Procter and Gamble P &  Term Paper
- Length: 15 pages
- Subject: Business - Advertising
- Type: Term Paper
- Paper: #11015604
Excerpt from Term Paper :
There is also an inability to distinguish the product lines from that of the competitors, although the company has succeeded effectively in creating brand recognition for their products. Customer loyalty and brand loyalty of the past cannot always be counted upon to create the necessary profitability for the company.
This is obvious in the case of P & G. that the marketing strategy that the organization uses for different products differ considerably. The financial culture within an organization also affects the marketing culture in any market. Many established companies in the market spend considerable amount of time identifying the best mediums that can be used to market the products to the customer. Peter Drucker stated that markets are not passive entities beyond the control of the entrepreneur or organization. Rather, they are interlinked. They can also be influenced. (Drucker, 1954)
G when establishing manufacturing plants for its products in regional markets selects countries that enjoy political stability and possess the infrastructure and logistic capabilities for business. Depending on the stability of the market and the purchasing power of the population, the company markets different brands to satisfy the needs. Brands are also marketed based on the specific culture and values of the region. For example, the infrastructure for logistics and transportation needs are developed in countries like the U.S. And Western Europe however countries such as Russia and the Eastern block nations that are still developing their market infrastructure face these issues.
Cultures and society also play an important role in the way that the products are accepted in the market. For example, some societies like that of the U.S. And Western Europe might place great emphasis on clean and sanitized homes and might be constantly searching for products that are able to provide these features to them. Some societies on the other hand might use indigenous products to satisfy these needs and might be less likely to purchase a commercial product. Increasing the company's position in these new markets requires the ability of the company to 'create' the need for these products within the population of the region.
In the past, P & G. controlled almost every aspect of the product development and launch. In recent times however, the company is allowing more autonomy to its business managers and its collaborators to allow for greater flexibility of operations. (Knowldge-futures, 2003) P & G. is also motivating researchers in the product development field by allowing them to interact at all levels within the company. This, it is hoped, can help interaction can offer a medium for brainstorming and discussion. This interaction is generally through the company's Intranet and this has helped the employees interact more effectively. As with any established and mature organization, the size and the structure of the organization can cause it to respond more slowly to changes in the industry. By addressing and identifying ways to allow product autonomy and decision making to individual product departments, P & G. can react more quickly to new product launches, finding innovative ways to 'repackage' and launch existing products. "Organization 2005," a management strategy plan is supposed to restructure the company from four regional business units to seven global units divided according to product category and also reduce the workforce employed by the company.
The company actively also investigates the use of technology for reducing product or process failures, improving packaging and logistically distribution networks as well as optimizing facility production. Technology required for the consumer product market has also been evolving and keeping pace with the developments in the manufacturing sector over all. The volume and the scope of this market ensure that even a small savings or benefit made can significantly impact the overall profitability of the company. In more advanced markets, P & G. is constantly investing in R & D. To ensure that the products and upgrade or improvements being manufactured are well received by the population. P & G. has also helped small manufacturers develop devices that can be used in conjunction with the products being manufactured and has a profit sharing arrangement with these companies. Profits on these devices have helped the company offset some of the cost of rising raw materials. (Berner and Symonds, 2005)
The Boston Consulting Group (BCG) model for P & G's products
It is clear from the history of P & G. that initial and existing growth was as a result if incorporating new products and new location. (Ghemawat, 2002) in the consumer product industry there were approximately 16,000 consumer products launched in 2000. (Guen, 2001) in the global market, it is also estimated that approximately 80% of the products have a life cycle of less than 24 months. P & G, in recent times, has built significant brands using technology innovation as a differentiating factor. The BCG study used here is based on P & G's current products and some of its competitor's products in the market.
Using the Boston Consulting Group (BCG) model, it was observed that the growth in business occurred by combining the strengths of good national brand products that had a reputation for quality and reliability and obtaining licenses and sole distributorship for these products helped P & G. gain market share. P & G. needs to also constantly identify new products -- this can be challenging as the time to market factor determines the acceptance of the product in the market.
Product life cycle management and pricing strategies also help establish the product in the market. The tolerance of the market and the price flexibility also impact product acceptance in the market. The BCG matrix model has been used below to identify the strategies used for marketing of products in any of the markets. While BCG analysis has some limitations (accurate information about the market share and the market rate is important for the accuracy of this model) this model help identify the market share and growth rate of software products in the market. The BCG model also places great emphasis on market share and market growth. The BCG model can provide a clear indication of which product require resource-allocation to capture the market (rising stars) and products where any additional investment may not be necessary (cash cows). This model will also identify products (dogs) that the company markets that have not taken off as expected or those that do not generate enough of returns on marketing and support revenues that P & G. has made.
The Boston Consulting Group (BCG) Matrix (NetMBA, 2005) can become a useful tool for an organization. As the BCG model is always compared to the leader in the market, P & G. can identify other companies that are better in any specific market. Thus they can identify the strengths and weakness of that company in relation to their own. The BCG model makes the assumption that an increased relative market share for P & G. will increase the cash flow that P & G. observes. Question marks can be challenging. The fate of many "question marks" (business that are growing rapidly and need large sums of money but do not have the necessary market share to generate cash) depends on the product managers and the decision maker's strategy and planning. How companies decide to deal with question marks often determine the move of the question mark to either a cash cow or a dog. Cash cows are the best type of company product. These generate revenue for the company, which can be used to convert the question marks to the next cash cows.
The Boston Consulting Group (BCG) model can help identify areas where products may be failing. Additional, root cause analysis may help business units within the organization identify problem areas and constraints that are hurting the business. Allocation of resources in problem areas may help many of them stabilize and then generate profits. BCG cannot identify how products help or hurt each other. Consumer product sales often display high levels of cannibalism and sacrificing one product's success to manage another can pose a challenge.
The demographics of the population might also influence the products that are sold in the region. Asia and Southeast Asia, for example, place great emphasis on beauty products that increase the fairness of skin and as such many of the advertisements of the company emphasis on products that help achieve these results. The ability of the company to understand the local needs has help they tailor the same product to different markets.
Detergent "form" changes depending on the market in which it is sold. In societies that depend on washing machines, the use of liquid and powder detergents is common. There are some societies that still wash clothes by hand. For these societies, the company manufactures and distributes bar soap that can be used for the process of soaping the clothes. The company also addresses the needs of the various age strata of the population marketing different products…