Market Strategy Direction
Discuss about the Marketing Strategy for Procter & Gamble Baby Care.
The organization structure of Procter and Gamble is based on product portfolio of the company. Global Business Units, Global Business Services, Corporate Functions and Selling and Market Functions form Organization Structure. The portfolio of P&G is formed around product categories (Cheung, L. 2017). These are Global Business Units. P&G has leading marketing position in these Global Business Units. These strategic business units are responsible for new product upgrades and overall brand strategy. Baby care, Family Care, Fabric Care, Feminine Care, Hair Care, Grooming, Hair care, Oral Care, Home Care, Personal Health care and Personal and Skin Care are 10 categories of SBUs (Puente?Díaz & Cavazos?Arroyo, 2017).
This report focuses on Baby Care Strategic Business Unit of Procter and Gamble. The Global Baby Care Organization of P&G helps in serving babies around the world. Various products include wipe, lotion and diaper. These products provide value for customers and superior performance.
Market Strategy Direction helps in determining marketing direction where the entire marketing program needs to be aligned in order to take the company in that particular direction. The market strategy direction of Procter and Gamble- Baby Care can be understood by evaluating these parameters:
Industry: The Global baby care product market is increasingly drastically. It is due to increase in population of infants and also high spending capacity. The other factors which rises the market includes rising number of working women, health concerned customers, desire to buy premium products (Ginter, 2018). Generally people buy products considering sustainability of product, Value, convenience and health benefits (Van Hoof & Kruse, 2014). The government and many non-profit organizations promote baby hygiene. In baby care market, baby toiletries are the segment which holds prominent share. The largest market share under toiletries is captured by baby diapers. The increase in living standard and awareness of safety of child are aspects which show that overall industry is growing (Felter & Niu, 2017).
Market: The market of baby care is competitive in nature. Major companies in this strategic business unit include Procter and Gamble, L’Oreal, Marks and Spencer, Johnson and Johnson, Kimberley Clark. These companies form large market share. However, in any region there are local competitors as well. For example China Child Care Limited, Natura Cosmetics and Dabur India Limited. Overall, the market is ruled by Asia Pacific Market which includes regions like India, Japan and China. P&G is the global market leader in baby care with market share over 25% in 2017 (according to financial report). The company is either number one or number two in most of the main markets where it competes. The global market share of the category of baby product for P&G is decreased more than half point from 2016 to 2017 (Fraser, 2016).
Market Analysis
Company Products: Pampers is the company’s largest brand. It is diaper from P&G. Their annual sale is more than $8 billion. The company products in baby care include baby wipes, pants and diapers. Hipoglos is the baby care sold only in Brazil. The other brand under baby care is Luvs.
Market Strategies: Baby wipes and toiletries are the promising brands which hold the strong growth potential. P&G baby care products have segmented the market based on sizing (Bolisani & Scarso, 2017). The products come under various sizes. For example, from less than 6 pounds to greater than 35 pounds, there are various categories (Ozkan, 2015). The company targets all these segments with different products like Pampers Swaddlers Preemie, Pampers Swaddlers New Born, Pampers Swaddlers Size 1, Pampers Swaddlers Size 2 etc. The baby wipes also has multiple options like Sensitive, Baby Fresh wipes, Kandoo Flushable Toilet Wipes and Natural Clean. The company position itself as branded products that provide superior quality and value to improve the lives of the consumers of world, now and for generations to come.
- Product: The Company’s products include baby wipes, diapers and pants. The company is leading in most of the categories globally. P& G ensures safety of product by different processes before the product goes to the market (Bartlett & Beamish, 2018). The company provides diapers in different sizes, different kind of training pants and variety of baby wipes.
- Price: P&G follows competitive pricing strategy which includes discounting strategy.
- Place: The main distribution channel of Procter and Gamble in various regions include: Supermarkets and Hypermarkets, Online Retailing, Chemist and Pharmacy, departmental and other stores and online retailing.
- Promotions: The packaging of product includes glass, liquid cartons, flexible packaging, metal, paper based containers and rigid plastics. The product is marketed through television commercials and print ads. Product placement is another strategy which pampers used for promotion. Baby care products are also promoted on hoardings. Direct mailing is other promotion mechanism used by pampers.
Forecasting and Budgeting: The main strengths of company are consumer understandings, productivity, innovation, branding, and scale and go-to-market capability. The company has multiple opportunities in sections like packaging for both offline and online. Another area to excel is extending product line in baby care products. The company focuses on productivity. It plans to save up to $10 billion from fiscal year 2017 through fiscal year 2021. Four main elements in productivity savings are considered that include overhead spending, trade spending, market spending and cost of goods sold. The company expects organic sales growth of 2% to 3% in baby care category.
Using Boston Consulting Group Approach, we can analyze the current Strategic Business Unit of P&G. From here we can understand where does baby care product fits in.
Stars are high market share and high growth products or business. The company requires heavy capital investment in order to finance these products. Cash Cows are high market share products and business with low growth. These are successful strategic business units and they require less investment in order to hold market share. Question marks are high growth business but the company has less market share for these products or business (Shanbhag & Bagwe, 2016). Instead, the company may need to invest a lot of amount in order to increase the market share. Last is Dogs which are low market share and low growth products and businesses. This category is not so promising.
