I.

Situational Analysis

Company and Context

Procter & Gamble (P&G) is one of the world’s leading consumer product companies. It is
headquartered in Cincinnati, Ohio and was founded in 1837. P&G offers approximately 300 brands in
over 140 countries. P&G’s invests on extensive R&D and Market Research to create products with
functional superiority with a deep undestanding of consumer needs and wants . It also has a brand
management system and a talent and competitve workforce which values integrity in all business
dealings. P&G’s success is driven by 4 principles: 1) To be first, 2) Enter big scale, 3) Compete with their
best technology, 4) Build systems and processes rather than waiting for them to develop. P&G offers
products categorized through 5 divisions namely: Laundry and Cleaning, Paper, Food and Beverages,
Beauty Care, and Health Care. Always, a feminine protection product, fell within the Paper division.
Within each Division, there could be 2 or 3 brands headed by a general manager.

P&G entered Eastern Europe in 1990 and initially concentrated its activities in Poland, Hungary
and Czechoslovakia. P&G then entered Russia in late 1991 via a joint venture with the University of St.
Petersburg. P&G’s initial portfolio inlcuded Tide detergent, shampoos such as Wash n Go and Head &
Shoulders, toiletries including Old Spice and Oil of Olay, and a number of smaller brands. By 1995, P&G
introduced a number of brands including Pampers, Fairy Washing-up liquid, Safeguard and Pantene
toiletries range, Comet Cleaners and Ace Bleach. P&G Russia’s brand manager of Feminine Protection
Category is Annick Desmecht and the general manager of feminine protection (“FemPro”) is Stassi
Anastassov.

One of P&G Russia’s products is Always. It is the world’s leading brand of feminine disposable
pads, capturing 25% of its market. It was launched in October 1995, and the latest audit figures showed
it achieving market leadership in 1998. Always offered 2 types of pads using different product
technologies: Regular and Ultra. The Ultra technology, based upon a patented form of absorbent granule
inside the pad, offered equal or greater levels of performance in a significantly smaller and lighter pad.
Each technology offered 3 variants: Basic, Plus, and Super Plus. Plus products had wings added to the
side of the pad, keeping the pad in place better and providing extra protection against side soiling. Super
Plus products were longer and offers greater absorbency suitable for overnight use. All products boasted
a “dri-weave top sheet”, the pores of which prevented liquid from leaking out after being absorbed. Price
Index of the product is shown in Figure 1.

Basic Plus Super Plus

Classic Plus Super plus
Regular (100) (130) (160)
Normal Plus Super plus
Ultra (130) (160) (190)
Figure 1

Customer

The Russian consumers are women aged 18-55 years old. Research indicated that consumers in
Russia wanted top-quality Western products the fastest way available within the constraints of their
relatively low income levels. Consumers in Russia are very quality-driven. They are also prepared to
spend a higher than usual proportion of their low disposable income on consumer packed goods*.
Russian consumers are often torn between their underlying preferences and the reality of their
economic situation. The attitude of Russian consumers towards new brands offered in 1990s was often
described as intelligent and skeptical. However, they are willing to try new products, will be loyal to
those with a perceived quality difference, and are willing to shop around to find them. On the other
hand, they live with high levels of uncertainty, they only get paid at irregular intervals, and they are often
forced to trade down from their favored brands. Average users are willing to spend $2 per month for
feminine pads.

Russian consumers also experienced their first increase in income in 1997. Real wages rose on
average by 5%, and real household incomes by 2.5%. This resulted to 5.2% increase in retail sales.
Average monthly disposable income is $200 per household. However, during 1997, U.S. Treasury
questioned the reliability of the official economic statistics claiming that living standards were appox.
50% higher than reported. It is estimated that 44% of the population were “getting by”, with 30%
enjoyed a “good standard of living”.

*Consumer packaged goods (CPG) are consumable goods such as food and beverages, footwear and apparel, tobacco, and
cleaningproducts. In general, CPGs are things that get used up and have to be replaced frequently, in contrast to items that
people usually keep for a long time, such as cars and furniture.

Competitor

Libresse, a Swedish paper company Molnlycke, is the market-leading brand of disposable brands
in Russia in 1995 until 1997.The other major Western brands in the Russian market are Carefree
(Johnson & Johnson), Kotex (Kimberly Clark) and Helen Harper. The key local competitors are Veronika (a
low-end Russian brand), Bella (a low-priced Polish brand which had 50% share in its domestic market).
Competitive shelf price index per pad is shown in Figure 2, Always being 100. Comparative price in
dollars is shown in Figure 3.

Despite the high price, Always fared well in research into consumer value perception, with 78%
describing the brand as “good value for money”, the top of the scale used. This was higher score than
was achieved by any brand included in the survey; Libresse scored 57%, Carefree 58%, Bella 50%, and
Veronika 41%.

