1. Procter & Gamble in Europe
Case Study # 9
Procter & Gamble in Europe
A roll-out launch
Group 5

2. Chantharas Kanchanakool
Group Members
Mauricio Gonzalez
Bui Thi Thuy
Chantharas Kanchanakool
Nina Krapf
Vincent Tenchavez
Julia Vassiljeva

3. Outline
P&G Case Background
Pan-European Introduction Strategy
Marketing Objectives
Roll-out Launch
Media Spending Budget
Europe-wide Introduction Program Implications

4. P&G Case Background
Vince

5. P&G Case Background
This case is concerned with the issue of international suppliers of consumer goods – that of the relationship between global or regional approaches.
This case examines the introduction of a new haircare technology into the European market by the US manufacturer Procter & Gamble (P&G).

6. P&G Case Background
Key Facts
P&G was founded in the USA in 1837 and is today’s larges manufacturer of packaged consumer goods.
More than 1/3 of P&G’s total profit is generated by its international operations, which are the fastest growing part of total business.
P&G’s basic principle: provide superior total value and meet basic consumer needs.

7. P&G Case Background
Key Facts
P&G is known for its legendary brand management system.
The need for marketing strategies from a European perspective arose in the 1980’s.

8. Pan-European Introduction Strategy
Mod

9. Pan-European Introduction Strategy
BC-18
- A technology that enables a combination of shampoo and conditioner in one product.
- Replacement of an old brand ‘Pert’ with ‘Pert Plus’ in the US. in 1986.
BC-18 going to Europe

10. P & G in Europe Pan-European Introduction Strategy
However, suppliers and brands were already crowded in Europe due to the differentiation in nationalities
The most important competitors of P & G were Unilever, Colgate and L’Oreal
Also there was a huge gap between the price classes: higher price for the same quantity

11. Pan-European Introduction Strategy
To balance a Pan-European strategy with local market needs:
- Closer coordination particular for the new brands
- Marketing strategies thought through from European perspective
- Euro-Brand Team brings out the concept of “Euro-Balancing”

12. Pan-European Introduction Strategy
The main question: under what brand name to introduce the product in the individual European markets?
Consumer research undertaken by testing 4 possible brands showed no significant differences result.
BC-18 should be introduced with a pan-European name suitable for all European countries.

13. Pan-European Introduction Strategy
Longer-term Marketing Objectives
- Compete with Unilever, Colgate and L’Oreal
- Increase its market share and revenues
- Gain recognition in European market and strengthen its position as a market leader

14. Pan-European Introduction Strategy
Other possibilities
- Pricing Strategy: whether premium pricing would be accepted by the European consumers
- Packaging: whether 250ml bottle of shampoo-conditioner would be accepted in the European market?

15. Marketing Objectives
Thuy

16. Short and long term objectives
Marketing Objectives
Short and long term objectives
The aim of Procter & Gamble is to become a leader in the European market of two in one hair products.
The first year objective is to attract new European customers who never used conditioner and customers from competing brands to shift to the use of conditioner and/or shampoo to BC-18.
The aim is to exert a pull on the population in order to create a new market niche inside the shampoo market and encourage the people to use the new BC-18.  

17. Short and long term objectives
Marketing Objectives
Short and long term objectives
Another main objective is to establish brand loyalty as this will encourage customers to continue buying the product and will enable them to become more familiar with the range of products available at Procter & Gamble.
The company wants to create brand loyalty, which is especially important, as this is the most difficult stage in the consumer's purchasing behaviour.

18. Short and long term objectives
Marketing Objectives
Short and long term objectives
The long-term objective is the continuation of the short-term objective i.e. establish a market share that will expand and gain in recognition.
Procter & Gamble will aim to increase steadily the market share of the market in Europe.
The penetration into new geographical territories would ensure that the company benefits from revenues and strengthens its position as a market leader.
This is particularly important, as competitors are quick to imitate the new developments (me too products).

