Brand Communications – Procter and Gamble Case Study

Background
Procter & Gamble (P&G) is one of the world’s largest companies, manufacturing and marketing a
wide range of consumer products. In the year ended June 2013, turnover was $43.4 billion. The
company is structured across three global business units:

i. Household Care which combines fabric and home care products, (brands include Tide and Ariel
soap powders) plus snacks and beverages (Pringles snacks and Folgers coffee)
ii. Beauty Care (Max Factor cosmetics and Clairol hair products)
iii. Health, Baby and Family care (Pampers nappies, Bounty kitchen towels, Crest toothpaste)
Procter & Gamble is the global market leader in baby care products. In January 2005, it was
announced that P&G had acquired Gillette, itself a giant consumer goods company. In most
sectors in which P&G operates, its major competitor is Unilever. Top retail customers for
P&G brands include the supermarket chains Albertson’s, Carrefour, Kmart, Wal-Mart and Tesco.

Delighting the customer

In supporting a company of this size, with brands covering a number of market sectors, marketing
communications play a significant role in maintaining and developing both retailer and consumer
relationships. In the UK in 2004, Procter and Gamble’s advertising expenditure increased by
almost 13% to £186.9 million. This is in addition to a budget of £400 million covering in-store
promotions, direct mail, public relations and market research.

Roisin Donnelly, the UK & Ireland Head of Marketing and Corporate Marketing Director,
emphasises the company philosophy ‘that the consumer is the boss. They make the purchase
decision every day. If we delight her, she will reward us with sales. If we disappoint her she won’t.’

The consumer is always referred to as ‘her’ at P&G, simply because research indicates that even if
the actual purchaser is male, the brand purchase decision has usually been made by a female. Not
surprisingly, listening to and understanding the customer is a key aspect of marketing activity in
order that communications can be targeted effectively. For example, all new members of the
Pampers marketing team must be able to change a baby’s nappy!

Importance of communication
Whilst there is still a significant focus on the use of TV led advertising with 80% of media budget
allocated to this medium, increasing sums are being spent on other media. Donnelly believes P&G
needs to talk to consumers in a number of different ways. Research shows that whereas TV
viewers used to recall 70% of what they saw on TV, this has now reduced to a little over 40%. As a
result, interactive advertising is now receiving increased attention at P&G. A recent interactive
campaign for the Flash cleaning brand featured the Disney film Lilo & Stitch, with film trailers, free
toys and a quiz about untidy people. Through this campaign consumers spent an average of nine
minutes interacting with Flash.

Promoting word-of-mouth communication, by identifying ‘expert consumers’ who talk about brands
to friends is also seen as a powerful tool and this is being linked to social networking tools such as
Twitter, Facebook and Instagram. This idea of targeting experts and influencers is demonstrated in
the beauty care sector, where make-up artists and bloggers are targeted and some are used to
endorse the brand. For brands targeted at younger consumers, an instant messaging system
called Tremor has been developed, which offers gifts to members and provides news intended to
be shared with others.

Building relationships
More recently, P&G has been examining the communications methods used to build closer long-
term relationships with consumers. The concept of building relationships with consumers of
branded products such as floor cleaners and detergents has been a difficult one for manufacturers
to accept. However, P&G regards this as essential as it sees increasing competition from retailer
own-label products. A customer magazine, ‘Mustard’, which had been distributed to households in
the UK by a national newspaper, the Daily Express, and directly to 300,000 P&G female customers
with children, was withdrawn. It was replaced by the development of a lifestyle website called
‘Fresh Living’. Based on the success of the P&G-run US beauty website www.reflect.com, Fresh
Living features Household Care brands including Flash and Fairy Liquid. The site features home
improvement tips, ideas for home and garden makeovers, special offers and opportunities to
sample new products. In addition, it is used to send personalised monthly email newsletters to
consumers. Off-line direct mail has achieved varying degrees of success and many manufacturers
now work directly with retailers who have built effective loyalty schemes such as the Tesco
Clubcard. All of these moves are a response to the changing use of marketing communications as
retailers try to restrict branded in-store signage and promotional materials.

Return on investment
Measuring the effectiveness of their marketing communications is high on the P&G agenda. Both
qualitative and quantitative approaches are used but increasing emphasis is being placed on the
use of quantitative measurement tools. Donnelly is sceptical about the value of focus groups and
sees this as a blunt instrument. She believes that spending 10 hours with one woman would be
more productive than an hour with 10 women. A new unit has been established to measure
marketing ROI (Return on Investment). This complements the methods P&G used to pay agencies.
For a long time these were based on media usage but now they are more heavily orientated to
payment-by-results or PBR. In the US, it has also set up Project Apollo in collaboration with various
brand partners. This £50 million plus project aims to measure advertising effectiveness by studying
thousands of consumers to discover which products they buy, and how and where they can best
be reached through marketing communications.

Activity
You have created a new shampoo for the P & G range and need to bring it to market. You need to
produce a PowerPoint presentation which answers the following
▪ Create a brand/name and message for your shampoo (remember to consider history and
provenance here)
▪ Identify Objectives for the launch of your new shampoo
▪ Define a target market for your new shampoo
▪ Outline a communications mix to support the launch of the new P&G shampoo in the
market of your choice. Consider Justify your choice of promotional tools.
▪ Produce a possible timeline for activities.