Classic/Thick Thick + Wings Ultra + Wings

Always 100 100 100
Libresse 95 110 95
Carefree 134 122 114
Kotex 158 127 107
Bella 48 68 114
Veronika 31 N/A N/A
Figure 2
 Classic/Thick Thick + Wings Ultra + Wings
Always $1.50 $1.95 $2.40
Libresse $1.43 $2.15 $2.28
Carefree $2.01 $2.38 $2.74
Kotex $2.37 $2.48 $2.57
Bella $0.72 $1.33 $2.74
Veronika $0.47 N/A N/A
Figure 3

Collaborators

P&G first entered Russia in 1991 via a joint venture with the University of Petersburg. P&G also
developed Always brand with advertising agency DMB&B on a global basis. P&G also invested in an
identified number of promising distributors in return for a commitment to distribute P&G products
exclusively. P&G also collaborated with Kevin Edwards, who had managed the introduction of McVan in
Poland, had built a multifunctional team of 200 people supporting the development of Russian
distribution system.
II. Areas of Consideration

During 1997, Russia enjoyed real economic growth (shown in Figure 2).

1997 1996 1995 1994 1993

GDP ($bn) 462 440 357 278 184
GDP (PPP*) 624 609 626 637 711
Real GDP Growth % 0.4 -5 -4 -12.6 -8.7
Average Consumer Price Inflation % 15 48 200 300 850
Population (millions) 147.7 147.9 148 148.2 148.6

Source: Adapted from World Bank and Economist Intelligence Unit Data
*PPP - Purchasing Power Parity, an adjustment to reflect real purchasing power, given costs of living and other economic conditions in the market
Figure 4

Product

68% of the feminine protection (FemPro) market is composed of feminine pad products, while
14% is composed of pantiliners, and 18% is composed of total tampons.P&G Russia offers only 1
feminine protection (“FemPro”) product, Always. Always is the world’s leading brand of feminine
protection disposable pads offering 3 variants with two product technologies shown in figure 1. The
company is currently deciding whether to extend FemPro portfolio by launching Alldays and/or Tampax.
Alldays is a brand of lighter pantiliners for everyday use, between menstrual periods. Tampax is tampon
brand recently acquired by P&G.

Place

P&G currently enjoys competitive advantage over its competitors because of its distribution
system. However, Russia will eventually develop a distribution system which eliminates its distribution
system as a competitive advantage.

Price

In Russia, they decided to introduce their best technology at premium prices, in line with those
prevailing in developed markets, and as a result they have built a premium business. Alone in Central
and Eastern Europe, Russia had decided to follow the Always global pricing model. This was based upon
a 30% premium for every level of upgrade. Price per pack is shown in Figure 3.

Promotion

In Russia, mailboxes are unreliable for communicating with consumers as they are subject to
vandalism, theft and divertion of samples. Direct-to-door sampling (also known as “knock-and-wait door-
to-door”) is not also feasible because many women would not open the door to strangers because of
security concerns. P&G had been one of the very first Western companies on Russian TV, and remained
by far the largest advertiser through 1997. However, an amazingly high proportion of women tested the
products they see in demonstration in the advertisements just to check if it really looks the same.
 GRPs 1997 GRP Index (1996=100) Share of Voice (%)
Always 9,415 190 30%
Libresse 9,743 203 31%
Carefree 7,189 171 23%
Total Pads 31,752 178 100%
Total FemPro 49,424 N/A

GRP - Gross rating point; 1 GRP = 1 exposure of the advertisement to one percent of the target
population

III. Problem Statement

Stassi Anastassov, general manager for a number of P&G categories including Feminine
Protection (“FemPro”), and Laurent Philippe, vice president and general manager in charge of Russian
subsidiary of Procter & Gamble (P&G) discuss 3 particular issues during the meeting:
1. The price level of the Always brand, and specifically whether it should continue to be priced
at the same price level as Western Europe, and whether there existed an opportunity in
Russia for a mid-priced brand
2. Sustainability of the different marketing strategies being followed in Russia and neighboring
Eastern European countries, and whether it was important for the Russian team to consider
this in formulating its own plans
3. The question of whether to extend the FemPro portfolio by launching Alldays, a companion
brand of pantiliners, and/or Tampax, the tampon brand added to P&G’s stable of brands
through the acquisition of Tambrands in 1997
They are now presented with information about the Russian market and they are expected to
use such data for the company’s advantage. How should they use the presented information to create
solutions for their issues?

V. Alternative Courses of Action (ACA)

ACA1 – Make Always more affordable by eliminating advertising expenses. Tampax and Alldays will not
be extended to the market since it would require advertising expense to introduce new products.
Pros:
- Lowering price level will invite more users and possibly get a bigger market share
- Lesser total and unit cost
- P&G can focus solely on Always
Cons:
- Possibility of losing market share because of advertising campaigns of competitors
- No new products will be introduced
- Market for tampons and pantiliners will be solely enjoyed by competitors

ACA2 – Maintain the price level of Always since it is already priced competitively against Western
products. Extend Alldays and market it as a necessity for everyday use. Do not extend Tampax since it is
already declining in regular usage.

