Organizational Change Of Procter And Gamble Marketing Essay

In these ever changing and highly competitive markets, there has been a considerable amount of research carried out into new product development and introduction. A successful new product launch is believed by many to be the recipe to business or firm growth and profitability depending on their ability to identify the needs of customers and to quickly create products that meet these needs and can be produced at a low cost.

The next step is to analyse and develop the market plan. This is done by reviewing the 4Ps product matrix as a way to finding a unique position from which to create a competitive advantage for the product. Also, review the SWOT with Clients and utilize SMART technique to develop the written, working plan

Executing the plan and launching the product. This includes developing collateral materials, begin placement discussion with the first stage in the ideal channel, have enough discussion with as many different entities with a view to uncovering any previously undiscovered real objections. Review and improve plan as necessary with the new information, repeat until sold, and explore link extensions with new partners.

It should be noted that new product development and introduction plan is the first stage in the Product Life Cycle. It is created in stages, giving logical break points to force the decision to proceed or not based on what occurs at each stage.

Aim and Objective

The goal of this research paper is to present in a clear and detail way how the development and launch of household care products by Procter and Gamble (P&G) Company is aimed at bringing together the marketing, design, strategy and manufacturing functions of the company and also to identify the overall profitability of the product.

Company’s Overview and History

With its headquarters in Cincinnati, Ohio, Procter and Gamble (P&G) Limited is one of the world’s leading giants when it comes to making household products. The company is engaged in producing beauty, health, fabric, home, baby, family, and personal care products.

With commitments to remain as the leader in its market, P&G is one of the most aggressive marketers and is the largest advertiser in the world. Many innovations that are now common practices in corporate America – including extensive market research, the brand-management system, and employee profit-sharing schemes were first introduced at Procter and Gamble.

Procter and Gamble Limited has an employee base of 138,000 or more and operates in nearly 80 countries around the world and markets more than 300 brands in over 180 countries; more than half of the company’s revenues are generated overseas. The company recorded revenues of $83,503 million during FY2008, an increase of 9.2% over FY2007. The operating profit of the company was $17.083 million during FY2008, an increase of 10.6% over FY2007. The net profit was $12.075 million in FY2008, an increase of 16.8% over FY2007.

History

Procter and Gamble Company (P&G) was established as a joint partnership business by William Procter and James Gamble, two immigrants from United Kingdom in 1837 with head-office in Cincinnati, Ohio. By 1890, P&G was selling more than 30 different types of soap, including Ivory. In 1915, the company built a manufacturing plant in Canada, its first outside the U.S. During 1917-1918, P&G established the chemicals division which function was to formalize research procedures and develop new products. Then in the 1920s the company discontinued the manufacturing of candles.

KEY DATES AND ACQUISITIONS:

c. 1851: The Company’s famous moon-and-star symbol is created.

1878: P&G introduces White Soap, soon renamed Ivory.

1885: Introducing Innovative Employee Benefits.

1890: The company was incorporated as Procter and Gamble Company.

1911: The debut of Crisco, the first all-vegetable shortening.

1931: Brand management system is formally introduced.

1946: P&G introduces Tide laundry detergent.

1955: Crest toothpaste makes its debut.

1957: Charmin Paper Company is acquired.

1961: Test marketing of Pampers disposal diapers begins

1963: Company acquires the Folgers coffee brand.

1982: Norwich-Eaton Pharmaceuticals is acquired

1985: P&G purchases Richardson-Vicks Company, owner of the Vicks, NyQuil, and Oil of Olay brand

1988: Noxell Corporation, maker of Noxema products and Cover Girl cosmetics, is acquired

1990: P&G expands its presence in the male personal care market by acquiring Shulton’s Old Spice Product line.

1991: Max Factor and Betrix cosmetics and fragrance lines are bought from Revlon, Inc.

1992: Pantene Pro-V shampoo is introduced.

1993: Major restructuring is launched, involving 13,000 job cuts and 30 plant closures.

1994: Company enters the European tissue and towel market with the acquisition of the Germany-based company, Schickedanz.

1997: Company acquires Tambrands, Inc., maker of Tampax line of tampons

1998: Organization 2005 restructuring is launched.

1999: Premium pet food maker Iams Company is purchased.

2001: P&G acquires the Clairol hair-care business from Bristol-Myers Squibb Company.

2002: Jif peanut butter and Crisco shortening brands are divested.

2003: Company acquires a controlling interest in German hair-care firm Wella AG.

By 2004, the company announced its agreement to acquire the commercial business of Grupo Vita in Spain. In the same year, P&G finalized the sale of its juice drink brands, Sunny Delight and Punica, to JW Childs Associates LP, a private-equity firm in Boston. This further paring of the food business left P&G with just two main food brands, Pringles and Folgers. The snacks and beverages unit accounted for only 7% of the company’s total revenues in fiscal 2004. At the beginning of fiscal 2005 P&G realigned its business units, shifting it five previous units into three: global beauty care; global health, baby, and family care; and global household care. Pringles and Folgers were placed within the latter unit.

During the fiscal 2004, sales surged 19%, surpassing the $50 billion mark for the first time. Net earning also jumped 25%, hitting $6.48 billion mark. The newly invigorated company continued its streak of paying dividends without interruption since its 1890 incorporation, and it also increased its dividends for the 48th straight year. And in July 2005, a proposed merger with the Gillette Company, a leader in male grooming product was completed and cleared by the European Commission.

