Case Study About Procter and Gamble Company Essay

Procter and hazard order Case AnalysisThis type involve analysis focused on Procter and Gamble Companys trade plans and strategic options on its light-duty liquid brands (beta-lipoprotein). Procter & group A Gamble is the worlds largest producer of residehold and hygiene harvest-feasts. By 1981 P& adenosine monophosphateG operated in 26 countries and sales intacted $11.4 cardinal with 90 consumer and industrial products manufactured in the United States. The case study provided some very detailed data analysis and reports in name of the company history and background, organizational structure, key factors to its success in the martplace, the family among advertising, sales, product development (PDD), manufacturing, and finance surgical incisions, and its light-duty liquid brands ( low-density lipoprotein). Highlight of Company History, Organization, and Key Success Factors * In 1890, Procter & Gamble Company was embodied with a cap stock value of $4,500,000. The neat allowed the company to skeletal system plans, buy youthful equipment, and develop naked as a jaybird products. * Sales mountain duplicate every 10 yrs.* Success factors are 1) dedicated and talented adult male resources, 2) a reputation for h angiotensin-converting enzymesty and trust, 3) prudent and conservative management philosophy, 4) pattern in superior quality of products at competitive prices, and 5) substantial selling expertise. * The company organized its products in terms of 8 categories 1) package lash and detergent, 2) bar soup and household cleaning, 3) toilet strongs, 4) paper products, 5) food products, 6) coffee, 7) nutrient Service and lodging products, and 8) special products. * Brand group planned, developed, and directed the total market effort for its brand through development of the annual marketing plan.* Brand group worked closely with other four lines. Sales department provided important perspective on consumer and trade promotion acceptance, stock want to support competitive set. * Product development department ensured continued emolument on brands quality through extensive consumer and science lab tests. * Brand group worked with manufacturing department on detailed brand passel estimates. Their interaction was crucial to new-sprung(prenominal) product development process. * Based on the volume and marketing expenditure forecasts provided by the brand groups, financial/ apostrophize analyst developed and fed back brand profit and pricing analyses as well as profit and rate of impart forecasts on new products and promotion.Using the information, Mr. Chris Wright, associate advertising manager of the Packaged muck and Detergent Division (PS&D) of the Procter & Gamble Co., was trying to agree how the division could attach volume of its light-duty liquid detergents (LDLs), capture to a greater extent allocates from the market, and increase long or short-term profit. The three options that Wright cons idered are new brand foundation, product improvement on an breathing brand, and an increase in marketing expenditures on existing brands. Each option is analyzed as follows New Brand IntroductionPros* P&Gs current LDL played a leading role in the market place. The success of its Dawn brand clearly indicated a likelihood of another new brand with a distinctive receipts could increase further P&Gs LDL Volume. * Wright precept new product potential in all three market segments (performance, mildness, and price brands) * For performance brand, market research indicated that 80% of U.S. households scour and chaparral their dishes at least once a week. H-80 invented by new engineering science as a high-performance product which can fulfill a clear consumer need based on research. The 4-week blind in house use test of H-80 and established competitive LDL, was a strong index of its potential success. * For mildness segment, a new brand which differentiates its mildness advance can help the declining segment recapture the consumers. * Although P&Gss price segment had been in decline, it was expected to modify at its current share level due to the change magnitude consumer aesthesia to price resulting from the discourage state of economy. * Wright considered the potential of producing a brand with check bit performance benefits to existing price brand competition at a appeal that allowed PS&D to maintain a good profit. Cons* The new brand would require $20 cardinal in capital coronation to cover additional production capacity and bottle molds. * The new LDL brand also needs at least $60 million for first-year introductory marketing expenditures. * The introduction of new product would take about two years plus one year if test market was needed. So three years indicated that the profit return would be a long-term pointment. Product Improvement on an existent BrandPros* Unlike new opportunity, product improvement such as introduction of H-80 formula to one of the current LDL brands would require slight 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, joyfulness brand could cut its cost of goods by $3 million per year if this new formula was introduced. The brand relaunch would cost $10 million in marketing expense with no capital investment. Cons* Although thither is a data back up how H-80 formula would capture the market, there was lack of data of the introduction of H-80 formula to the existing current LDL brands. * If consumers have already established a certain image of Joy brand group, can the change of formula attract new consumers and preserve 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 Marketing Expenditures on Ex isting BrandsPros* Since the market has been static with the LDL category, Wright might avoid increasing the capital investment and reduce investment risk. * Wright could expand the overall profits by capturing larger market shares apply extra advertising and promotion techniques. Cons* There was lack of data supporting the increase in marketing expenditures on existing brands could produce the in demand(p) 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 true in the depressed state of economy. RecommendationsThe recommendation was to go with the combined feature of having both long-term and short-term investment. Introduction of a new product such as H-80 appeared to be a too costly investment. In such a depressed state of economy, it was not a smart decision to invest $80 million for the new product. Out of $80 million, $60 million was only used to cover the cost of the first year, not to credit rating incremental cost for the next few years. The product would require 3 years in order to be introduced to the market. Using the cost/benefit analysis, I think 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 minimum 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 in effect(p) plans to tackle the charging and competitive market. Especially the case also indicated that increased marketing expenditures could be approved almost immediately if the plan wa s financially attractive.