- Acknowledgment
“Perseverance, inspiration and motivation have always played a key role in the success of any venture”. So hereby, it’s my pleasure to record thanks & gratitude to the persons involved. First of all we give thanks in anticipation to our respected teacher Sir Nabeel Nisar, who gave us opportunity to apply concepts of marketing on a multinational organization and critically analyzing that how they are working and what are the flaws in it.
Table of Contents
CHAPTER PARTICULARS PAGE NO
TITLE PAGE
1 ACKNOWLEDGEMENT 1
2 EXECUTIVE SUMMARY 3
3 INTRODUCTION
3.1 INTRO/HISTORY OF P&G 4
3.2 MISSION STATEMENT
4
3.3 VISION STATEMNET 4
3.4 BRANDS 6
4 MAIN BODY
4.1 PESTLE ANALYSIS
6
4.2 MARKETING MIX 8
4.3 PORTER FIVE FORCES MODEL 10
4.4 HOFSTEDE MODEL 12
4.5 SWOT ANALYSIS
14
5 RECOMMENDATIONS 15
6 CONCLUSION 15
7 REFERNCES 16
- Executive Summary:
“P&G” Procter and Gamble established by two common men named William Procter and James Gamble in 1837. First commenced its operations in US and now operates in round about 80 countries with more than 280 brands. P&G entered Pakistani markets in 1991 with headquarter located in Karachi.
The major business of P&G in Pakistan is Consumer Products comprised of seven to eight well-known brands like Ariel, Safeguard, Vicks, Pentene, Head & Shoulder, Wella and Pampers. By Analyzing P&G with respect to different models we have observed that P&G products portfolio, R&D efforts, vast distribution network, measures to reduce waste and taking social responsibility with the help of recycling have made them one of the market leader in Pakistan. While on the other side P&G also have some fragile aspects through which their market share has decreased. Issues in Product mix, environment and political instability and highly competitive market are prominent in these aspects. Issues in Product Mix lies in especially product (more feminine products), price (relatively higher than competitors) and promotion (unethical marketing).
Despite having these issues they are able to attract many customers but if they can address these issues as we have recommended specially by reducing prices, focusing on man’s products and taking measures to eliminate Counterfeits they may arise as one of the leading MNC in Pakistan and will be able to construct a more strong image than its competitors in the minds of customers.
- History/Introduction
P&G was founded in 1837 by two persons named William Procter and James Gamble who were candle-maker and soap maker by profession respectively .P&G is US Company which is now operating globally and providing variety of product in all over the world. P&G’s headquarter is located in Ohio, USA. P&G is operating in almost 80 countries with 280 brands. P&G is among the top 10 companies of the world. It started its operations in Pakistan in 1991 with headquarter located in Karachi. P&G is providing 8 product to Pakistani consumers. P&G Pakistan is operating with advanced and high speed digital networks. P&G Pakistan is almost employing more than 4000 jobs.
3.1 Mission statement:
“We will provide branded products and services of superior quality and the value that improve the lives of world consumers, now and for generations to come. As a result consumer will reward us with leadership sales, profit and value creation, allowing our people, our shareholder and the communities in which we live and work to prosper”
3.2 Vision statement:
“Be, and be reorganized, as the best consumer products and services company in the world”
3.3 Brands:
- Main Body
4.1 PESTLE ANALYSIS
It is the framework that uses to scan external environment in which firm operates. PESTLE include following factors. Kotler claims that it is a useful tool for understanding market growth and decline. PESTLE analysis is useful when business is going to launch a new product or service or entering into a new market or selling into a new country or region.
Political
Pakistan face unstable political conditions till its birth. This leads to change in policies by every government. So this may be a problem for P&G to operate in such a condition.
As Pakistan faced serious political conditions in recent days so this cause distribution problem for P&G to transfer their products in all over country
Change in government also causes change in tax structure that may leads to fluctuation in prices of P&G products.
Economical
Recently inflation rate decreases so this may leads to increase in consumption of P&G products.
Exchange rate also has impacts on P&G products. As rupee is appreciating in recent days so this may have positive impact on P&G
Fluctuations in oil prices also have reasonable impacts because of huge logistics wings of P&G.
Social
People are more health conscious so people may change their priorities.
Difficult for P&G to target all cultures as different cultures living in Pakistan
Family based living style have positive impacts on P&G as they offers products in such a way like buy one get two free
Technology
As improving technology leads P&G to communicate with its suppliers in a better way.