Company Products
The baby care market is forecasted to grow significantly during 2017 to 2025. According to Grand View Research, it is expected to reach more than USD 120 billion in next 8 years. So this shows that baby care segment has high growth. Many key companies include: Abbott Nutrition. Alliance Boots, Fisher-Price, Wipro, Himalaya Drug Company, Unilever, Procter & Gamble Company, Oral B Laboratories Ltd, Nivea, Nestle, Kimberly-Clark, Johnson & Johnson, Dabur, Asda Group Ltd (Wack, 2017). In baby care, P&G has over 25% market share globally in diapers, wipes. Pampers is the leading product. Luvs is also significantly renowned. So this shows the company has high market share in baby care product category. So the strategic business unit is Star for the Procter and Gamble.
In heart of any business is strategy. Strategy is game plan that helps any business to lead from its competitors. Strategy allows everyone to rise above any businesses (Wheelen & Bamford, 2017). Strategy refers to both long term planning and day to day businesses designed to achieve success. There are three levels through which strategy can be developed.
Corporate Strategy: It is the first level of any businesses. This strategy directs other strategies. This level forms the overall general strategy, defines the operating market and also determines the mode of entry. This determines what all strategic business Units Company is going to engaged in .In case of Procter & Gamble, the company decided to enter in 10 different strategic business units. The other decisions which P&G has taken on corporate level include international expansion in terms of both sales and manufacturing (Kumar & Grag, 2014). The acquisition and diversification decisions are also taken at this end (Vitasek & Kling, 2017). The main focus is to deliver best value to customers.
Business Strategy: This is step down strategy from corporate level strategy. These are the strategies for the smaller business units within the large organizations. These strategies are more specific. Separate strategies or tactics would be laid out for different businesses. For example baby care will have different selling strategy from that of personal care. However, the corporate level strategy was broader in scope and over here it is segregated into small parts. At this level P&G focuses on innovation that requires technological advancement and consumer insights. The company focuses on strengthening its business portfolio with multiple brands that are attractive and compete globally (Cox, 2015).
Market Strategies
Functional Strategy: It helps the organization to keep moving in right direction. It should be coordinated with high level goals or strategies. This strategy focuses on day to day actions which are required to deliver business and corporate level strategy. There is coordination between departments & teams, business units. It also analyzes how functional goals will be met. P&G baby care has multiple brands in baby care like Pampers and Luvs. At this stage, company focuses on improved merchandising and marketing programs. The focus is also given on productivity improvement for each brand across cost of goods sold, promotional and marketing expense and overheads. The other areas considered include brand awareness, R&D programs etc.
This strategy development tool helps in future prediction. It is segregated into 5 parts.
To devise any strategy it is necessary to know the problem of the company. For example P&G in baby care is present mainly in baby wipes, diapers and pants. The brands like Pampers are already performing excellently. In the next step, the company can enter into another baby care product like nutrition. So problem is product line extension.
For decision making, information is the key. Data is necessary for the backup choices. This step requires market and industry analysis, opportunity and threat analysis that help in making appropriate decisions. P&G here will see the past trends; it will look for the best opportunity and best market to expand. It is necessary to seek future projections in business space.
Here company will separate scenarios which are certain to achieve from those scenarios which are uncertain. For example, P&G will see the development of new brand under baby care is easier in developed market than in developed market from where it earns 65% of revenue. So uncertain condition i.e. development of new brand in developing country is separated from this (Chen, 2015).
In this case company will take different uncertainties from the above list and develop multiple scenarios to see how the business would look like if this scenario is executed. It will help in analyzing the risks which company might have to take in order to carry out different plans.
The company can change the business planning based on above scenarios. For example, P&G can avoid the riskiest scenarios. It can also increase its commitment for the “sure” things (Dichter, 2017). Planning out strategies based on scenario analysis will help in risk reduction and future prediction.
Forecasting and Budgeting
Above strategy development tools, portfolio analysis and market strategy direction are helpful in marketing strategy of P&G baby care. The planning and implementation of strategy includes defining vision and mission, setting objectives, designing portfolio and planning and executing functional strategies (Hill & Schilling, 2014). Procter and Gamble is multinational company of consumer goods. It has 65 global renowned brands. These brands are parts of 10 strategic business units. From its inception, the company is to deliver excellent products to customers. In the category of baby care, the company provides 3 categories but there is large number of products designed according to the needs of customers. The market strategy direction helps in analyzing the baby care industry, where P&G stands in this segment. It also explains the segmentations, targeting and positioning strategy opted by this business unit. The section also helps in budgeting and forecasting. So the market strategy helps in both internal and external analysis (Stead & Stead, 2014). Based on this SWOT analysis can be done to understand the multiple opportunities. The next section of the report deals with portfolio analysis. The analysis explained that baby care SBU is a star product. It has both high growth and high market share. This explains that P&G can invest significantly to diverse this SBU. The two strategic development tool used here are the three level of strategy and scenario analysis. The first tool can be used in both planning and implementation phase. In planning phase, P&G baby care business level strategy should be in aligned with long term corporate strategy. Based on the coordination of two, functional level strategies are put in place. In implementation phase, the structure of company takes precedence. So the structure at the corporate level, functional level coordination among various departments, corporate governance, leadership, benchmarking helps in execution of strategy. The other tool i.e. scenario analysis helps in planning phase. It will explain the number of options which company has with different amount of risks. For example, company needs to decide whether to launch baby nutrition (new category) in developed or developing market or both (Lasserre, 2017).
Conclusion
The above paper discusses the marketing strategy of baby care unit of Procter & Gamble. With the above discussion it can be said that P&G is doing relatively good in the market. However, the company must have marketing strategy in place to handle competition from emerging brands. One of the key platforms of marketing for P&G would be social media marketing and Internet marketing. The paper discuss various opportunities for P&G and it is important that the company should have marketing plan to address each of the opportunity. The good thing for P&G is that the market of baby products is a growing market.
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