Proctor & Gamble Case Study

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Introduction:

Procter & Gamble, known to many as simply P&G, is one of the most influential and world leaders in the consumer goods industries. It delivers superior products at an exceptional value that exceeds customer demands. Marketing its brand in over 140 countries, P&G reported net earnings of $1.6 billion in 1990; a notable $100 million of those reported earnings stemmed from its Canadian subsidiary where P&G is “recognized as a leader in the Canadian packaged-goods industry” (Kerin & Peterson, 2012). P&G’s Canadian market is separated into five operating divisions: paper products; food & beverage; beauty care; health care and laundry & cleaning. For the purpose of this analysis the following paper will focus on P&G’s health care division; more specifically Scope mouthwash. Following Warner-Lambert’s introduction of Listerine as the pioneer mouthwash brand, Scope launched into the market in 1967; positioning itself as “a great-tasting, mouth-refreshing brand” (Kerin & Peterson). Unlike its predecessor Listerine, Scope became the original mouthwash in the market to offer both a great taste and protection against bad breath. According to the data given, Scope led the Canadian mouthwash market in 1976, and as of 1990, had remained the leader with a market share of 32 percent. In 1988 however, a new product called “Plax” launched into the market taking a different positioning approach (in comparison to others) in the mouthwash market. Their strategy focused on fighting plaque using a “pre-brushing” rinse instead of the traditional fresh breath, germ killing mouthwash, thus creating its own niche in the market. Aside from Scope and Plax, other direct competitors in the market included: Listerine, Listermint, Cepacol, and Colgate oral rinse.

Strategic Issue and Problem:

Gwen Hearst, brand manager for Proctor & Gamble’s health care division, was given the responsibility for (1) developing a strategy to ensure continued profitability in anticipation of competitive threats, and (2) devise a three year marketing plan for P&G’s mouthwash business segment.

The primary problem that Hearst, and the team faced, focused on how the brand should capitalize on the emerging markets within the mouthwash industry; as they were beginning to shift focus on more of the health-related benefits of mouthwashes, rather than their traditional uses of fighting bad-breath and killing germs. Hearst must be able to assess the strategies of the other firms in the industry as to not lose any of their current market share to those competitors; especially Plax.

Alternatives:

Based on the existing information, three alternate courses of action have been recommended. These recommendations are based solely on the data presented from the departments within the P&G health care division: product development (PDD), sales, market research, finance, purchasing and advertising. Each alternative strategy entertains both positive and negative outcomes that Hearst must meticulously consider so that the best long-term strategy is chosen for the brand.

1.Alternative 1: Maintaining Status Quo - “Doing nothing”

This alternative suggests that P&G’s health care division continue with its current marketing strategy and positioning. This strategy takes on no new risks and is therefore used to preserve current sales, maintain customer loyalty, and maintain its position as great tasting, breath freshener.

2.Alternative 2: Repositioning – “Scope fights plaque”

Another alternative is to reposition Scope’s current position in the market to a “plaque-fighting” mouthwash. By implementing this strategy, Scope would remain using the same product formula; not needing to replace or add any ingredient(s) into their current formulation. Specifically, a repositioning strategy is used to change the consumers’ perceptions of the [Scope] brand in comparison to its competition. This strategy would modify Scope’s current marketing position from a...
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