Pros:
- Prices are still competitive against Western products
- FemPro portfolio is extended by launching Alldays
- Increase in revenue because of new product
Cons:
- Increase in advertising expense because of the introduction of a new product
- P&G will continue to not have a product to compete in the tampon market
- Possibility of a loss since product usage for pantiliners is only 14% in Russia

ACA 3 – Maintain the price level of Always since it is already priced competitively against Western
products. Introduce Alldays and Tampax in order to extend FemPro portfolio.

Pros:
- Prices are still competitive against Western products
- FemPro portfolio is extended by launching Alldays and Tampax
- Increase in revenue because of new products
Cons:
- Increase in advertising expense because of the introduction of new products
- Possibility of a loss since pantiliner and tampon products only have 14% and 18% product usage
in Russia respectively

VI. Conclusion

Among all the courses of action for P&G, we highly recommend ACA 2. We see no need to adjust
the prices of Always because comparing to other Western Brands, it is actually priced the lowest. Based
on research, Russian consumers prefer products that are of quality. This justifies the pricing of P&G for
the product which is a bit higher than those of local brands. This is the competitive advantage of P&G.

We also believe that it would be a wise decision to put much effort in advertising for Alldays. Just
like how Always pads are patronized well in Russia, Alldays has a chance contribute to the total sales of
P&G if marketed well.
 It appears to be a bad idea to introduce Tampax in the Russian market. It can be very effective to
market it in the US but for a country like Russia, it wouldn’t be a good fit. This can also be seen in the
sudden drop in the percentage of tampon use in the country, from 37% in 1996 to 20% in 1997.

In conclusion, we believe it is more important to focus on improving the pads product line and
formulate strategies to support this approach.

VII. Recommendation

STP and Product

Segment the market into 3:

1. Regular users with simple lifestyles

2. Teens especially those that are experiencing menstruation for the first time

3. Women who have very active lifestyles

The “Teen” and the “Active” markets can be considered niches as they are not as many in
numbers as regular users. However, it is important to inculcate in the minds of these users that certain
products are made especially for them, potentially increasing sales.

To match the new segments, P&G should have a huge depth under the pads product line. Below
is a chart showing distinctions in the products that will be offered in different market segments:

Product Type Product Name Tagline Packaging Concept

Gold font in black
Regular with and
Regular Always Classic Always Confident packaging with a
without wings
premium feel
White font in dark
Regular with wings Always Classic - Always Confident at blue packaging with
+ extra length Night pads Night moon and stars
design
White font in lilac
Regular with and Always Fresh &
Teens Always Fresh packaging with
without wings Clean
flower design
White font in violet
Regular with wings Always Fresh - Always Fresh & packaging with
+ extra length Night pads Clean at night moon and stars
design
 White font in green
Regular with wings
packaging with
Active + extra length + Always Active Always on the go
arrow pointing to
extra absorbent
the right

TV Advertisements will also be implemented with the following concepts:

Regular products will be advertised with comparison to the competitors. 2 women both having
their monthly periods will be shown doing their job as a flight stewardess however, the women use
different pads. The one using Brand X (competitor’s brand) is very cautious and clearly worrying if her
pads have failed her again. However, the stewardess using Always Classic stays confident. By the end of
the ad, the stewardess using Always Classic suggests to the other stewardess to use the Always Classic
feminine pads.

Products targeted for teens will be advertised with russian schoolgirl aged around 14-16 years
old having her first period. She is very embarrased about having her first period and feel awkward about
it. However, after using Always Fresh feminine pads, she regained her confidence and continued to enjoy
school life.

Famous Russian athletes like Maria Sharapova will be the brand ambassador for Always Active.
On our testimonial advertisements, Maria Sharapova will be shown playing tennis with full concentration
without even worrying about her period. She will testify about the brand’s high quality and confident
feel.

Key Accounts Officer will also be hired in order for distributors to be well taken care of. These
Key accounts officers will be the one to handle, monitor and control distributors. Each key accounts
officer will be focused on a different market. 1 will be assigned for supermarkets/grocery, 1 for the open
market, 1 for the pharmacy. This will ensure that stores will never run out of Always stocks.

To deal with the intermediaries causing price problems in some areas in Russia, a general
meeting should be conducted so that policies become clear and loopholes are not exploited. There
should be proper monitoring of where distributors get their product from, with the help of the assigned
key account manager.

Before P&G actually launches Alldays pantiliner in Russia, it should first conduct extensive
market study and research. It has to know competitor’s products, prices, advantages and variants. It
should also know the consumer’s preferences, price sensitivity and usage per month. These information
will assist in the successful product positioning of Alldays pantiliner.