As people are more rushing towards online technology so P&G can entertain queries of their consumers
Due to availability of database technology P&G can maintain their records and information regarding their employees.
Legal
Regulatory body effect on overall process.
Changes in imports laws increase in tariffs.
Changes in MNC's operations laws.
Environmental
Change in weather may fluctuate sells of P&G because some products are preferable in summer and some are in winter
Pakistan face natural catastrophes like floods so this may effect distribution channel of P&G.
Several measures to make environment more healthy and adapting social responsibilities with the help of recycling e.g. P&G claims that they either recycle or reuse 95% of its scrap.
4.2 Marketing Mix
Product:
Ariel: Ariel was the first product of P&G in detergent market of Pakistan. Following are the issue in this product; high quantity of bleach which weakens the clothes and ultimately decrease the life of clothes. No variety i.e. Ariel is not available in liquid and detergent bars.
Head & Shoulders: The major issue in this product is that though it is an anti-dandruff shampoo but the time you leave using it then it again causes dandruff in your hairs. Secondly, it also causes hair loss said by many consumers.
Vicks Vaporub: “Vicks VapoRub ointment is a mentholated topical cream manufactured by Vicks”. Issue in this product is that it causes breathing problems. There is another thing that this is mostly preferred to use in winters because there is a concept in people’s mind that it is only applied in winters. Further when it is applied it causes sweat that’s why most people don’t use it in other seasons.
Promotion:
Ariel: Though Ariel used effective campaigns like “MAA” and “Longest Kurta” but the issue is that they used unethical marketing in one of their ads. When they were comparing their product with competitors they showed blurred image of competitor’s product. They are confused in positioning i.e. they don’t have clear target market. They should make a clear segmentation and then they can launch it with different sizes for consumers.
Head & Shoulders: In their promotional ads they claim that the product is 100% dandruff free but actually this is not the case and in this way they are deceiving their customers.
PUR: PUR which is a water purifier, had no celebrity endorsement. Further it lacked promotions or we can say limited to print media only. Moreover they are targeting only BOP (Bottom of Pyramid).
Place:
Vicks Vaporub: As described earlier that it was banned in many western countries because of health issues, so at that time availability problem was also occurred in Pakistan. And still is not available at many retail stores.
Wella: Wella was established in 1880. Wella is the place where you can find hair color treatment. Most of professional people use Wella hair colors. Wella has the variety of hair related products which ranges from hair color to hair treatment. There is an issue with this product as it is not available everywhere or only available in mega stores.
PUR: In Pakistan PUR had availibility issue as well. Some shops preferred not to keep it or mostly expertss/NGO’s had the access of it.
Price:
Ariel: Price of Ariel are higher as compare to its competitors like surf excel and others as well. So they should reduce their price to capture more market share.
Head & Shoulders, Pantene: Prices of P&G Shampoos are relatively higher than Unilever shampoos.
4.3 Porter five forces model:
Every company wants to increase their profits by adopting different techniques and method. For this five forces model was developed by Michael E. Porter in1997, in this the five forces that can help to make profits and can help to determine the stopping competitive market are:
How can this porter five force model help P&G to make it more competitive or help to analyses its competitors are below defined.
Threats Of new entry
The famous name of Procter and GAMBLE’s creates itself challenge for new entry, since P&G possess portfolio of products and important amount of market share in the world, and new entry needs heavy amount of investment to compete the P&G because P&G itself have invested a lot of amount and doing expensive R&D that make new entry impossible. So the new entry is low for this industry but this low entry depends on which business segment threats comes.
Threats of substitution
There are high chances of substitution of P&G’S all products that creates a very tough competitive environment. Safeguard substitute is lifebuoy, Dettol and Surf Excel substitute Ariel, so for this P&G should adopt new and innovative products and make price adjustment strategies according to the conditions of Pakistan, this can be achieved through by collaborative with customers and developing deep understanding needs.
Bargaining power of supplier
The supplier bargaining power is very much high because it is very costly to switch supplier. As P&G is comprises of huge investment so if they change their supplier they may require a lot of time and money which can disturb their whole supply chain, P&G has diverse product line which comprises of more and more suppliers for various products.
Barging power of buyer
Bargaining power of buyer is considerably high because buyers switching cost is almost zero because of large numbers of substitute is available, equality in product’s quality, very less difference in prices (other than Ariel), buyer is well aware of products. For example: Ariel users have almost zero switching cost if they shift to Surf Excel.
