Established in 1837, Proctor and Gamble (P&G) had developed a holy grail of principles and practices. Its philosophy is focused on individual talents, abilities and how best to make use of them. P&G source this talent from within the organization attracting people willing to spend their entire career with the company. Proctor & Gamble has developed a reputation of caution in the industry of household's sundries and personal care products. It's marketing strategies and judgements towards different markets stand out to the competition. Extensive marketing research and testing are "trademarks" that distinguish P&G in the industry. "Internal operations at P&G are described as thorough, creative, and aggressive by some, and slow, risk averse, bureaucratic and rigid by others. There was probably an element of truth in both descriptions" 1. Each brand at P&G is in competition with the other. P&G entered the British market in 1926. It developed its European
foothold by acquiring local businesses or setting up sovereign operations. The European Technical Center (ETC) was established in Brussels in 1963 to provide R&D facilities and a small regional management team. By 1981, Europe
represented 15% of P&G's market. Expansion forced P&G to lay responsibility of operations in the hands of the subsidiaries. It made sense, consumer needs, preferences and habits, technology, competition, national legislation, differed from country to country. Common practice across Europe was to favor national brands. "Each subsidiary was a miniature Proctor and Gamble, with its own brand management structure, its own product development capability, its own advertising agencies, and its own production facilities"2. Into the mid 60's growth slowed, competition intensified and prices weakened. Management at P&G felt that slowing product innovation was to
blame. Moreover, it was believed that the ETC's technical facilities were not being fully utilized. Subsequently, management came to the belief that consumer behavior and product differences were narrowing across Europe. They felt a need to standardize products Europe-wide. "The objective was to focus the
resources of the European R&D community around key brands and to define a 1 2
Sourced from the case. Sourced from the case.
long-term European approach to product development"3.
Transfer of technical
staff between the ETC and subsidiaries would encourage interdependence and cooperation. The Vizir Project In the US a new segment was founded under the washing detergent market called the heavy-duty liquid (HDL). Lever, P&G's competitor was quick to identify the segment and take the lead with a product called Wisk. P&G on the other hand 'wanted in' on the European market, even after a failed US launch. Initial testing of their product however unsuccessful did not deter P&G from their endeavor. Scientists at ETC developed a HDL formula that eventually won P&G blind tests against competing brands. Competitors, Colgate and Henkel, were working on reformulating their powders for the proposed market segment. Colgate eventually pulled out, where as battling Henkel required only a change in fragrance. Berlin, Germany would become P&G's full-scale test market. The next problem in line was of appropriately positioning the product. Ariel, P&G's laundry powder laid claims similar to Vizir, 'superior performance on greasy stains at low temperatures'. Management wanted to position Vizir as a main wash product. Doing so would mean that Ariel would lose sales to its sister product Vizir. Another problem was that P&G had created a market segment that would result inevitably in further competition, perhaps even from generic brands. Vizir, a liquid formula, would be easier to copy. Because Vizir could potentially cannibalize the sales of it sister products, management decided to charge a premium price for the product so as to make up for the lost sales, ensure the profitability of Vizir, and...
Please join StudyMode to read the full document