricing. The most important weakness is that the firm has lack of experience with cosmetics. To improve that it could train its sales persons, representatives, and it could improve the marketing department and the R&D. The opportunity of the company is to expand its assortment. A limited assortment is also one of its weaknesses. If the firm expand its assortment, it will get rid off that weakness. The budget will suffice to expand the assortment. The most dangerous threat is the growing competitive pressure. This means that P&G should quick attack the market in order to gain more market and position its products with its well-known brand name before the competitors. An advantage of P&G is that it could hold its prices lower than its competitors, because of the volume production which P&G will undertake. To launch its products in Japan will be a profitable choice for P&G. The company targets now more young people and Japan’s population is young. This does not mean that the older people should be ignored. One of the results of a marketing research is: Young people would like to be older and old people would like to be younger. If P want to gain as much as, possible market it should also provide in the needs of the older people. Japan is also very close to the United States of America; the domestic market of P. It will make it then much easier for all operations of the firm. P should than be in business with the retailer directly. It could enlist an agent, but it should eliminate the whole-saler. It will save costs with transporting the products and P could be easier and faster up to date in the needs and wishes of the buyers. The sales expectations are high in Japan. We have a market penetration of 67%. That means a huge market coverage. The profit expectations are lower in the first place, because of the high costs of the launching. That will make up within in a year. P budgets are part of their tactical and control plan. The controls cover every aspects of the company and allow top managers as well as each department to quantify how well they did in the included period. In case of something goes wrong, budgets will help identify where the problems are in order to take corrective actions.