Threats of rivalry
There are round about 379 FMCGs operating in Pakistan but the major competitor of P&G are Unilever and Colgate-Palmolive because they are also offering the same product line in household, beauty and health care.
P&G has high threat of competition with local and regional competitor because P&G is selling its products in many diverse markets and industry segments.
4.4 Hofstede analysis of P&G:
As of July, 2014, the company operates in five Selling and Marketing Organizations (SMOs).When you have such diverse target markets you have to analyze every market separately in terms of their culture, values, behaviors of individuals and that’s where Geert Hofstede model helps you to understand these cultural differences, individuals behaviors and guides you how to cope with these differences. It assists MNCs in crafting overseas operating strategies. This model has five cultural dimensions which vary nation to nation. Let’s take a look on these dimensions of Pakistan and then try to link it with P&G.
Power distance:
According to Hofstede dimension this index reflects the link between power and inequality, Pakistan score is 55 which is modest number that implies the unclear or mix preference about Pakistan in this dimension. When it comes to P&G its power distance is on a low side because of mutual interdependency and employee empowerment which is a very good sign because now the trend of employee empowerment is increasing in Pakistan due to global competition and corporate needs. This is the reason why HAY GROUP ranked P&G among best companies for leadership.
Masculinity Vs Femininity:
This very aspect explains about the injected characteristics of female (caring and life quality) or male (competition, achievement, success) in the society. Pakistan score of this index is 50 which is exactly transitional. When we analyze this dimension in terms of P&G they are more towards feminine side, “HeForShe” movement, “MAA” campaign and brands like Always, Pentene, Ariel and Wella is the indication of this.
Individualism Vs Collectivism:
This dimension deals with the issue that whether people characterize themselves as I or we. Pakistan comes under collectivism society where people prefer to live in family rather than separately or individually. That’s why P&G mostly targeting the families which can be easily observed by their product line, advertisements and marketing campaign such as MAA campaign of Ariel, Head & Shoulder Family pack, family care by Safeguard, Pampers-UNICEF (one pack, one vaccine) and their Product line is also comprises of household products.
Uncertainty avoidance:
This dimension describes that how individuals interact with uncertainty and vagueness. Pakistan scores high in this index and thus shows high preferences in avoiding uncertainty. When it comes to P&G they have very pragmatic approach towards uncertainty globally but in Pakistan it seems bit different, at the time of high border tension between Indo-Pak, political instability and natural catastrophe P&G Deputy Manager, Saad Amanullah said, “the current situation has not impacted our business and there is business as usual. There is also no panic to increase inventories of imported raw material and we will continue to import as per requirement.” But company did go for stocking additional raw material after September 11 catastrophes in the US.
Long term orientation:
This element defines that society prefers to plan for long term or short term. Pakistan score shows intermediate preferences but Pakistani people are short term oriented that’s why P&G strategies also following this route by offering short term discounts, short term promotional offers (20% extra) and modifying their product’s packaging with the passage of time to magnetize customer.
4.5 SWOT ANALYSIS:
- Recommendations:
• They should try to come with more variety of products in Pakistan as its competitor Unilever is doing, make more products available or adapt such changes in their products to attract customer. (e.g. introduce Ariel in liquid form)
• They should avoid unethical marketing techniques. E.g. do not present competitor’s product as of low quality.
• Pakistan comprises of middle class and lower class where people are very price conscious so you have to maintain low prices or at least same prices as competitor to gain market share.
• As Pakistani people are very short term oriented so P&G must provide them with short Discounts and promotional offer with the passage of time.
• As we all know counterfeit is resulted from ineffective marketing strategies so they must take major steps to reduce counterfeit by effectively educating the customers.
• They must introduce some more man’s products because man sector is still very fresh and have potential for growth (beauty and health care products).
• Finally, we also recommend that they should re-launch PUR with new and effective marketing strategies because it has become the basic need now in Pakistan.
- Conclusion:
Procter and Gamble (P&G) one of the market leader of Pakistan in FMCG segment. By analyzing P&G with respect to different marketing models we can conclude that it has a good acceptable market share in Pakistan due to its products portfolio and decent marketing strategies. But they can increase their market share and can place a more repudiated image in the minds of customers if they are able to address these particular issues highlighted in this report with respect to their product portfolio and marketing strategies. Due to the nature of its products many competitors have emerged in the market providing consumers with lots of choices and dividing the market in chunks which makes competition tenser. That’s why P&G have to implement more effective marketing strategies to maintain stability, growth and providing value to their customers better than their competitors.
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