P&G Report New.docx

8/10/2019 P&G Report New.docx

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Procter Gamble Pakistan

Project Report Page 1

Industry Introduction:

The consumer market especially FMCG is one of the fastest growing industry in Pakistan andthere are many players of global fame like Unilever, Nestle Pakistan, Colgate Palmolive, PEPSICO, Kraft Foods and well established local contributors for instance, Tapal Tea Pakistan Pvt Ltd,Engro Foods, Seasons Canola Pakistan( Wali Oil Mills).

There are major capital cities like Karachi, Lahore, Islamabad, and Multan. Being the big citiestheir portion in every Category/brand is always more than the others. The cities like Faisalabad,Peshawar, Gujranwala and Gujarat, Quetta etc are included in 2nd layer cities in this regard.

There are many companies who has their business limited to the top cities only. According to alatest survey the total base of Lahore has now been increased up to 28000 shops.All these channels have different contributions in total sales volume which varies from product

to product. There is an independent importance of each channel in the eyes of the companies and

they strive their best to take maximum share out of the total sales.

Company Overview:

Procter and gamble is a fortune 500 American multinational corporation headquartered in

downtown Cincinnati, Ohio. It manufactures a wide range of consumer goods. In 2011, P&G

recorded $82.6 billion dollars (4 lac crores). Procter & Gamble is the largest consumer

goods company in the world and sells products under more than 50 brand names. The

Procter and Gamble Company is today more familiarly known as P&G in most of the

English-speaking world, and has grown from its humble roots as a Cincinnati soap maker to

one of the 20 largest multinational corporations in the world (based on sales). P&G racked

up over $76 billion in total sales in 2009.

The Procter & Gamble Company (P&G) boasts dozens of billion-dollar brands for home,

hair, and health. The world's largest maker of consumer packaged goods divides its

business into five global segments. The company also makes pet food, water filters, and

over-the-counter acid-reflux medication. About two dozen of P&G's brands are billion-dollar sellers, including Always, Braun, Crest, Fusion, Gillette, Head & Shoulders, Mach3,

Olay, Oral-B, Pantene, and Wella in the beauty and grooming segment, as well as Bounty,


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Charmin, Dawn, Downy, Duracell, Gain, Iams, Pampers, and Tide in the household care

segment. P&G's hundreds of brands are available in more than 180 countries.

Market Demographics:

Population: 176,242,949

Growth Rate: 1.828%

Birth Rate: 27.74 births/1000 population

Death rate: 8 deaths/1000 population

Net Migration rate: 1.24 migrants/1000 population

0-14 years: 37.2% (male 33739547/ female 31868065)

15-64 years: 58.6%

65 years and over:4.2%

Industry Analysis:

Population: 176242949

Children:37.2% (65607612)

Adults: 62.8% (110680572)

Children Equity:(14643619)

Adult Equity:(27802960)

Total Target Market:42446579


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Procter & Gamble Pakistan, headquartered in Karachi, commenced operations in Pakistan in1991. P&G goal was to become the finest global consumer goods company operating locally inPakistan. To fulfill this goal, we are serving Pakistani consumers with 12 high-quality brandslocally that strive to make everyday lives better.

With commitment came growth, and in 1994 we acquired a soap-manufacturing facilitysprawling seven acres of land at Hub, Baluchistan. In 2002, the plant tripled its soap-manufacturing capacity with an investment of $3 million. In 2004, with an initial investment of

about half a million U.S. dollars, a PUR facility was set up with a production capacity of 50million sachets of the water purifier annually. The P&G Hub plant is the single plant thatproduces PUR globally. Today, the Hub plant is equipped with state-of-the-art manufacturingtechnologies and quality assurance processes and systems, reflecting the company's values ofsafe, hygienic and ethical manufacturing practices.

P&G Pakistan headquarters are consistently upgraded to the company's progressive values.Investments of $1 million and a recent $600,000 investment have taken place in the work-spaceenvironment to date. The P&G Pakistan head office today hosts high-speed digital networks andadvanced systems and facilities.

As a company with vast global experience, P&G always has believed in the potential Pakistanhas as a country. Since 1989, the total amount invested by P&G Pakistan in assets, workingcapital and market development has exceeded Rs 6 billion. In addition, Procter & Gamblecontributed Rs 3.1 billion to the national exchequer in the form of taxes and duties during 2005and 2006, increasing 13 percent over the previous year.

