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You have been tasked with introducing the

Ivory brand in Pakistan!


Ivory is a global Soap brand made by P&G, this is the oldest brand of P&G and
First Ivory soap was sold in 1879. The overall brand port folio includes classic
bar soap, liquid hand soap, body wash, dish liquid, and a mild laundry
detergent. Your task is the launch Ivory bar Soap in Pakistan.
Your plan needs to be holistic and should cover marketing, finance, supply
chain, and sales strategy elements. For each of these areas we will provide a
set of assumptions and a list of expectations in the following pages. Good
luck!
Contents

Financial –Page 1 • Marketing –Page 3 • Supply Chain –Page 6 • CBD –Page 8


The finance function provides leadership towards all business decisions, ensuring the organization reaches
profitability goals and adds to shareholder’s return. It is critical to understand the driving factors of all
business decisions and propose solutions that maximize return and minimize the risks involved.

Your task is to prepare a detailed financial analysis on the Ivory Brand launch for next 5 years. You should
understand and question all assumptions behind the launch and prospective solutions offered by your cross
functional colleagues. Your key objective would be to prioritize and focus investment on the right business
building fundamentals, while delivering a healthy profit growth.

Key Measures:

You are expected to show the below in absolute numbers and also show each component as a %age of your
Sales for each year. You also need to include NPV of your 5 year plan. You may use additional financial
measures as well while explaining your financial plans.

Brand Financials (000) Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Volume (units)
Price per unit (PKR)
Sales Revenue $
Cost of Goods Sold $
Gross Margin $
Marketing expenses $
Organization Costs $
Profit Costs $

Key Budgets:

- Cost of Goods Sold (COGS): This is the cost of manufacturing and transporting your product and will be
determined through the Supply Chain Toolkit.

- Marketing Spend Budget: For Year 1, this is capped at $4,000,000. For years 2-5 your marketing budget is
capped at $2,000,000 (you can increase this using your profit, if any).

- Organization Costs: Costs for running the organization are $300,000 per annum.

1
Key Assumptions:

Your financials must use below as their basis.

Assumptions Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

$/PKR Exchange Rate 86 90 95 100 105


Avg. Commodity Inflation (YOY)* 5% 7% 10% 10% 10%
Sales Tax** 16% 16% 16% 16% 16%
Distributor Margin** 12% 12% 12% 12% 12%
Corporate Tax Rate 35% 35% 35% 35% 35%

*Inflation has already been applied to all year 1 costs.

*sales tax is applied on your final consumer price.

***Distributor margin: is the incentive/payment made to your distributor. This amount applies on your
revenue net of sales tax.

Key Expectations:

You are required to act as the CFO of your brand, keeping into consideration both short term and long term
impact of your decisions on business growth and profitability. Evaluation will be made on the basis of how
you deliver profits by incorporating a sustainable business model. You may take help of graphs and visual aids
to enhance your presentation.

You may be asked to share your calculations & rationale regarding the following elements:

1) NPV and Break even profitability targets.

2) Building blocks of profit drivers (Pricing, COGS, Marketing Spend, etc)

2
The task at hand is to come up with a marketing plan for Ivory in Pakistan. The key questions that need to
be answered in your plan are:

Product Positioning (Where to Play), and


Marketing Strategy (How to Win with Consumers)

Background

I. In Pakistan, the soap market is a 1,030,000 metric ton per annum business churning 20 billion
rupees a year. Soap is a major consumable item particularly the beauty segment. The overall
soap market is growing by 13% per year with beauty market segment growing at 8%. Key is to
build distribution and help drive trial to source untapped volume from this whitespace market.

The table below summarizes the size and scale of Ivory business in a variety of developed and
developing markets:

Market Size Price (PKR) Market Size P&G Share


(Million Units) (in Million PKR)

Russia 400,000 30 12,000,000 25%

UAE 120,000 20 2,400,000 15%


India 600,000 23 13,800,000 23%
USA 800,000 19 15,200,000 30%

II. The Pakistan soap market represents one of the largest whitespace opportunities for P&G to
explore due to its size and scale. The average price of a soap bar is comparable to detergent and
skin care products of the market.

Market Overview

The market is divided in three main segments; premium tier, mid


tier, and low tier. Consumers from each tier are looking for a
different offering in the market place making it very competitive.
Our key competitors Skin Glow, clean & Happy soap have a much
stronger foothold in the market driven by local production & pricing
flexibility, dominating both premium and mid tier segment in
Pakistan.

