P&G

Product

"We will provide products of superior quality and value that best fill the needs of the world’s consumers".

• P&G claim that its purpose is improving lives for 5 billion consumers in 180 countries through leading, billion-dollar brands. P&G always begin with the consumer in mind, and then it see how P&G brands can go beyond and help make life better for everyone, everywhere.

• There are 65 individual brands, which organized into 10 product categories:

1. FABRIC CARE

2. HOME CARE

3. BABY CARE

4.FEMININE CARE

5.FAMILY CARE

6.GROOMING

7.ORAL CARE

8.PERSONAL HEALTH CARE

9.HAIR CARE

10.SKIN & PERSONAL CARE

Product

Basic Principles

A basic principle, that P&G’s products should provide “superior total value” and should meet “basic consumer needs,” led to a strong commitment in:

1) product research to create products that were demonstrably better than the competition’s when compared in blind tests;

2) consumer research as insurance against major mistakes; and,

3) extensive product and market testing before making major brand decisions.

Basic Principle

P&G Japan

Distribution Structure

Customer's Characteristic

Target group

• The primary buyer of packaged goods was the housewife, and the most important segment the family with at least one child.

P&G Japan

• The Japanese distribution structure was considered unnecessarily complex and the routes circuitous
• Japanese goods typically passed through two or three wholesalers before reaching the retail shelf

• She defines value more in terms of product performance, quality, and reliability than price
• A paragon of conservation and efficiency in the management of her household
• One of the world’s most fastidious consumers when it comes to personal hygiene.

Timeline

Confusion A competative response: 1978 - 1980

P&G

and

Nippon Sunhome

in 1972

• By 1979 cheer and pampers both were on its growth in market share and were becoming a profitable brand.
• Kao announced wonderful in 1977 and easily succeeded. The gain on its first year was 4.2% and it reached to 9.1% by 1978.
• On the other hand Lion introduced Top in 1979. It gained success easily because it used enzymes in the product for improving the cleaning power.
• The new product of Lion gained 19.3% within less than two years this left a big impact on kao’s and P and G’s business

• Establishing a partnership in 1972 with a group called Nippon Sunhome

• Nippon Sunhome received a 50% stake in P&G

• A new joint venture called P&G Sunhome (P&GS) with an initial capital of ¥2 billion

Timeline

P&G On-the-Ground: 1973-1978

• Japanese market entry with Сheer, Bonus and Camay
• Between 1973 and 1977, capitalization of the joint venture increased from ¥2 billion to ¥24 billion
• Successful test market conclusion of Pampers
• Pampers had quickly developed the disposable market from 2% to 10%

Retrenchment:

1981-1983

Throughout 1982 and 1983, both Pampers and Cheer were battered by significant share losses. Cheer dropped to the number-four position in detergents, and Pampers ran neck-and-neck with Moony at 45% share The future looked grim for the president and advertising manager for P&G in Japan during the summer of 1982. Also in 1983, Kao test marketed its own brand of disposable diapers called Merries. With Kao’s strength in R&D, Merries was considered better than Pampers.

Procter & Gamble did not take into account the differences in product distribution systems in the United States and Japan

Title

Strategy

Company strategy: by transferring factory brands and marketing policies developed in the United States to Western European countries

As a result of this all-American strategy, P & G overlooked two major factors in the Japanese market: consumer customs and habits, and the Japanese distribution system.

The Japanese companies had developed their own production line of products that are more in line with the tastes of the Japanese.

Example: Kao, Lion,Uni-Charm

The competitors

built its own wholesale network capable of covering 65% of its end retailers.

released a sale of a thinner and more durable diaper to meet the requests of Japanese mothers

both Kao and Lion were leading the category toward 0% phosphate detergents

the introduction of Top in 1979. use of enzymes to improve its cleaning power. Both P&G and Kao suffered.

Very little progress in establishing an effective working relationship

Partnership

1

Internal strife

3

Further troubles

staff deficit

5

was coming on stream in new facilities, and labor troubles were arising with the unions

brand management concept which placed a high premium on age and seniority in its reward system

small relative size of P&G’s sales force of 150 representatives who were expected to call on P&G’s 3,000 wholesalers weekly

4

Doubts and uncertainty

No rights

2

rumors

6

none of the wholesalers had exclusive distribution rights to P&G brands.

“There was always a fear of when is P&G going to quit investing in this market. The Japanese are amazed at P&G’s investment and their ability to still pay bonuses in bad times.”

In sales, both retailers and wholesalers had lost confidence in P&G’s products and marketing ability as Pamper’s business plummeted at the rate of two to three share points per month.