P&G has attracted outstanding individuals since the day it began operations in Pakistan. Thecompany employs more than 257 people and creates more than 4,000 jobs indirectly in Pakistan,99 percent of which are held by Pakistanis. All this makes P&G a more locally focusedcompany.


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Vision Statement:

To create the most successful global brands in every category everywhere

we compete. And we have the strength to do it

Mission Statement:

To create, maintain and leverage a positive business environment to

build and protect the business and reputation of P&G and its brands

CorporateResponsibility:

P&G believes in working with and within local communities to respond to their socialneeds and help them develop their strengths. P&G Pakistan has initiated and runs severalprogram


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Business Functions

Company Type:

Public Company.

Brands:

P&G offers a variety of brands. P&Gs existing products grow through innovation and

renovation while maintaining a balance in geographic activities and product lines.

The Company's priority is to bring the best and most relevant products to people, wherever theyare, whatever their needs, throughout their lives.

Procter Gamble

Commu-

nications

Consumer

Market

Knwledge

Engineerin

g

Finance HR IT Marketing

Suoly

Chain


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P&Gs products are found in almost every product category. Following are the list of brands

served in Pakistan:

P&G has divided its products in segments as:

Beauty

Grooming

Health care

Fabric care and home careBaby care and family care


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61%

39%


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SWOT Analysis of P G

STRENGTHS WEAKNESSES

Strong financial position

Large scale of operations

Though connect +develop P&Gshares its Research & development

Diversified brand portfolio Powerful collection of strong brands

Customer concentration

Focus on high end of the market

Losing market share in online medialeadership

Beauty and health products are

mostly for woman

OPPORTUNITIES THREATS

Increase penetration in urban areasand tap rural markets

Exponential growth of middle classin emerging markets such as chinaand India

Health and beauty products for men

Internet marketing

Acquisitions

Increase in prices of raw materials

Uncertainty in the economicconditions

Cut throat competition in FMCGmarket

Unfavorable business laws andpolitical instability

Private labels growth is also a seriousthreat

Due to recession, consumer spendinghas decreased globally

P G Strategic Focus:

Consumers will pay a premium price for products that offer improvements over eitherprivate label products or the brands they have bought for many years.Product innovation must be regular with constant visible improvements.Product innovation must be designed to constantly upscale consumer preferencesStrategies of innovation and pricing can be used to break in developing economies


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Strategic Issues:

Competitive pressure is a constant and consistent challenge

Rising commodity cost

Global economic and political instability

What makes P G different from others?

Brand loyaltyDistribution channelInnovationPricing strategyPromotional strategy


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as ordinary soaps making it the doctors' number 1 recommended choice throughout the world.

In addition to germ protection, it also caters to various other needs such as beauty care and

protection against sweat odor.

Market Share:

The market share of safeguard is the biggest in antiseptic soap category with 22% share.

Situational Analysis:

Soap is a major consumer able item and there is a huge demand and potential in this market

particularly the antibacterial segment. The anti bacterial market segment has grown year onyear by more than 7 % percent due to increased consumer awareness and education on thebenefits of anti-bacterial soaps. As a result, the pie is growing bigger every year.

Some uncontrollable situational factors that are faced by the Proctor & Gamble and Safeguardsoap are as follows,

Demand:Although the demand for P&G products is very high but when we talk about thedemand of the Safeguard soap the demand is growing in the antibacterial category. The marketshare of Safeguard soap is more than 15 % in Pakistan out of the Rs 21 billion soap market.

Competition:today; two brands are directly competing Safeguard (P & G); Dettol (ReckittBenckiser) and lifebuoy (Unilever)

Legal/political:these are the uncertainties that are extremely variable in the politicalconditions of Pakistan. Constant political instability does affect the company in terms of buildingnew relations with new governments all the time.

Social and Cultural factors:the company has to be very careful in the implementation of itspromotional campaigns, since the social cultural environment of Pakistan is very conservativeand any suggestive advertisements usually face a lot of negative reactions on the part of theconsumer.


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Other factors:like the government regulations and technological advancements have had nosignificant effect on the product and the company.

Product Type:

Consumer product

Safeguard soap is a fast moving consumer product.

Convenience good

It is an essential good vis--vis itstarget market, which is all households (primarily children)who can afford buying soap and who want to fulfill an everyday need (primarily bathing) thatprovides them and their family with a 100% anti-bacterial solutioncomplete protection fromall germs/ bacteria and cleanliness from dirt / germs.