3
Consumer

Historically, Ivory has been a premium tier brand, with strong potential for success in the soap’s
beauty segment.

The table captures the major segments of the soap market in Pakistan and their urban & rural
break-up:

Soap Market Segment Total% Urban% Rural%


Skin care & moisturizing 55 70 30

Health & Hygiene 35 55 45


Sweat Odor 10 22 78

The following tables illustrate relevant attributes for premium & mid tier cosmetics consumers:

Premium Tier Consumer Attributes


High Category Involvement (Regular user)

Equates high price with superior quality


Looks for beautiful and healthy skin benefit
Believes in third party endorsement of renowned celebrities

Mid Tier Consumer Attributes

Buying soap to fulfill an everyday need (primarily bathing)


Affordability is a key concern in purchase decision making
Dissolvability and scent are key signs of quality & performance

4
Competition

Skin Glow is a clear market leader in the beauty segment and overall market leader. Recently Fresh has re-
launched itself and has started gaining market share from other competitors. It will be your key competitor.

The table below indicates market shares for leading soap brands in Pakistan.

Skin Glow Fresh Happy Soap Clean Lifeguard Antired Others


29.7% 12.8% 13.5% 9.9% 20.4% 9.6% 4.1%

Expectations

Within your marketing plan, the following four expectations need to be met:

1. Go to Market Strategy (Product positioning and how to win with consumers)


2. Communication Idea/Unique Selling Proposition
3. Marketing Plan
4. A 30-45 second TV commercial and one Key Visual (Print Ad Poster)

5
The challenge is to develop Supply Chain Structure for Ivory in Pakistan. Key questions that need to be
answered are:

Volume Forecasting:

Develop 18 months sales forecast based on your marketing & sales strategy. Support your forecast with
showing volumes against each initiative. Table below illustrates how you can show volume against each
initiative

Forecast in Cases Jan Feb Mar Apr May Jun Jul Aug Sep
Base Forecast
- Initiative 1
- Initiative 2
Total Forecast

Sourcing Strategy:

Ivory is available in following international P&G plants. You need to choose the most efficient & effective
sourcing site to maintain service levels of 99.5%

Sourcing Site Lead Time Duties Freight Cost Flexibility *


Cairo 6 weeks 30% 3000 USD 20%
Jeddah 4 weeks 32% 2800 USD 25%
Targowek 8 weeks 28% 3500 USD 30%
*Flexibility can be defined as % change allowed in orders placed to the plant

Manufacturing Cost (per case)


Small Bars Rs. 1200
Big Bars Rs. 1500

Inventory Parameters:

How much inventory will you keep at your Distribution Center on the basis of following forecast error result?

Product Sizes Forecast error (in %) Storage Cost (per pallet / month) *
Small Bars 35% Rs. 1000
Big Bars 45% Rs. 1000
*1 pallet can store 72 cases of the product

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Case Count
Small Bars 72 unit / case
Big Bars 58 unit / case

Case Count
Small Bars 72 unit / case
Big Bars 58 unit / case

Distribution Structure:

With how many distributors you will operate? What replenishment model you will follow? (Vendor Managed
Inventory Model or Customer Managed Inventory Model). Choose 10 Distributor’s locations where P&G will
ship the product directly assuming that P&G’s central Distribution Center is in Karachi. Below is the province
wise business splits along with transportation cost against each.

Location Business Split Transportation Cost (per container)*


Sind 28% Rs. 170,000
Punjab 27% Rs. 190,000
Baluchistan 23% Rs. 180,000
NWFP 22% Rs. 200,000
*1 container carries 3000 cases of the product

Finished Product Logistics Cost:

Based on above data calculate your total logistics cost to deliver the product. Use this cost as sourcing cost /
cost of goods sold in your financials.

7
The task at hand is to create the sales strategy for introducing Gain in Pakistan. To succeed, you
need to act like you are the owner of the business and do what is ultimately right for the business. The key
questions that need to be answered are:

Where to Play
We expect you to select the right trade channels (from the trade pyramid below) that you think need to be
leveraged in order to help your brand reaches its potential shoppers shop.

Use your experience, public sources of knowledge or even a set of assumptions to come up with an answer.
You may choose more than one channel if needed, however be sure about the role each channel will play
and how it will help you achieve your goals. At the end, you should be able to explain your choices in terms
of cost, target market, how your choices fit with the overall strategy of the brand, and most importantly size
of prize for each choice.

