International Business Case 6

Procter & Gamble

Europe: Vizir Launch

v

By:
Group 9
Section E



1. As Charlie Ferguson, P&Gs European VP, would you authorize Wolfgang Berndts
third request to launch Vizir in Germany? Rationalize your answer

Ans: Considering the facts given in the case, there are two options for European VP:
- Launch Vizir and assume all risk associated with Vizir
- Give up plans to launch the product all together and forgo the proceeding gain
Based on the evidence given I the case and the analysis that follows, we would suggest that
Charlie should give a decision in favor of the launch..
Launch the product:
o As the results from the initial blind tests for Vizir have been positive & it won
against German market leader, however the senior managements reluctance to a
major launch for the product is the risk associated with investing in a product
based on only 3-4 months of testing. As it is clear that competitors such as Henkel
would also be working on counter strategies to the launch of the product, waiting
for the conventional one year testing norm followed by P&G might cause loss of
the first mover advantage. A launch at this point of time would put pressure on
competitors as well as allow P&G to capitalize the market.This premium pricing
would compensate for any soft cannibalization that the product causes on Ariel
which falls under the same utility category.
o We would also like to recommend the launch of Vizir as a sideline product used
only to counter excessively soiled clothes. This strategy would help P & G for a
market-skimming pricing strategy. Setting a high Price for Vizir to skim revenue,
thus making fewer but more profitable sales. This positioning will also help
preventing Vizir from cannibalizing Ariel sales.
o Further high speed new product development can be adopted by the company
which would keep the company on it toes to face the competition and bring
innovations in its original product. This will help P&G to rescue its product from
imitation.Also through this we can later on bring changes to the image of the
company to main product
o There are questions regarding whether to launch Vizir in only Germany or whole
Europe, Launching in whole Europe would be a better step but few considerations
for marketing standardization include : to launch the product in those countries
that possess most similarities in terms of consumer preferences and habits,
technology, competition, and national legislation.



2. What do you think of the Eurobrand proposals? What concerns do you have? How
do you resolve them?

Eurobrand would improve standardization of production, marketing and product portfolios which
will have positive economic impacts on the firm at large.

Assignment 6
Advantages of centralized production
and branding
Adverse Effects of a standardized
systems
- Greater Economies of Scale in
production
- Effective utilization of R&D where
skilled personnel are hard and
expensive to find
- Longer factory runs and better
manufacturing efficiency
- Reduced packaging cost per unit
- Reduced central expenses for company
governance and leadership
- Improved brand recall and visibility
with single point common theme
branding
- Customer retention across borders and
reduction of propensity for customer to
switch
- Decreased cost of advertisments

- Very high centralization leading to a
dogmatic top down hierarchy
- Possibility of bigger sized markets such
as Germany and U.K dominating
decision making about product
specifications and branding guidelines
in line with their market trends
- Potential for conflict between different
profit centers on their requirement for
the centralized product
- Not suitable for lifestyle and daily use
utilitarian products as they vary highly
with different cultures and climatic
conditions in each country
- Value chain varies with topography and
nature of each countrys economy. For
instance, Italy does not have
hypermarkets of the kind that U.K and
France have. Further, Scandinavian
countries have a geographical location
which warrants a different kind of
distribution network and product
packaging as compared to South
European nations such as Spain
- Administrative and legal systems
between countries are different and a
centralized approach will increase
transactional costs such as
import/export duties
- The shopping patterns and disposable
income of different nations vary, thus a
common pricing strategy might result
in a product which is too inferior in
quality for one nation and too
expensive for another
- Government imposed restraints on
ingredient usage or advertisement
expenses might put few nations outside
the scope of centralized production



Conclusion:

Culture and lifestyle aspects which cannot be influenced in the short term, however, P&G can go
forward with Eurozone branding for products for which usage patterns do no vary much across
societies. Instead of looking at launching a product such as a detergent which clearly has
different patterns of usage between different European countries, the company can look at
launching diapers under Pampers brand or Shampoos under a common brand across Eurozone.

The value chain can be chosen such that distribution and packaging are as standardized as
possible. For nations requiring an additional fringe, the base standardized packaging style may
be appended with whatever is required.

Pricing should not be kept standard as far as possible. A base price in dollars may be fixed and
individual pricing in each nation should be chosen in accordance with the purchasing power
parity and marketing research data available from the particular nation

The company should ensure that the lead country does not get an absolute hand in negotiations
for deciding specifications for products or guidelines for branding. Smaller markets should not
be ignored even though the weightage for each country may be given as per its potential for sales
revenue. Special care has to be taken care by the Zone leadership team to ensure that each profit
center is given due respect and the implementation is not forceful and stays in tune with P&Gs
basic principle of treating employees in high regard.