Literature Review

Product planning should be considered as a key driver for the eventual manufacturing and development of a successful new product. It can mean both organizational entity and the process of planning the product which can involve many more departments in a company (Allen, 1993). The consistent investment in consumer and market research, innovation, brand-building and go-to-market policies has considerably helped Procter and Gamble Company achieve success in its new product development strategy and also achieve considerable market shares.

This case continues with an insight into P&G’s product innovations that have been a success among the diverse segments of the global market. The company is organized into three Global Business Units (GBUs) and a Global Operations group for producing commercially viable products. The three GBUs are beauty, health and well-being, and household care. The Global Operations group consists of the Market Development Organization (MDO) and Global Business Service (GBS).

Research Methodology

The research methodology will be based on the qualitative analysis, i.e. on the presentation and the analysis of a series of findings retrieved by researchers in the literature (Internet sites, online newspapers, periodicals, books and other academic publications, journals). The presentation of appropriate primary sources (statistical indexes, graphs, and financial data) will be also used in order to support the views of the literature. In other words, the research will be mainly secondary mostly because of the ‘objectivity’ of data involved. More specifically, the use of primary research would not be used for the purpose of this research.

Chapter 1 Organizational Culture and Structure

1.0 Corporate Structure

Procter and Gamble organization structure is an important part of their capability to grow. It combines the global scale benefits of a $79 billion global company with a local focus to win with consumers and retail customers in each country where P&G products are sold. P&G organizational structure comprise three Global Business Units (GBUs), Global Operations, Global Business Services (GBS) and Corporate Functions (CF)

Fig 1: Four Pillars of Corporate Structure of P&G

Global Business Units (GBUs) focus solely on consumers, brands and competitors around the world. They are responsible for the innovation pipeline, profitability and shareholder returns from their businesses.

Market Development Organizations (MDOs) are charged with knowing consumers and retailers in each market where P&G competes and integrating the innovations flowing from the GBUs into business plans that work in each country.

Global Business Services (GBS) utilizes P&G talent and expert partners to provide best-in-class business support services at the lowest possible costs to leverage P&G’s scale for a winning advantage.

Corporate Functions ensure ongoing functional innovation and capability improvement.

Procter and Gamble has adopted an organizational structure of innovation that allows them to launch innovation faster. The company has taken seven key steps in order to structure their innovation management and organization for faster innovation.

Delegating decisions to innovative teams: Decisions are delegated to the innovative teams in order to avoid delays and enable fast innovation independent of top managements.

Integrating the Research and Development Department into the Business Unit: Integrating majority of the R&D into the business unit makes innovation management more effective and fosters the collaboration with the other departments of the business units and the orientation towards the customers in lieu of an exclusive focus on the technology.

Co-Location of Teams Department: By locating all innovative team members and relevant departments of a division in the same place, the company can make sure that information flows without distortion.

Central Innovation Team: Procter and Gamble has an organization of central innovation team at the corporate level which goes by the name Future Works. At the business unit level its central innovation teams belong to the New Business Development Organization.

Central Innovation Fund: P&G has established the P&G Corporate Innovation Fund (CIF) for the purpose of financing the development of disruptive innovation and of new business. Crest Whitestrips were, for instance, funded by the CIF.

External Interface for Open Innovation: In order to execute Open Innovation and to channel external solutions and ideas into the company, P&G innovation management needs an effective external interface. The company has established its External Business Development Organization and its Connect & Develop Organization. The mission of these departments is to realize the innovation potential, which slumbers in the outside world, via the development of external networks.

Merger & Acquisition Department: The mission of this department is to acquire innovative companies with a view of strengthening it innovation management and be in the market-place with innovations much faster.

1.1 Corporate Culture

Procter and Gamble organizational culture is based on the guiding foundation of Purpose, Values and Principles (PVP)

Purpose

To provide branded products and services of superior quality and value that would touch and improve the lives of their consumers and in return, the consumers would reward P&G with leadership sales, profit and value creation, and allowing their people, shareholder and the communities in which they live and work to prosper.

Values

Integrity

Leadership

Ownership

Passion for winning

Trust

Principles

Show respect for all individual

The interest of the company and the individual are inseparable

Strategically focused in their work

Innovation being the cornerstone of their success

Value Personal Mastery

Seek to be the best

Externally focused

Mutual interdependency is a way of life.

Organizational Change of Procter and Gamble

A common aspect of any company whether small, medium or large scale is the structural and organizational changes. An organization undergoes change in order to ensure the products and services that would be given to customers are excellent, as well as, the performance of the employee within the company. Procter and Gamble is one the company that utilises change in organization in order to become one of the most well-known product producers in the whole world.

‘Organization 2005’ is aimed at changing P&G’s culture from a conservative, slow-moving, bureaucratic behemoth to that of a modern, fast-moving Internet-savvy organization. P&G wants to make faster and better decisions, cut red tape, save cost out of systems and procedures, fuel innovation, set more aggressive sales goals and nearly double its revenue. The catalyst for all this change is Information Technology.

Finally, P&G wants to abandon its legacy of secrecy. Its new spirit of openness is most evident on the Internet.

SWOT Analysis

One strategic management tool that P&G uses to stay ahead of its competition is the effective and efficient utilization of SWOT analysis. This involves specifying the goals and objectives of the business as well as identifying the internal and external factors that are favorable and unfavorable in achieving the goals and objectives

Strengths

Weaknesses

* Strong focus on Research and Development.

* Leading market position

* Diversified product portfolio

* Strong brand portfolio.

* Increasing instances of product recalls

* Dependent on Wal-Mart Stores for majority

of its revenue

Opportunities

Threats