TRADE STRUCTURE CUSTOMERS COST TO SERVE EXAMPLES

Quantity = 1,000 Agha’s, Al


Top Modern Trade Weight = 25%
18% Fatah, Best
Price

Quantity=100000 General/Kiryana/
Weights = First 20K = 14% Cosmetic/Bakery
First 20K = 25% Next 40K = 20% Medium
Middle Traditional Trade Next 40K = 15% Next 40K = 30% General/Kiryana
Next 40K = 10% Small
Kiryana/Pan

Quantity = 10,000
Wholesalers Weight = 25%
16% Jodia, Shah Alam,
Nankari Bazaars

8
How to Win

Now that you have decided where to play, the next most important question is ‘how to win.’ To formulate a
clear sales strategy for your brand, the below strategic dimensions of the brand need to be thought through.
In trying to answer them, you will have to make several tough strategic choices. Multiple correct answers are
possible; you have to choose the best as a team. Your understanding of the brand, the market, and
competition are all invaluable at this stage.

Strategy Kinds of Questions to Address In Your Answer (But Not Limited To)
What product tier does your brand belong to? What unique benefits does your
Right Product brand offer? How can they be communicated to and via trade to shoppers? Is
there any need for product innovation over time?
What is the right portfolio for the launch? What portfolio will be needed over a
Right Portfolio
period of time? What are you including, what are you leaving out and why?
What sizes is key competitor of choice playing in? Which trade channels should
Right Availability
have which sizes? What will be the first SKU you will prioritize in each channel?
What price range will you be in? How will the pricing be determined over a period
Right Pricing
of time? How are the inter-size savings for consumers planned?
How should the product packaging look and feel? Is the case count in line with the
Right Packaging industry or vs. key competitors - does it need to be? Is there any opportunity for
innovation in the packaging?
Do you have any plan to help introduction of the product into trade or to
shoppers? How will you react to competitive promotions? What will promotion
Right Promotion
strategy be to prevent eroding money excessively on promotions or to drive out
competition by excessive promotions?
Does your brand create the right value for customers? Will you grow the overall
Right Profitability
category size or profits or shrink them?
How should your product be placed in stores considering 61% of purchase
Right Shelving decisions are made in-store? What is the ideal category placement/ adjacency in
each trade channel for shelving the brand?
How will your product stand out in the store? How will it communicate with
Right Merchandising shoppers? What mediums of merchandising will be used to drive easy closure to
purchase decisions in store?

Be prepared with a sales pitch for customers in each trade channel. You may be asked to present from any/all
trade channels. You may/may not include each of the points in your sales pitch however the judges may
behave like a customer and ask you to explain your point of view at any point in time. You will have a
maximum of 2 minutes (most probably a lot less) to grab and keep the customer’s attention, explain what
you are here to sell, and close the deal.

Happy Selling 

9
Sourcing: refers to the origin of the product. Sourcing cost is the cost attached with importing and
ware –housing product from different manufacturing sites across the world

Distribution: is the process that takes product from the warehouse to the customers and
consumers. Distribution cost is the per unit cost that needs to be paid to the 3rd party distributor

Organization: refers to all Human and Capital resource cost involved with running the business

Variant: is defined as a member of the same brand family which might differ in flavor, aroma, etc
(for example Zest may have multiple flavor variants; Aqua, Tropical Mango, etc).

Tier/SEC: a consumer segment classified by house hold in come

Freight Cost: is the cost of moving one container of product from the sourcing site to the local
warehouse.

Case/s: are measuring units. A case contains a set amount of single units of product

Pallet: a wooden plat form on which cases are stored within a ware house. Each pallet can hold a
finite and predetermined number of cases

Mileage: refers to the general usage duration of the product

Shelving/Placement: is the physical location in a store where your product will be placed for
consumers

Merchandising/Positioning: is the physical location in a store where your product or associated


marketing material will be displayed for consumers

Trade Channel/s: is / are the different outlets available to a consumer to shop for goods. Each
trade channel will have a set number of out lets across the country, and has an overall contribution
(in terms of usage by consumers) towards the business.
.

Procter & Gamble Pakistan © 2010. This document is the


Intellectual property of P&G Pakistan and should only be used
for the purpose/s defined by the Company

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