Procter & Gamble: The Beauty/Feminine Care Segment of the Consumer Goods Industry
In 2005, A.G. Lafley, chairman, president, and chief executive of Procter & Gamble (P&G), told the shareholders that since 2000 sales had grown more than 40% to $57 billion and profit had more than doubled. P&G was a global manufacturing, distribution, and marketing company focusing on providing branded products with superior quality and value. Two billion times a day, P&G brand products touched the lives of people around the world. The company provided over 300 brands reaching consumers in about 140 countries. P&G was formed in 1837 by William Procter and James Gamble. It all started by making and selling soaps and candles. On August 22, 1837, they formalized their business relationship by pledging $3,596.47 a piece; in early 2006, the company made approximately $68 billion annually in sales. In 1862, during the civil war, the company was awarded several contracts to supply soap and candles to the Union armies. These orders kept the factory busy day and night, building the company’s reputation as soldiers returned home with their P&G products. Since then P&G had continued to grow in sales and in the introduction of new products [P&G Company Information, 2006]. Over the years P&G has acquired new product brands and companies such as Iams, Clairol, and Wella. The most recent one was on October 1, 2005, when P&G added Gillette to expand the Company’s product mix to 22 brands. The Gillette Company was a manufacturer and distributor of various types of consumer goods in the following five areas/brands: Blades and Razors, Duracell (batteries), Oral Care, Braun (small appliances), and Personal Care. The merger with Gillette made P&G a more balanced company in terms of brands, employees, and sales against its competitors over the intermediate and long-term future. The consumer goods industry was changing drastically in the last few years leading up to 2006. Retail power was increasing and today’s consumers were more confidently deciding when, where, and how to shop, and at what price to buy. There were various reasons for these changes, such as more variety of products in the market place. In addition, according to the Bureau of Economic Analysis (BEA), personal income increased to $41.1 billion and disposable personal income (DPI) increased to $35.5 billion, in December 2005 [BEA, 2006]. P&G, as illustrated in Figure 1, was structured into four organizational units: Market Development Organization (MDO), Global Business Services (GBS), Corporate Functions (CF), and Global Business Unit (GBU).
? Market Development Organization
s (MDO) studied consumers to build local understanding which was used as a foundation for marketing campaigns. Interacting with consumers helped ensure that the company’s marketing plans and campaigns were structured to change the game to favor P&G at the point of purchase.
? Global Business Services (GBS) provided business technology and services that drove business success and won customers and consumers. This unit provided services and solutions that enabled the company to operate efficiently around the world, collaborate effectively with business partners, and help employees to become more productive.