PROCTER AND GAMBLE

Going Global a new wrinkle in cosmetics

Submitted by:
Alyssa T. Lastima








Submitted to:
Ms. Rizalie N.E. Mibato, Ph.D.

September 21, 2011
Introduction
Procter and Gamble is North Americas leading consumer product goods with sales in excess of
$83 billion and earnings per share of more than $2. The companys CEO has instituted an experimental
distributor-centric strategy that is intended to result in a pivotal re alignment of all the companys
manufacturing and distribution locations, from the current operational strategy around new approach to
servicing the customer. At issue is that while the company has met all of the markets financial
expectations, investors and stakeholders alike are concerned that the value of the new strategy is
supported by the results. In contrast, the CEO believes the organizations performance will justify the
strategy given time to properly assess the outcome of the test locations. The issue is how to satisfy the
needs of Wall Street while strategically reorienting the company around a new corporate strategy and
maintain revenues in a tightening economy
Statement of the Problem
1. How can Procter and Gamble continue to dominate the cosmetics market while maintaining its
reputation as a successful outdoor adventures operator?
2. What strategies do they have to adopt or implement to pursue their goals to attract more customers in
the global market?
Statement of Objectives
To provide coverage of essential data about the Cosmetics Industry, its competitors, markets, and
possible alternative courses of action.
To show the different strategies being taken by Procter and Gamble in order to gain a competitive
advantage over its competitors and gain market share overseas as much as possible.
To present some recommendations those companies in the sector can use to have competitive
advantage.

SWOT Analysis of Procter and Gamble

S-STRENGTHS
Innovative Products
Professional Management
Diverse Product Lineup
Plans for expanded products and
acquisitions
W-WEAKNESSES
Lack of direct marketing
strategies for its products
Lack of market experience in
new media marketing channels
for related products and
services
O-OPPORTUNITIES
Expanding marketing strategies
Undifferentiated rival products
Consumer demand for home
consumer product goods and
especially health & beauty
products
Niche markets
S-O STRATEGIES
1. Source new products meant to
target niche markets
2.Utilize its managerial competencies
to develop a more aggressive
marketing strategy to take advantage
of its competitors lack of
differentiation
3. Continue to diversify products to
meet increasing consumer demand
W-O STRATEGIES
1. Develop more focused
marketing strategies
2. Partner with an established
consumer product goods
distributors such as Amazon.com
in order to increase internet based
sales
3. Utilize niche markets to lessen
dependence on just a few product
categories
T-THREATS
Sustained price competition
Industry regulation
Competitor entry into the home
consumer product goods market
S-T STRATEGIES
1. Utilize volume buying in order to
put further pressure on the
competition
2. Continue to expand product
diversity in order to offset increased
competitor entry
W-T STRATEGIES
1. Establish a partnership with an
internet consumer product goods
distributor such as Amazon.com in
order to increase sales in different
product categories

Alternative Courses of Action and Solution
It is very important to use correctly the four Ps. If one companys sales are decreasing, it has to look and
consider adapting one or all of the four Ps.
Product
Cosmetics are convenience products. To make the product available is very important in increasing its
market share. To expand its assortment, the company could use the strategy of 'Trading up'; add products
of high quality to the existing assortment. This is aimed to improve the image of the total assortment.
Customers find the brand name, reputation of the manufacturer, the guarantee definitions and the services
offered very important. What P&G should do in order to achieve a much better brand name are the
following: Keep the brand name short, easy and easy to spell; Easy to recognize and remember; Easy
pronunciation of the brand name; can be used internationally. A product strategy is the adaptation of the
product. P&G could take off the articles out of the market, which are not providing in the needs of the
consumer anymore. It can change the packaging of other cosmetics. Like what they did before with the
packaging of Max Factor, focusing on style and elegance. The packaging has also other functions such as:
Recognizable and attractive; Emotional appeal, the packaging can achieve a certain position for the
product. It can develop new and better guarantee definitions and the giving service. One of the most
important services is to keep an expanded assortment.
Price
The decision of the right price is very important and even more difficult for the marketer. Increasing the
price too high will scare off the customers. However, a low price will yield low profits. Some important
issues, which P&G have to consider, are: Which discounts can be given? Are the buyers ready to pay a
higher price? In Japan the cosmetics are much cheaper then Europe of P&G. Actually, it could raise its
prices in Japan. That is because it distinguishes itself especially in the packaging and brand name.
However, we should consider if the decision of the price must lead to a profit on short term or on long
term. P&G wants to go global. That is related in a long-term profit choice. More profits will be fetched in
the future. That means P&G should start asking lower prices for its cosmetics, in spite of the
distinguished character of its products.
Place
An effective distribution system means the obtainability of the right products on the right time and at the
right place. Efficiency is necessary. The distributor takes a certain brand name, because he knows that the
brand name positions its self compared to other competitive suppliers. The product must fit at the shops
formula. Examples: private labels, very selective/exclusive distributed brand names. For P&G products,
an intensive channel design is for granted. P&G should be direct in business with the retailer. This results
in two benefits. First, the wholesaler will be eliminated, which results to more profit for the retailer and
P&G. Second, if P&G operates as much as possible direct with the retailer, it will be me more up to date
in the need of the buyers. That will automatically result in improvement of the marketing department. The
channel choice will be then horizontal.
Promotion
Saving actions, price questions, gift-articles, demonstrations and other forms of sales promotion
influences positive the chance of purchasing. One knows that old people would like to be young and
young people would like to be older. It could adapt its ads, because of that. P&G like to target more
young people now; it could ad in popular magazines like Nikkei Woman and Sankei Live in Japan for
instance. P&G have lack of experience with cosmetics it can train and motivate its sales persons and
representatives. Systematically use of displays, discount actions could also be very useful.

