P&G Case Study
Case – Procter & Gamble (Light-duty Liquid Detergents) (EPGDIB VSAT 2010-11 : Delhi)
Industry / Market Overview * The economy is going through a tough time and the population has become more price-sensitive. Unemployment also seems high * LDL market growth potential is very low coupled with the fact that there is substantial growth in the use of Automatic dishwashers (ADWs) * The LDL market had 3 major players P&G (42% share), Colgate Palmolive (24%), Levers (7%) and the remaining 27% with generic and private labels. P&G’s share of the LDL market is valued at $357 million / 25 million cases approx.
Product Classification * LDLs are a low involvement product * Daily use, generally a repeat purchase once every month if the product is readily available * Lack of brand loyalty
Market Segments
Analysing the needs, preferences and usage behavior of the households, all customers can be classified into the foll. 3 segments – 1. Performance segment (35% of the total category) – values the cleansing powers the most like grease cutting powers and long lasting suds 2. Mildness segment (37%) – values gentleness on the hands most with the cleansing powers 3. Price segment (28%) – focus on the low cost ahead of other factors
Target Market Segment
Keeping in mind the objective of increasing volumes and profits through a new product launch, P&G should launch a new brand in the Low Price segment. The reasons for the above decision are – * Competition: the performance and mildness segments already have more than 7 brands from established companies fighting for a larger share of the shrinking market pie whereas the price segment only has small generic brands and private labels with minimal marketing support * Cannibalization: P&G already has 42% market share in the performance and mildness segments through their 3 popular brands – Ivory, Dawn & Joy. If they launch another brand in the same segment, there is a greater risk of it
Industry / Market Overview * The economy is going through a tough time and the population has become more price-sensitive. Unemployment also seems high * LDL market growth potential is very low coupled with the fact that there is substantial growth in the use of Automatic dishwashers (ADWs) * The LDL market had 3 major players P&G (42% share), Colgate Palmolive (24%), Levers (7%) and the remaining 27% with generic and private labels. P&G’s share of the LDL market is valued at $357 million / 25 million cases approx.
Product Classification * LDLs are a low involvement product * Daily use, generally a repeat purchase once every month if the product is readily available * Lack of brand loyalty
Market Segments
Analysing the needs, preferences and usage behavior of the households, all customers can be classified into the foll. 3 segments – 1. Performance segment (35% of the total category) – values the cleansing powers the most like grease cutting powers and long lasting suds 2. Mildness segment (37%) – values gentleness on the hands most with the cleansing powers 3. Price segment (28%) – focus on the low cost ahead of other factors
Target Market Segment
Keeping in mind the objective of increasing volumes and profits through a new product launch, P&G should launch a new brand in the Low Price segment. The reasons for the above decision are – * Competition: the performance and mildness segments already have more than 7 brands from established companies fighting for a larger share of the shrinking market pie whereas the price segment only has small generic brands and private labels with minimal marketing support * Cannibalization: P&G already has 42% market share in the performance and mildness segments through their 3 popular brands – Ivory, Dawn & Joy. If they launch another brand in the same segment, there is a greater risk of it