Professional Documents
Culture Documents
The price cuts leave the overall cost of the product to retailer about the same as it would have been with the various trade allowancediscounts. P&G argues that EDLP eliminates the problems such as deal buying, l e a d s t o r e g u l a r l o w p r i c e s a t t h e r e t a i l l e v e l , a n d h e l p s b u i l d b r a n d loyalty among consumers.Yet the EDLP strategy has caused great controversy in the trade, whichdepends heavily on promotion to attract consumer. Some retailers took P & G p r o d u c t s o f f t h e s h e l f , o t h e r s c u t t h e i r a d s a n d d i s p l a y o f t h e company's brand. Retailers prefer to operate on a high/low strategy of f r e q u e n t p r i c e s p e c i a l s a n d a r g u e t h a t E D L P p u t s t h e m a t a disadvantage.Despite the criticism. P&G says EDLP is paying off and volume hasgrown faster in it's brands that have switched to the pricing strategy. P&G extended it's use of EDLP to international markets, including theU . K . a n d I t a l y . P & G c o n t i n u e s t o m a k e c h a n g e s i n t h e w a y s a l e s prom otions are being used by packaged goods marketers. The companyhas taken steps in recent years to simplify its promotional programme by 17
c u t t i n g b a c k o n m a n y t y p e o f p r o m o t i o n s i n c l u d i n g b o n u s p a c k s , premiums, coupons, and cent off packs. P&G has long been a bellwether for the packaged goods industry and its changes with regard to the useof consumers and trade promotions are likely to crate a ripple effect among other marketers. Target Costing: Pricing that starts with an ideal selling price, then targets costs that willensure that the price is met. Target costing reverses the usual process of first designing a new product, determining its cost and then deciding onthe price.P&G used target costing to price and develop its highly successful CrestSpin brush electric toothbrush.P&G usually prices its good at a premium. But with Crest Spinbrush, P&G reversed its usual thinking, it started with an attractive low market price, and then found a way to make a profit at that price.T a r e d c o s t i n g p r i c i n g h a s m a d e C r e s t s p i n b r u s h , o n e o f P & G m o s t successful new products ever. It has now become U.S.A 's best sellingtoothbrush. 18
Competition based pricing: Setting prices based on the prices that competitors charge for similar products. .P&G usually pay less attention to its own cost or to demand.The firm might charge the same as, more than, or less than its major rival-the HUL. 2.3 Product Decision: I t m a r k e t s t h e l e a d i n g b r a n d s i n 1 9 o f t h e 3 9 c a t e g o r i e s i n w h i c h i t competes .Its market leadership rest on several principle.
Customer Knowledge: P&G studies its customer -both final consumers and the trade-throughcontinuous marketing research and intelligence gathering, it prints itstoll free 800 number on every product. Long term outlook: It takes the time to analyze each opportunity carefully and prepare the b e s t , t h e n c o m m i t s i t s e l f f o r e t h e l o n g r u n t o m a k e t h i s p r o d u c t a success, it struggled with Pringles potato chips for almost a decade before achieving market success. 19
a strong existing brand names give the mew brand instant recognitionand credibility with much less advertising outlay. Multi brand strategy: It markets several brand in the same product category. It produces eight b r a n d s o f h a n d s o a p a n d six shampoo brands. Each brand meets a different consumer want and competes against specific competitors brands, each brand manager competes for company recourses. Morerecently, P&G has begun to reduce its va st array of products, sizes,flavors, and variety to bring down costs. Manufacturing efficiency and cost cutting: P&G reputation as aggregate marketing company's matched by itse x c e l l e n c e a s a m a n u f a c t u r i n g c o m p a n y , i t s p e n d s l a r g e s u m s developing and i m p r o v i n g p r o d u c t i o n o p e r a t i o n s t o k e e p s i t ' s c o s t among the lowest in the industry. Product Management: P&G has product management organization. Here the product manager d e v e l o p s a n d i m p l e m e n t s t r a t e g y a n d m a r k e t i n g p r o g r a m m e f o r a specific product or brand brand .It first appeared in P&G in 1929. A new 21