Marketing Mix of Procter & Gamble
Procter & Gamble was incorporated in Ohio in 1905. However, the original business upon which P&G was built was founded in 1837 by William Procter and James Gamble. P&G offers a large range of consumer packaged goods. Today, its products sell across more than 180 countries and territories. Its business is divided into five reportable segments including Beauty; Grooming; Health Care; Fabric & Home Care and Baby, Feminine & Family Care. Largest market for Procter and Gamble is United States which accounts for 41% of its revenue. P&G is an innovative brand whose focus is now only on 10 product categories. This has helped the brand concentrate on fewer areas which are most profitable for it. The focus is on innovation to generate higher sales and revenue. Every year the brand spends a large sum on R&D as well as marketing. Its presence in the emerging markets has also risen impressively. The company uses a variety of channels to reach its customers globally. Procter & Gamble has maintained a strong image as a consumer goods brand and enjoy high customer loyalty. This is a discussion of the four P’s in its marketing mix including product, place, price and promotion.
P&G owns a large portfolio of around 65 brands. In the recent years, its focus was on portfolio transformation. Now, the company is focusing on ten product categories only which include baby care, fabric care, family care, feminine care, hair care, home care, grooming, personal health care, oral care & skin care personal care. Some of the most famous brands in its portfolio include Gillette, Olay, Old Spice, Oral B, Vicks, Head & Shoulders, Pantene, Tide and Ariel. Moreover, the brand has focused on innovation to make continuous improvements to its products and marketing programs. Its fabric and home care products accounted for the highest part of its sales in 2018 followed by baby, feminine and family care products. Many of the brands in its portfolio are highly popular and enjoy high level sales and customer loyalty across the world.
Procter and Gamble is a global brand based in Cincinnati, Ohio. Its products sell across more than 180 countries and territories. The company uses several channels to reach its customers. It sells its products primarily through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores and pharmacies.
Apart from its large and distribution network, the company has manufacturing sites located all over the world. In US, it owns and operates 25 manufacturing sites which are located across 19 states. Apart from that, it also owns and operates 85 manufacturing facilities across 37 more nations. It manufactures beauty products at 24 of these locations and grooming products at 20, health care at 18, fabric and home care at 41 as well as Baby, Feminine & Family Care at 39. Its principal regional general offices are located in Switzerland, Panama, Singapore and China. In this way, the company has managed a strong global presence.
The company has adopted a market oriented pricing strategy. It has generally priced its products according to the competition. However, in the recent years, due to the changing market dynamics, it has decided to increase the prices of some of its products. However, the consumer goods sector has grown highly competitive and the rivals use high discounting to attract customers. Based upon the current market dynamics, P&G cannot raise prices heavily. Discounts and free products are a common method used in consumer goods sector to grab share from rivals. However, key economies including the U.S. economy have seen strong performance.
Healthy consumer spending and strong economic performance have led to P&G increasing prices modestly on some of its brands including Pampers, Bounty, Charmin and Puffs brands. Most of them will see a 4 to 5% price increase. While costs of raw materials have kept rising, consumer gods brands have continued to overcome weak demand. Apart from it consumer goods companies are facing higher competition and pressure from retailers to lower prices. However, P&G introduces any price increase cautiously since it can lead to uncertainty and can impact demand and volume.
The company uses a mix of traditional and modern marketing methods and channels to promote its brands and products. It uses its online and physical presence for the promotion of its products. Apart from trade shows and print advertising, the company uses online advertising and its own website as well as the social media channels for promotion of its brands. In 2018, P&G spent 7.1 Billion Dollars on advertising. During the last five years, its advertising budget has remained between 7 and 8 Billion dollars. Due to the heavy competition in the consumer goods industries, brands spend a large sum each year on marketing. P&G also uses discounts and coupons for promotions. Apart form that e-commerce channels act as both sales and marketing channels for the company. TV and print advertising are also used aggressively by consumer goods brands including P&G for promotions.
P&G is a leading consumer goods brand of the world. It recorded a net sales of 66.8 Billion dollars in 2018. However, the consumer goods industry has grown highly competitive and brands are aggressively spending on innovation as well as marketing. The company mainly uses a competitive pricing strategy for the marketing of its brands and products. However, due to better performance of the US economy and healthier consumer spending, it has decided to modestly increase the prices of some of its products. On some of its main products, it has decided to raise the prices by 4 to 5%.
P&G has achieved its market leading position by focusing on a portfolio of key products which is limited to 10 product categories and 65 brands. To achieve superior growth and better profit margins, it is focusing on innovation and marketing efficiency. After 2008, it achieved the highest net sales in 2014. However, due to changing market dynamics and increased competition, the brand is dealing with several new forms of challenges that will require it to make strategic changes and better use its operational infrastructure to achieve superior results.
- Procter and Gamble Annual Report 2018