19. Roll-out Launch
Mau

20. Roll-out Launch
Recommended in Europe:
There is "a steady growth of the shampoo market and the conditioner market"
Statistics show an increase in hair washing
Southern European countries have quite an underdeveloped conditioner market compared to the USA.
P&G should focus upon West Germany, Great Britain, France, Scandinavia and Benelux.

21. Roll-out Launch

22. Roll-out Launch
Objetive:
Attract new European customers who never used conditioner.
Decision criteria for this order:
Value (TDM)
Volume (MSU)
Use Per head

23. Roll-out Launch
Introduce a new product to the biggest market.
Not change their washing-hair customs.
Provide a developed product in the same that they are used to use (2 in 1).

24. Media Spending Budget
Nina

25. Country with the highest priority:
Media Spending Budget
Country with the highest priority:
France
Highest market share of shampoo within Europe – concerning value and volume of shampoo use
Low market shares of conditioner alone – still not yet totally accepted
Huge opportunities to catch the French market with a new product including shampoo and conditioner into one product – easy and convenient to use!!!

26. Possible media and promotion activities:
Media Spending Budget
Possible media and promotion activities:
Adds on TV
Adds on Web-pages
Adds on radio channels
Adds in newspapers
Product-sampling – household sampling, giving free samples together with other P&G-products

27. Media plan for the first year:
Media Spending Budget
Media plan for the first year:
Eight strong TV advertising months (April-November)
Seven strong Web-page advertising months (June-December)
Household sampling (50% of households- May-September)
“With P&G-product” sampling (January-March, October-December )

28. Media Budget for the first year (TDM):
Media Spending Budget
Media Budget for the first year (TDM):
TV-advertisement (4800)
Web-advertisement (2000)
Household-sampling (4200)
“With P&G-product”-sampling (4700)
Total Media Budget for the first year:

29. Promotion activities:
Media Spending Budget
Promotion activities:
Household sampling
“With P&G-product” sampling
Event sampling – going to fares or mass-events
Market sampling

30. Activities in the following years:
Media Spending Budget
Activities in the following years:
Eight normal TV advertising months (January-April, July-October)
Seven normal Web-page advertising months (February-April, September-December)
Household sampling (15% of households – March-August)
Display activities in hypermarkets or hairdresser’s shops

31. Media Budget for the following years (TDM):
Media Spending Budget
Media Budget for the following years (TDM):
TV-advertisement (2400)
Web-advertisement (1000)
Household-sampling (2100)
Display activities (2300)
Total Media Budget for the following years: 7800

32. European-wide Introduction Program Implications
Julia

33. European-wide Introduction Program
Assumptions (1)
Based on the U.S. marketing strategy:
1st year: 10 strong TV advertising months household sampling (60% of hh)
listing funds
2nd year: 10 normal TV advertising months
sample distribution (10% of hh) Display activities in supermarkets

34. European-wide Introduction Program
Assumptions (1)
Optimistic scenario – all capacity is in use
1st year MSU
2nd year MSU
Existing 200 ml US bottle is in use
Wholesale price 4.99 DM/200 ml

35. Profit/Loss statement
European-wide Introduction Program
Profit/Loss statement
TDM
Year 1
Year 2
Revenue
Production costs
44 000
88 000
Gross Profit
80 750
Overhead costs
11 200
22 400
Advertising costs
61 170
33 570
EBIT
8 380

36. European-wide Introduction Program
Other scenarios
A 6% discount is allowed during the first year, so that the company will still be in profit
The production should work at at least 88% of its total capacity to keep it profitable during the first year
A 19% increase in production costs would still keep the business in profit

37. European-wide Introduction Program
Decision
As there is no loss expected during the first 2 years, there is no need to modify the order of the local market entries
All target countries should be covered to seize larger market share in Europe

38. Procter & Gamble in Europe
Thank you!
Procter & Gamble in Europe
A roll-out launch
Group 5