Product Attributes:

Safeguard soaphas set new standards for defining "health & hygiene" in Pakistan

Brand Name:

Safeguard

Slogan:


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Brand Positioning:

Anti bacterial soap

Brand Image:

Health and hygiene

Brand Extension/ Product Mix:

The seven variants provide an ideal product mix in terms of consumer needs i.e.

(2 skus115 grms and 70 grms):

Pure Whi te: Pure White is the flagship offering of Safeguard signifying the core benefitof superior germ protection.Herbal: Clears and purifies your skin from germs.Lemon: Makes you feel refreshed with its zesty smell.Menthol: Keeps you fresh in hot weather.Aloe Vera: Moisturizes your skinSandalwood:Provides natural care gently.


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Vitamin E: Cleans your skin and makes it smooth

Product line extension and uses

The product is used primarily for showering / bathing but is also used for hand washing. Aproduct line extension is Safeguard Hand wash which is also available under the Safeguard

Brand.

Product Life Cycle

Since this is a Fast Moving Consumer Product, the average product life cycle of this product (ifused every day) is 30 days and 2 years if not in use (if stored in a cool and dry location). Thebrand is entering from growth to maturity.

SAFEGUARD- SWO T ANALYSIS

Strengths

The brands Germ-kill heritage (Triclosan) is seen as strong and adds on trustworthinessExcellent for treating skin irritations, cuts/bruises and seasonal applications

Brand comes from a reputable (old) companyLoyal following of Original

Weaknesses

Dissolves quickly in water

Opportunities

Leverage the powerful brand equity associated with the Safeguard Brand to makeSafeguard Soap an everyday use proposition.People are becoming more health consciousTrusted brand for providing education about health and hygiene


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Threats

Competition from Dettol and lifebuoyEconomical uncertainty

Competition Analysis

Here is a brief description about the antiseptic soap producing companies.

Safeguardis the No. 1 antibacterial soap worldwide; it is the only bar soap registered with the

FDA. Safeguard is designed to provide excellent germ protection for the whole family.

The market share of safeguard is the biggest in antiseptic soap category with 22 % share.Safeguard users have the perception that it is providing them with Continuous Germ Protection,Gentle on skin, Smells Good, has a easy to grasp shape and the functional needs portrayed is ofan everyday soap with germ protection.

Safeguard is an anti-bacterial soap that provides superior longer lasting germ protection.Safeguard helps protect your family from germs which are found everywhere even on apparentlyclean surfaces.

Dettol soap is a brand of Reckitt Benckiser Pak Ltd and it has been operating in Pakistan since1999 after taking over from Reckitt & Colman. Market share of Dettol soapin the soap marketis around 9% at the end of December 2008.

The Dettol soap users have the perception that it is effective in germ kill with the medicinalsmell of Dettol liquid which is used for Bruises & Cuts, Insect bites, washing of clothes,Mopping of floors, Shaving, Bathing and Cleansing of skin and used mostly during summers. Itsfunctional core need is incidental antibacterial.

Lifebuoyis one of Unilever's oldest brands. Lifebuoy Royal Disinfectant Soap was launched in1894 as an affordable new product in the UK, to support people in their mission for better

personal hygiene. Lifebuoy soap aims to provide affordable and accessible hygiene solutions thatenable people to lead a life free from hygiene related worries, everywhere, regardless of theboundaries of nationality, religion and socio-economic status. Lifebuoy has a market share of


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15 %. Lifebuoy users see the soap as a decent quality, affordable germ protection agentcontaining carbolic acid as its germ protection agent and its functional need portrays that it is aneveryday soap with germ protection for the middle and lower middle class

Target Strategy

Different antibacterial competitors are trying to own a higher ground by building on alreadypresent germ-kill equity. Like Dettol has given its slogan of Dettol protects against a widerange of unseen germs, including bacteria and viruses

While safeguard is focusing on Din Raat Lagataar hifazatwhich is more powerful in themind of the consumer.

Lifebuoy is following the germ busters strategy

Market Strategies

Market Needs(QUALITY CRAFTSMANSHIP, INNOVATIVE DESIGNS, CUSTOMER

SERVICE)

P&G is conscious of the changing consumer needs and trends and is constantly conductingmarket research to assess opportunities and threats. Quality of the product is the number 1priority as well as research on new variants. In addition, a new customer hotline has also beenadded to get instant feedback on product use, problems and activities.