Recommendation
To compete successfully, P&G has to improve its marketing skills and expand its assortment to provide in
the different and fast changing needs of the consumers. They have the potential to achieve this. The
company will carry on its growth. It should use its advantages before the competitors start to gain market
in Japan. Here we have to carry out the strategies we already made before. We should do this according to
the marketing mix. P&G have to divide the tasks for the projects and point out the persons who will be
responsible for those projects. After this, we can give concrete form to action plans. The brand name has
an important role by purchasing of consumers for a certain cosmetic. P&G have to position its cosmetics
very strongly. It must have a positive distinguished character. To manage this, it should use the best
media for ads and commercials for the right target group. Young people would like to be older and old
people would like to be young.
Budgeting could be used as part of the tactical plan. The best way to make sure that a planned investment
or launch of a new product is going to benefit the company is budget every aspects of the company
including the new plans. Many articles and books have been written about it. Starting with the sales
budget and then moving on to the production budget, the direct and indirect costs as well as fixed and
variable costs are going to be included. The aim of this process is to create a budgeted (predicted) balance
sheet that will be use later in the process. 'What if' situation could be used as well. Budgets are going to be
compared to the actual and real figures in order to achieve the best results. In some case budgets are also
use for other purposes such as control.
Conclusion
The mission of P&G is to become a leader in the cosmetic industry. The most important
objective is going global in cosmetics. We can assume that P&G is ready to go global in cosmetics. It
carries on its growth. The most powerful strength of P&G is its brand name. It can benefit in the
promotion, positioning and pricing. The most important weakness is that the firm has lack of experience
with cosmetics. To improve that it could train its sales persons, representatives, and it could improve the
marketing department and its research and development. The opportunity of the company is to expand its
assortment. A limited assortment is also one of its weaknesses. If the firm expands its assortment, it will
get rid off that weakness. The budget will suffice to expand the assortment. The most dangerous threat is
the growing competitive pressure. This means that P&G should quick attack the market in order to gain
more market and position its products with its well-known brand name before the competitors. An
advantage of P&G is that it could hold its prices lower than its competitors, because of the volume
production which P&G will undertake. To launch its products in Japan will be a profitable choice for
P&G. The company targets now more young people and Japan's population is young. This does not mean
that older people should be ignored. One of the results of a marketing research is: Young people would
like to be older and old people would like to be younger. If P&G want to gain as much as, possible market
it should also provide in the needs of the older people. Japan is also very close to the United States of
America; the domestic market of P&G. It will make it then much easier for all operations of the firm.
P&G should than be in business with the retailer directly. It could enlist an agent, but it should eliminate
the whole-sales. It will save costs with transporting the products and P&G could be easier and faster up to
date in the needs and wishes of the buyers. The sales expectations are high in Japan. We have a market
penetration of 67%. That means huge market coverage. The profit expectations are lower in the first
place, because of the high costs of the launching. That will make up within in a year. P&G's budgets are
part of their tactical and control plan. The controls cover every aspects of the company and allow top
managers as well as each department to quantify how well they did in the included period. In case of
something goes wrong, budgets will help identify where the problems are in order to take corrective
actions.