Case Study About Procter and Gamble Company Essay

Procter and happen gild Case AnalysisThis case playing field analysis focused on Procter and bump Companys foodstuff plans and strategical woofs on its light-duty liquid betrays ( low-density lipoprotein). Procter & Gamble is the worlds largest dumbfoundr of sign of the zodiac and hygiene results. By 1981 P&G operated in 26 countries and sales amount $11.4 billion with 90 consumer and industrial growths construct in the United States. The case bailiwick provided around very detailed entropy analysis and reports in terms of the conjunction history and background, organizational structure, key factors to its supremacy in the securities industryplace, the relationship among advertising, sales, product education (PDD), manufacturing, and finance departments, and its light-duty liquid blots (LDL). high spot of Company History, Organization, and Key victor Factors * In 1890, Procter & Gamble Company was incorporated with a bang-up stock value of $4,500,000. The o utstanding allowed the company to build plans, buy modernistic equipment, and develop mod products. * gross revenue muckle doubles every 10 classs.* Success factors are 1) dedicated and talented pitying resources, 2) a reputation for h unitysty and trust, 3) prudential and conservative management philosophy, 4) innovation in superior quality of products at combative charges, and 5) substantial trade expertise. * The company create its products in terms of 8 categories 1) encase soap and detergent, 2) bar soup and rest home cleaning, 3) toilet goods, 4) paper products, 5) food products, 6) coffee, 7) food Service and lodging products, and 8) special products. * disfigurement name crowd planned, developed, and directed the total selling effort for its defacement by means of outgrowth of the annual marketing plan.* Brand assemblage worked closely with other four lines. Sales department provided important perspective on consumer and trade promotion acceptance, stoc k indispensableness to support competitive pricing. * Product festering department ensured continued improvement on tags quality through extensive consumer and laboratory tests. * Brand group worked with manufacturing department on detailed deformity masses estimates. Their interaction was crucial to unused-fangled product development process. * Based on the volume and marketing expenditure forecasts provided by the brand groups, financial/cost analyst developed and fed back brand simoleons and pricing analyses as substantially as profit and rate of counterpunch forecasts on novel products andpromotion. utilize the information, Mr. Chris Wright, colleague advertising manager of the Packaged pocket and Detergent Division (PS&D) of the Procter & Gamble Co., was nerve-wracking to determine how the division could cast up volume of its light-duty liquid detergents (LDLs), capture more(prenominal) than shares from the market, and annex long or short profit. The troi ka options that Wright considered are rising brand knowledgeability, product improvement on an exist brand, and an maturation in marketing expenditures on alive brands. Each option is analyse as follows New Brand presentationPros* P&Gs contemporary LDL played a ahead(p) role in the market place. The achiever of its Dawn brand clearly indicated a likelihood of another invigorated brand with a distinctive benefit could increase further P&Gs LDL Volume. * Wright saw new product potential in all three market segments (performance, mildness, and footing brands) * For performance brand, market research indicated that 80% of U.S. households scour and invalidate their dishes at least once a week. H-80 invented by new technology as a high-performance product which female genitaliaister fulfill a clear consumer halt based on research. The 4-week blind in house use test of H-80 and constituted competitive LDL, was a strong indication of its potential success. * For mildness segment, a new brand which differentiates its mildness benefit lavatory help the declining segment recapture the consumers. * Although P&Gss expenditure segment had been in decline, it was expected to poise at its current share level due to the change magnitude consumer sensitivity to price resulting from the gloomy state of economy. * Wright considered the potential of producing a brand with parity performance benefits to existing price brand competition at a cost that allowed PS&D to maintain a good profit. Cons* The new brand would require $20 star gazillion one thousand thousand million in capital investment to check additional production capacity and nursing bottle molds. * The new LDL brand overly needs at least $60 million for first-year introductory marketing expenditures. * The introduction of new product would hold up about two days add-on one year if test market was needed. So three years indicated that the profit return would be a long-term investment. Pr oduct Improvement on an alive BrandPros* Unlike new opportunity, product improvement such as introduction of H-80 pattern to one of the current LDL brands would require less investment. It would cost $20 million for the improvement and $10 million as incremental marking expenditures, which was $50 million less than a new brand. * On top of it, Joy brand could cut its cost of goods by $3 million per year if this new figure was introduced. The brand relaunch would cost $10 million in marketing expense with no capital investment. Cons* Although there is a selective information supporting how H-80 formula would capture the market, there was drop of data of the introduction of H-80 formula to the existing current LDL brands. * If consumers have already established a veritable 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 merchandise Expenditures on Existing BrandsPros* Since the market has been quiet with the LDL category, Wright might avoid change magnitude the capital investment and reduce investment stake. * Wright could expand the overall profits by capturing larger market shares using unnecessary 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 uncoiled in the depressed state of economy. RecommendationsThe good word was to go with the combined feature of having both(prenominal) long-term and short-term investment. Introduction of a new product such asH-80 appeared to be a too expensiv e investment. In such a depressed state of economy, it was not a ache decision to invest $80 million for the new product. Out of $80 million, $60 million was only used to sink in the cost of the first year, not to consult incremental cost for the next a few(prenominal) years. The product would require 3 years in order to be introduced to the market. Using the cost/benefit analysis, I compute 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 negligible 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 charg ing and competitive market. especially the case also indicated that increased marketing expenditures could be approved almost in a flash if the plan was financially attractive.