Procter & Gamble Company (A)
In November 1981, Mr. Chris Wright, Associate Advertising Manager of the Packaged Soap & Detergent Division (PS&D) of the Procter & Gamble Co. (P&G) was evaluating how the division could increase volume of its light-duty liquid detergents (LDLs). 1 The excellent growth of Dawn dishwashing liquid since its national introduction in 1976 meant that P&G now manufactured and sold three leading LDL brands, holding a 42% share (by weight) of the industry’s $850 million in factory sales. Based on input from the three LDL brand managers who reported to him, as well as his own knowledge of the LDL category, Wright believed there were three major opportunities for volume growth: (1) the introduction of a new brand, (2) a product improvement on an existing brand, and/or (3) increased marketing expenditures on existing brands. In preparation for an upcoming meeting with Bruce Demill,, PS&D advertising manager, Wright began evaluating the volume and profit potential of the three options. Company Organization The company comprised eight major operating divisions organized by type of product: Packaged Soap & Detergents, Bar Soap & Household Cleaning Products, Toilet Goods, Paper Products, Food Products, Coffee, Food Service & Lodging Products, and Special Products. Each division had its own brand management, sales, finance, manufacturing and product development line management groups. One of the most important responsibilities of the brand group was the development of the annual marketing plan, which established volume objectives, marketing support levels, strategies and tactics for the coming year. The brand manager promoted the interests of his brand while the associate advertising manager assumed responsibility for building the business of all P&G brands in his or her category. The brand groups worked closely with the following four line departments in both the development and the implementation of their marketing plans: Sales: The brand groups and sales force frequently interacted. While the brand groups managed categories and brands, the sales force managed markets and accounts. As such, the sales force provided important perspective and counsel on trade and consumer promotion acceptance, stock requirements to support promotions, competitive pricing and promotion activity, and newproduct activity. Each brand group worked closely with the sales force to develop the optimal sales promotion plan for its brand together with appropriate merchandising aids.
LDLS are defined as all mild liquid soaps and detergents designed primarily for washing dishes.
Product development department (PDD). Since superior product performance was key to the success of P&G products, each brand group worked closely with PDD to ensure continued improvement of its brand’s quality. Fifteen professionals worked exclusively on research and development for LDLs. The PDD continually strove to upgrade product quality or explore new product formulations. If a potential new product was developed, it was extensively tested in consumer and laboratory tests before any test marketing began. Manufacturing department. The brand group provided the manufacturing department with detailed brand volume estimates (by month, size, and form/flavor) to facilitate efficient production, as well as five-year volume base forecasts for capacity planning. In addition, the brand group discussed promotions requiring label or packaging changes with manufacturing to determine the most efficient production methods. Manufacturing informed brand groups about ongoing manufacturing costs and provided potential cost-savings ideas. Interaction between the advertising and manufacturing departments was particularly frequent during any new-product development process, and included discussions on manufacturing requirements, custom-packing options for test markets, and critical paths for production. Finance department Based on volume and marketing expenditure...
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