What are Procter & Gamble’s business models (2)

The development history of Procter & Gamble

Candle maker William Proctor and soap maker James Gamble were from England and Ireland respectively. They initially settled in Cincinnati, where they first met through their marriages to sisters Olivia and Elizabeth Norris. Their father-in-law, Alexander Norris, suggested that his two sons-in-law become business partners. So on October 31, 1837, Procter & Gamble was born.

Between 1858 and 1859, sales reached $1 million. About 80 employees were working at P&G at the time. During the American Civil War, the company won contracts to supply soap and candles to the Union Army. In addition to the increased profits experienced during the war, military contracts introduced P&G products to soldiers from across the country. [5]

In the 1880s, P&G began to introduce a new product to the market, a cheap soap that floated on water. The company calls it "Ivory Soap". William Proctor's grandson, William Arnett Proctor, initiated a profit-sharing plan for the company's employees in 1887. He correctly assumed that by giving workers a stake in the company, they would be less likely to strike.

As demand for its products outgrew the Cincinnati facility's capabilities, the company began building factories in other parts of the United States. The company's leaders began to diversify their products and in 1911 began producing Crisco, a practical ghee composed of cottonseed oil mixed with cottonseed stearyl. In the 1920s and 1930s, due to the popularity of radio, P&G also sponsored several radio programs. Therefore, these programs often become commonly known as "soap operas".

The company subsequently built factories in other countries and moved the production and sales of its products outsourced. In 1930, it acquired Thomas Hedley Co., headquartered in Newcastle upon Tyne, England. ), becoming an international company. Following this acquisition, P&G has maintained close ties with the North East of England. Over time, P&G launched many new products and brands and began venturing into new areas. P&G launched Tide laundry detergent in 1946 and Prell shampoo in 1947. In 1955, Procter & Gamble began selling the first toothpaste containing fluoride, Crest. In 1957, the company again acquired the Charmin Paper Mill and began producing toilet paper and other paper products. Procter & Gamble once again focused on the laundry products industry, launching Downy fabric softener in 1960 and Bounce fabric softener in 1972. One of the most revolutionary products on the market was the company's Pampers, first trial-sold in 1961. Prior to this, disposable diapers were still not popular. Although Johnson & Johnson developed one called Chux, babies still always wore cloth diapers. This was actually because such diapers leaked and did not fit properly. , and may break. Pampers offer a convenient option but add more environmental costs in terms of waste disposal.

Procter & Gamble acquired a number of other companies, diversifying its product lines and significantly increasing profits. These acquisitions include Folgers, Norwich Eden Pharmaceuticals (maker of Pepto-Bismol), Richardson-Vicks, Noxell's Noxzema , Shulton's Old Spice, Max Factor and Iams, etc. In 1994, P&G made headlines for its huge losses on its leveraged interest rate derivatives position, and subsequently sued Bankers Trust; what was testified in court threw their corporate management into a twilight zone. In 1996, Procter & Gamble made headlines again when the U.S. Food and Drug Administration approved a new product developed by the company, Olestra. Also known as Olean, Olestra is a low-calorie alternative to fat in potato chips and other snacks.

Procter & Gamble has expanded greatly throughout its history, but its headquarters remain in Cincinnati.

In January 2005, P&G announced the acquisition of Gillette, becoming the world's largest consumer goods company (Unilever is second). P&G added brands such as Gillette razors, Duracell, Braun and Oral-B. The acquisition was approved by the European Union and the Federal Trade Commission on the condition that some duplicative brands be divested. So P&G agreed to resell its electric toothbrush brand, SpinRush, and its business to Church & Dwight. It also sells Gillette's oral care toothpaste brand ?Rembrandt?. Deodorant brands Right Guard, Soft&Dri and Dry Idea sold to Dial Corporation. The company officially merged on October 1, 2005. Liquid Paper, Gillette Stationery Division, and Paper Mate were sold to Newell Company. In 2008, P&G also entered the recording industry and sponsored Tag Records, a subsidiary of TAG Body Spray.

P&G's dominant position in many categories of consumer products makes its brand management decisions worthy of study. For example, Procter & Gamble's decision-makers must consider that its acquisitions may encroach on the market of another of its brands.

On August 24, 2009, Irish pharmaceutical company Warner Chilcott announced that it had acquired Procter & Gamble’s prescription drug division for US$3.1 billion.

In 2015, P&G announced that it would accept a US$12.5 billion acquisition proposal from Coty, the world's largest perfume company, and merge its 43 beauty brands, including perfume, hair care and cosmetics, into Coty. The deal covers Max Factor, Cover Girl, Wella hair care products and fragrance brands including Gucci and Hugo Boss.