Market Trends

The soap market has been most affected by the recent sky rocketing price of palm oil which isthe primary ingredient of soap noodles. This has caused the average price of soap noodles toincrease by 20% - 25 % forcing producers (also P&G) to increase prices of their soap productsby almost as much so as not to put excessive pressure on their margins. This will undoubtedly

result in decrease in soap sales volumes (higher prices means less consumer off take) as well asdisruption in the market due to several quoted prices of the same product available resulting in


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dissonance in the wholesale and retail markets as well as confusion in consumer buyingdecisions at the point of sale.

Market Growth

The overall soap market is growing by 15 % while the antibacterial segment is growing by 9%.Hence, there is a lot of potential in the market for growth and additional brand penetration andbrand building.

Opportunity Analysis

Based on the competitive analysis, P&G found out that there are a lot of opportunities which willhelp the Safeguard soap capitalize a greater market share. New Safeguard Soaps ability to gainreal consumer insights, to launch products and variants that consumers actually want, supportedby insightful advertising that talks to consumers in their own language, are all vital elements,which will lead to success of Safeguard and the Safeguard soap as a brand.

Extensive Market Growth

Market Penetration and Market Expansion.

Achieving High Gross Margins

High Customer Services and Satisfaction

New Product Development and Entrepreneurship.

STRATEGIES FOR CREATING COMPETITIVE ADVANTAGE

Di ff erentiating Strategy:

They have developed a very clear image of safeguard soap in the minds of their target customers.

Health Education is a vital part

Schools programneeded for success


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Children - powerful positive change agents in household

Positioning Strategy

Positioning Against Competitor

Safeguard is positioned as a premium brand which focuses on children. The children are thefocal point for Safeguard soap educating them about health and hygiene through the famouscommander safeguard series and many other promotional campaigns. Children are their ultimatefocus as compared to the Dettol soap and lifebuoy, the former focuses on mothers in the familyand later on children.

Positioning In Relation To Product Attribute:

The primary positioning via a via product attribute is that Safeguard Soap has the essence ofTriclosan Solution , the no. 1 antiseptic brand in the world trusted by families everywhere forover a centurywhich its competitors do not posses. Hence, it is considered a premium brand inthe anti-bacterial segment.

Positioning by price and quality

As Safeguard is a premium brand, it is priced at a premium to its competitors (Dettol andLifebuoy). Being premium means there will be no compromise in quality as the link betweenprice and quality exists and customer is always willing to pay more for perceived quality whichin the case of Safeguard soap, he/she does!

Distribution Strategy

Channel of Distribution for Consumer Product

There are 2 primary channels of distribution for Safeguard soap:


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Distributors and sub distributors:

The company sells the products to its appointed distributors and sub distributors (+300 all overPakistan) that are responsible for the distribution of pre-defined geographical areas whodistribute it further to wholesalers and/or retailers. The retail distribution is further classified intoTOP STORES (TSPs) which include all the high profile outlets like al-fatah, HKB, Akbaristores etc and whole sale comprises of categories of diamond, gold and silver divided on thebased on their average purchase per month and from here the product reaches the point of salefor the customer.

Di rect Deli very

The company provides direct delivery to select large customers like institutional buyers of keyaccounts which sell directly to the consumer (in case of USC and CSD) or to small retailers /end-consumer (in case of MAKRO / METRO).

Instore Placement Strategy

Safeguard soap has also planned an in-store placement strategy to promote and market theirproduct so to have maximum visibility to the consumer; they have assigned dedicated shelves to

the product and are also promoting their product in metro and makro aswell. Their placementstrategy is mainly focused on

Place Safeguard Soap distinctively

Equal or more facing than its Competitors

Place between Lux & other Beauty soaps where Possible.

Build brand block wherever possible.

Pricing Strategy

P&G is using Competitive Pricing approach in order to capture its piece of cake.


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Competitive Pricing Description

Competitive Pricing is a defensive and competitor-related approach to pricing. It is a marketing-oriented strategy whereby prices are set on the basis of the prices charged by competitors

Safeguard soap is priced at retail price of Rs. 38.00 (115 gms) and Rs. 26.00 (70 gms) which is ata premium of Rs 3 and Rs. 2 to its competition (Dettol and Lifebuoy).

Discounts and allowances

P&G give a special trade offer on Safeguard Soap of 2% during the summer season so as to push

to product into retail and an additional discount of 4 % to wholesalers to maximize loading in thechannel and improved distribution when demand (consumer pull) is maximum.

