Integrated Marketing Communication

Case Analysis: Procter & Gamble(B)

Submitted by:
MANGESH PATIL| PAWAN JAGNIK | SUMAN KUMAR SAHA MAHTAAB KAJLA | NILA LOHITA | VARDHAN SINGH Integrated Marketing Communication

Group II (IMC-A)

Company Introduction
Manufactured 90 consumer & industrial products Total sales of $11.4 billion by 1981 of which 70% made in US (exhibit 1) Eight major operating divisions organized by type of product
Packaged soap & detergents Bar soap & Household cleaning products Toilet goods Paper products Coffee Food Service & Lodging Products Special Products

Each division had its own brand management as well as its own sales, finance, manufacturing & product development line management groups
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Light-Duty Liquid (LDL) Detergents

Market Overview

Annual factory sales of $850 million & volume of 59 million cases in 1981 Average consumer purchase cycle of 3-4 weeks Expected category volume growth of 1 % per year for next 5 years LDL market growth potential is very low due to substantial growth in the use of Automatic dishwashers (ADWs) It had 3 major players P&G (42% share), Colgate Palmolive (24%), Levers (7%) and the remaining 27% with generic and private labels
Performance segment (35%) focusing on cleaning benefits Mildness segment (37%) focusing on benefits of mildness to hands
3 major segments
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Price segments (28%) focusing on low cost

P&Gs Product Portfolio

LDL Segment
Ivory Liquid
P&Gs leading LDL brand (15.5%) Highest trial levels Reduced promotion frequency from eight 4 week events to 6 events in 1982 20% of promotion budget allocated to trade allowances 80% of promotion budget allocated to consumer promotion Major focus (2/3rd) on price packs & minor focus (1/3rd) on coupon offers

Dawn
Performance brand with 14.1% market share Unique benefit of superior grease cutting capability 2/3rd of promotional events were trial oriented coupon events while remaining 1/3rd were price packs

Joy
Ranked 3rd in LDL category with 12.1% market share Product benefit of delivering shiny dishes by using unique no spot formula 50% promotional budget allocated to trial oriented coupon events & prepriced events Remaining 50% was allocated to price packs

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Development of H-80
H-80, a high performance LDL with superior cleaning capability than other LDLs Specially formulated to remove tough stains Excellent product aesthetics & good packaging Possibility of cannibalization from existing P&G LDL brands Suggested target audience female heads of larger households, aged between 18-35, heavy LDL users Available in 4 sizes & at prices equivalent to P&Gs established LDL brands

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Assignment Question
What factors and policies guide promotion planning for the LDLs?

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Factors & policies affecting promotion planning

Low involvement product
LDLs are low involvement, daily use products Purchase mainly depends on top of the mind recall, product availability and sometimes price Lack of brand loyalty More advertising is required to generate pull from customers

Product category
Advertising/Promotion also depended on which category the product belonged Depending on the category, the particular aspect of the category was emphasized during the promotional events

Launch of advertisements for new products/brands

P&G generally did not advertise a new brand until it had achieved 70% distribution New products/brands demanded more advertising/promotional events in order to achieve maximum exposure
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Factors & policies affecting promotion planning

LDL promotional events calendar (Schedule)
Each LDL participated in at least 5 events annually Brand groups worked together to avoid simultaneous promotion of 2 or more of companys LDL Scheduling played an important role as it helped in maintaining the attention of sales force & trade It also helped managers to minimize cannibalization due to consumers switching from one promotion to another

Allocation of budget
Budgets were distributed under 2 major heads i.e. Advertising & Promotion P&G spent higher proportion of budget on advertising & lower on promotion Colgate or Lever spent more on promotions than advertising We might conclude that players with major market share spent more on advertising & smaller players spent more promotions Hence size/market share affected the promotion planning for LDLs

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Assignment Question
What factors must Garner consider in developing H80 promotion program?

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Factors to be considered for H80 campaign

Goals & Constraints
Budget should be lesser than $37 million. Getting the expected market share of 7% (Table B) Flexibility of scheduling with Ivory Liquid, Dawn and Joy

Positioning
Positioning should be such that it clearly discriminates H80 with other existing brands Focus on high performance of LDL that provides superior cleaning factor that it removes tough strains

Cannibalization
Already having a market share of 42% in the performance and mildness segments through their 3 popular brands Ivory, Dawn & Joy. Launching another band in same segment would increase the risk of cannibalizing sales of existing brands

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Factors to be considered for H80 campaign

Competitive Rivalry
High level of competition in performance and mildness segments Established companies want larger piece of shrinking market Presence of small and private label brands in price segment with no/minimal marketing support

Distribution
P&G generally did not advertise a new brand until it had achieved 70% distribution H80 was expected to achieve >~70% distribution 6 weeks after introduction

Target Segment
The female heads of larger households, aged between 18-35, heavy LDL users should be primary target audience

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Assignment Question
Using Exhibit 18 format, develop a national promotion program for H80?

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National Promotion Program

Please refer to the attached excel sheet for calculations

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Calculations
To minimize canibalization of P&Gs LDL brands, the 5 events selected are: Event I: February and March Event II: May Event III: August Event IV: October Event V: December Initially, a $2.70/ statistical case trade allowance has to be given in January, February and March to stimulate initial stocking. Cost for it= $(1.8*3/2)= $2.7 million (Using Table D). No. of average weeks volume = 8 * 3/2 = 12 (Using Table D) A group promotion is also given which costs $0.1 million

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Events
Event I: February and March 3 oz samples would be mailed to 50% households as done in case of Dawn. Cost for it is =$(0.53 *30.3/ 0.75 million) =$21.4 million (Using Table D and Exhibit 11)

No. of average weeks volume not applied in this case

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Events
Event II: May
Single brand coupons would be mailed during this phase. Cost for it =$5.8 million (Using Exhibit 12) No. of average weeks volume not applied in this case

Event III: August

Coupons can be distributed in BFD along with a Partial Liquidator premium. Costs for the BFD is given as $0.9 million (Using Exhibit 12) and for the Partial Liquidator is $ 0.4 million (Using Exhibit 16) No. of average weeks volume would not be applied in this case

Event IV: October

A 2nd trade allowance of $2/ statistical case can be given along with a Price Pack of 20% off on the retail price for 22oz and 32oz. Cost for the Trade Allowance would be = $(1.8 * 2/ 2.7 * 1/2 )million = $ 0.66 million (Using Table D) No. of average weeks volume would be = 8 * 1/2 = 4 (Using Table D) Cost for the Price Pack= $( (1*40.8 /20) + (1.2* 29.2/ 13)) million =$4.7 million (Using Table D and Exhibit 14). 20% of $2.04(price per piece of 32oz) is 40.8 cents and 20% of $1.46 (Price per piece of 22oz) is 29.2 (Using Table C) No. of average weeks volume would be 10 weeks (Exhibit 14)

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Events
Event V: December
An In-/on-pack own brand refund offer having a response of 7% can be given for each 2 units purchased. Cost for it is = $(560,000 + 3 (on 6 million)) =$ (0.56+ 0.18)million =$0.74million (Using Exhibit 15 III) No. of average weeks volume would not be applied in this case The total cost for the Promotion Plan is estimated at $37.4 million

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