There were a number of reasons why Unilever and P&G were harmonizing their brand portfolio as outlined below:
• The concentration of resources on a smaller portfolio of global power brands decreased the complexity in the portfolio as well as costs. For example, Elida Gibbs, a Unilever personal care company, had reduced its brand portfolio in Brazil from 20 to 7 in 5 years, and in the same period had increased revenues by 50% and margins by 100% (Arnold 6).
• The reduction of the number of stock-keeping units (SKUs) that had to be handled would result in production savings as well as savings from more concentrated marketing support.
• There was a significant pressure from big European retailers that were consolidating. The top 5 grocery retailers in Western Europe accounted for some 32% of total sales across all categories in 2000, a figure which projected to rise to 45% by 2005 (Arnold 5). Retailers wanted to create regional listings of a limited number of strong, well-supported global brands. This was also magnified by the economic convergence and the rise of the Euro as a shared currency across the Eurozone. This brought greater international price transparency across markets.
• Since market expenditures in consumer advertising had declined from 60% to 45% (Arnold 6), harmonizing the brand portfolio internationally would mitigate the dilution of advertising budgets across many brands.
To summarize, by harmonizing their brand portfolio internationally, Unilever and P&G were aiming to maximize their profit through improved operational efficiency due to a smaller number of brands and SCUs. In addition, they expected that a leaner portfolio of global brands would generate bigger orders from larger retailers.
2. Is it a strategic ne...
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... brands. For established brands, the strategy that Schroiff described as "adaptive” (Arnold 7) should continue. The adaptive strategy would include maintaining existing local brands while creating economies of scale by standardizing technical product features when possible such that not destroying product value in the market. The benefits of satisfying markets-specific needs should outweigh any resultant increase in costs. Brand and product features differentiation as well as emphasizing the functional performance and emotional value of the product should be part of the marketing strategy.
At the same time, when product innovations, such as gels or tabs, are introduced they should be added to all existing brands, with the result that overall variation in the portfolio is much reduced from the old days of a different set of formulations in every country (Arnold 8).
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
Thus new products/line extensions will be based on Allround brand, each one with a unique target market, delivering different value proposition to the respective customer.
P&G was founded in 1837 by William Procter and James Gamble as a maker of soaps and candles. P&G was known in Corporate America as a company to be admired and imitated. In addition, it was envied for its profitability as well as strong brand name. P&G has a long standing reputation as having life long employees. This dedication and loyalty by P&G's employees created the notion that outside sources were unwelcome and all products and ideas must come from within, however, this is not the way of the future.
Organizational changes that reduce cost. The M&S reduced its management levels to reduce the cost.
Procter and Gamble (P&G) and Colgate-Palmolive (C-P) are two of the largest consumer goods company in the world and have been in the industry since the 80s. The companies manufacture and market fast moving consumer goods (FMCG) such as household products, personal care and hygiene, targeting at various segments of consumers. Among the brands carried by P&G are Downy, Olay, Tide, Clairol and Bounty. Popular brands under C-P are Palmolive, Kleenex, and Colgate.
Sarkar, A. N., & Singh, J. (2005). New paradigm in evolving brand management strategy. Journal of Management Research, 5(2), 80-90. Retrieved from http://search.proquest.com/docview/237238894?accountid=28644
Before Lafley took over for Jager, P&G was stretched to the max, haplessly wasting away resources and opportunities with an overcomplicated business strategy. P&G was raising prices on their best selling brands to cover for missed sales and high production costs for new brands that failed to be a successful [Lafley, 2003]. They had hired too many employees and were involved in several investments that were unprofitable. P&G had not had a hit product since the launch of ALWAYS feminine products in the 1980’s and each additional product flop only stretched their recourses thinner and thinner. Costs were high and moral low with employees not afraid to voice their lacking confidence with P&G’s leadership and direction. Subsidiaries were blaming corporate for their missed earnings and visa versa [Lafley, 2003]. Strategies between the brands at P&G clashed and each were out to safe guard their own interests. The prices of their consumer products were too high while the company failed to deliver customer satisfaction. These factors distracted them from what had originally made them successful – being an industry leader in innovation (Markels, 2006).
The case looks at prescriptive strategy as applied to multi-product group of companies. Unilever is based in over a hundred countries where multiple products are being made in each. However, the market is mature which means that growth is stagnant and innovation is almost non-existent. In order to improve on growth and sales, the strategies that are needed look at how to come up with new products that have high profit margins and penetrate new markets. The prescriptive approach was used to come with a strategy to improve growth and profit. In order to improve on innovation, both the prescriptive and emergent strategies can be used since both support innovation. From the case study, not much profit was made when the ‘Path to Growth’ strategy was first implemented (2001-2004). The strategy was initially based on cost cutting. There was a need to also build volumes through existing portfolio of branded products through innovation and marketing. By focusing on increasing sales in developing countries where growth prospects were high and increasing investment in personal care products where profit margins were higher, it was possible to improve the profit portfolio.
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We have carried out a study on the F.M.C.G Company Heinz. Heinz is the most global U.S based food company, with a world-class portfolio of powerful brands holding number 1 and number 2 market positions in more than 50 worldwide markets. There are many other famous brand names in the company¡¦s portfolio besides Heinz itself, StarKist, Ore-Ida, Plasmon, and Watties. In fact, Heinz owns more than 200 brands around the world and makes over 5,700 varieties.
Price and advertising strategy: PepsiCo Overhauls Statergy. PepsiCo plans on saving 1.5 billion dollars in...
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Relationships have been in place with two main groups in Singapore long before Proctor and Gamble ever decided to build a plant. The Economic Development Board and A*Star’s Institute for Materials Research and Engineering are the two main groups they have been involved with. Since Proctor and Gamble built these relationships before building a plant in Singapore they have thus established a strategic alliance with Singapore. The Economic Development Board and A*Star’s Institute for Materials Research and Engineering have come together with Proctor and Gamble to share resources and complete a project. Proctor and Gamble benefit from setting up a strategic alliance with A*Star by getting the privilege of looking at IMRE’s innovative research (Moneycontrol.com, 2008). In return for this preferential treatment, P&G shares its new innovations with A*Star’s IMRE (Moneycontrol.com, 2008).