Communication Strategy of Safeguard Soap

Position Safeguard soaps range as a preferred everyday use solution for the whole family

Communication Objectives

Announce new & improved Safeguard soap.

Protection against a wide range of unseen germs (including bacteria & viruses).

Better experience (lather / perfume / feel-on-skin).

Show all 7 variants of new Safeguard soap.

Agency Selection

Almost 135 Advertising agencies exist in market but P&G has selectedAL Saatchi & SaatchiAdvertising Company because of their outstanding work in Pakistani market.
http://en.wikipedia.org/w/index.php?title=IAL_Saatchi_%26_Saatchi&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=IAL_Saatchi_%26_Saatchi&action=edit&redlink=1


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Budget

Safeguard soap is a Rs 2 billion brand annually and so the marketing budget allocated to itapprox 25 % of total Net revenue, much resources have been allocated to Safeguard soapmarketing efforts, one top example is commander safeguard series.

Marketing Communication Methodologies

Advertising

Television is still the primary medium for advertising for Safeguard soap, and print also forms a

crucial part of the communications strategy. But increasingly campaigns are integrated across allthese communication channels. All advertisements of Safeguard soap are a blend of hard sell andsoft sell advertising, as all the Safeguard soap advertisements first show the ingredient it containsand then portray the emotional benefit for the user which revolves around the theme of a motherand children in which the children is the one who influence the use of Safeguard soap. Dr Shaistarepresents the brand ambassador of Safeguard Soap

When it comes to advertising, SAFEGUARD prefers TV because of their philosophy that;HEALTH AND HYGIENE ALWAYS COMES FIRST. Thus TV is the best media, as youcan show how Safeguard soap keeps you hygienically clean and protected and gives you daylongprotection from body odour. Apart from this, in Pakistan, TV is a strong medium, it has highest

reach. Thus a large part of advertising budget is focused on TV.

Safeguard soap spends around 60 % of the TV advertising budget on all channels with highrating points like PTV, PTV WORLD, GEO, ARY, INDUS VISION etc.

Safeguard soap advertises highly in summer season i.e. mid of the year, as people prefer frequentwashes in such seasons to keep hygienically clean and long lasting protection against bodyodour.

While discussing Safeguards advertising strategies we must keep in mind the commandersafeguard series which are very intriguing for the children.


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Commander Safeguard

Commander Safeguard, the first animated superhero of Pakistan and the mascot of P&Gs brandSafeguard. Developed by Post Amazers, the largest animation house in Pakistan and the firstwith a truly global clientele, the hit series started a semi-revolution amongst Pakistani kids whojust could not get enough of it.

Story Characters


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Apart from Commander Safeguard series P&G has also done some social welfare programs

which can also be considered to be as a part of its Promotional Campaign.

Sehat-o-Safai Program

The Sehat-o-Safai Program, supported by Safeguard, has educated2.2 million school children, ages 5 to 11 and from all socioeconomicclasses, in 8,000 schools, about better hygiene practices, especiallyregular hand washing.

Safeguard Mother Education Program

The Safeguard Mother Education Program conveys the basic

message of health and hygiene one-on-one to mothers. This year, theprogram has educated about 600,000 mothers across the eight largestcities in Pakistan.

P&G's Safeguard team leads Global Handwashing Day in Pakistan

Safeguard Pakistan School Education

Program Empowering Children with Hygiene Education:


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Conclusions:

We have carefully analyzed all the market strategies adopted by P&G Pakistan to boost the sales

of Safeguard soap. Although it is the No 1 antibacterial soap in the country and has captured the

market share of 22% but still we find some flaws in the product for which we are giving the

following suggestions:

P&G, Pakistan realizes the huge potential of the rural markets, i.e. 64% of the totalpopulation, but has not yet developed a successful strategy to penetrate this market.They can get success by two key strategies; firstly, by developing a strong

distribution infrastructure and secondly, by adapting the packaging and pricing to thismarket.

They should set the price of their product in accordance with their competitors price.

Designing commander safeguard shaped soap to make it more intriguing for thechildren.

They should change the chemical composition of the soap because it dissolves inwater so rapidly due to the salts present in its.

They can add more flavors of aroma in their product.

The Advertisements should target the entire family instead of focusing children only.

They should add information on the bars about its flavor to help the people forpurchase decision.

Commander safeguard series adds value in the product from selling point of view. 7episodes have been launched till date. . They can continue launching more episodesof the series to attract the children as they are their prime focus.

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