Departmental composition of Procter & Gamble

Customer Business Development: front-line sales department, directly negotiating business with supermarkets such as Carrefour and Wal-Mart;

Market research Department Consumer & Market Knowledge: Carefully study customers and markets, provide data and analysis decision support;

External Relations & Legal Department: Responsible for public relations and brand image management;

Finance & Accounting: Maximize the interests of shareholders;

Human Resources: Create and maintain business growth and competitive advantage through employees, organizations, systems, and culture;

Information & Decision Solutions: Provide decision support based on data and information systems;

Marketing: Responsible for brand promotion and marketing;

Products Product Supply Department: Responsible for production and logistics, ensuring that the right products are delivered to the right place at the right time;

Research & Development Department: Responsible for product R&D and innovation.

Design Department: In order to create a core value brand, we are responsible for product brand design and various international event designs.

Procter & Gamble’s brand strategy

A single brand extension strategy facilitates the unification of the corporate image, the concentration of funds and technology, reduces marketing costs, and is easy to be accepted by customers, but a single brand is not conducive to the product Extension and expansion, and a single brand will prosper and suffer. Although multi-branding has high operating costs and high risks, it is flexible and conducive to market segmentation. The company name P&G Procter & Gamble has not become any product or trademark. Instead, it operates according to market segmentation into several major categories such as shampoo, skin care, and oral care, each focusing on the brand.

In the Chinese market, the soaps are Safeguard, the toothpastes are Crest, the sanitary patches are Safeguard, and the shampoos include Rejoice, Pantene, and Head & Shoulders 3. brand. There are 9 brands of laundry detergent, including Tide, Bilang, Laundry, Ocean Duo, Porter, and Century. If you ask which company in the world has the most brands, it’s probably Procter & Gamble. The frequent attacks of multiple brands enable the company to establish a strong image in the minds of customers.

Differentiated marketing: The multi-brand strategy operated by P&G is not to simply label a product with several trademarks, but to pursue the differences between different brands of similar products, including functions, packaging, and publicity. and other aspects, thus forming the distinctive personality of each brand. In this way, each brand has its own development space and the market will not overlap. Different customers want different combinations of benefits from products. Some people think washing and rinsing capabilities are most important. Some people think making fabrics softer is most important. Some people want washing powder to have fragrant smell and mild alkaline characteristics. So P&G took advantage of the 9 market segments of laundry detergent and designed 9 different brands. Use one product with multiple brands to divide multiple markets in terms of functions, prices, packaging and other aspects to meet the needs of various customers at different levels and with different needs, thereby cultivating consumers' preference for a certain brand of the company and improving their loyalty. Due to diminishing marginal income, it is difficult to increase the market share of a single brand from 30% to 40%. However, if a new brand is established, it is relatively easy to obtain a certain market share, which is impossible for a single brand.

Advertising is highly targeted: toothpastes and soaps mostly target children who are susceptible to bacterial infection, need protection and like to imitate, making many advertising slogans become social buzzwords. Laundry detergent uses low price and high quality as its trump card for savvy housewives. Head & Shoulders’ advertising strategy is an all-star lineup in order to attract star-struck fans. Sassoon chooses cool unknown blonde beauties. Emphasizing style and individuality, what we want is young people who pursue fashion and alternative styles. "Rejoice" is for smoothness, "Head and Shoulders" is for anti-dandruff, "Pantene" is for nutrition, "Vassoon" is for professional hair care, and "Clairol" is for Procter & Gamble to defeat Unilever, Germany's Henkel, and Japan's Kao and spend huge sums of money. The brand purchased from Bristol-Myers Squibb is mainly positioned for hair dyeing, in order to build a complete product line for hair care and hair dyeing. P&G's market segmentation is largely not based on function and price, but on giving consumers different psychological cues through advertising appeals.

P&G's principle of internal competition is: If there is still room for a certain type of market, it is best that those "other brands" are also P&G products. Therefore, we not only set up brands for different types of products, but also engage in brand wars within the same product type. Shampoos sold in China include "Rejoice", "Head and Shoulders", "Pantene", "Clairol", "Runyan", "Vassoon" and so on. Rejoice, Head & Shoulders, and Pantene have similar effects and functions, and their advertising appeals and price points are basically the same. Ordinary consumers cannot distinguish them except for color. If we consider the market segments, there is no need at all. However, the fierce competition among several major brands has made other companies daunted. Its new brand, Ekalu, uses herbs as its signature. Its advertisements do not emphasize that it is a P&G product and do not take advantage of P&G's brand advantages. Because the market it targets is P&G. Without intervention, the risk is greater. If something goes wrong, it can be discarded without affecting P&G as a whole.