Strategic management

Report on:
Business plan of proctor and gamble shampoos

Submitted To: M. Ekhlaque Ahmed Submitted by: Idrees waris Nazia sahar Romana ashfaque

PROCTER & GAMBLE SHAMPOOS

BUSINESS SCOPE

Nineteen years ago Procter and gamble started the journey in Pakistan to provide the world famous quality brands to Pakistani consumers. Procter and Gamble Corporation have been well known in the eyes of customers for serving the needs in fast moving consumers goods. Proctor and gamble has a mission to improve the lives of consumers wherever it operates.

REGIONS: WHERE WE ARE OPERATING? Islamabad Karachi Lahore Rawalpindi Quetta Sialkot

P & G operates in all major cities of Pakistan and their expansion plan is to cater the rural area as well. Internationally they are in the markets of 190 countries. FUNCTIONS AND APPLICATION: People have become more conscious about their hair problems and they want solution and better results. Different customers have different problems related to their hair like dandruff, splinted hair, fizzy hair, hair fall etc. Now Proctor and gamble is providing different products with solution for almost every hair problem. The demand of hair care shampoos keep on increasing. As it have different ranges, head and shoulder have seven varieties and Pantene is available in 5 varieties. Head and shoulder is anti-dandruff and Pantene is beauty hair care.

Anti-Dandruff shampoos Shampoos for smooth and strong hairs Shampoos for deep black hairs Shampoos for anti hair fall Shampoo for Dry/damaged hair Shampoo cum conditioner. Hair care shampoo for milky extra treatment

CUSTOMERS AND USERS: The user of proctor and gamble shampoo are 15 to 35 years old people and they are using more shampoo and more conscious about their hairs. Students are having more demand of shampoo. Demand of shampoo in house wives and older age people is relatively less then others. Procter & Gamble considers the different factors while choosing its primary users. The primary users of Procter & Gamble are mentioned below. 1. Young adults 2. Middle-aged adults 3. Families belonging to SEC (socio-economic class) A to C. 4. Beauty saloons 5. Cosmetic shops 6. Hotels

VALUE ADDITION Recently proctor and gamble introduced new Pantene with the power of oil; it will help in addressing the toughest hair issues of Pakistani consumers with in just 14 days i.e. due to breakage and Split it caused to hair fall of the hair. The shampoo in the name of New Pantene that combines oil benefits which helps to nourish hairs and it also helps to address the issue of hair fall and split ends and in just 14-days. The shampoo contain the natural herbs that provide the oil benefits which not only helps to nourish the hair but it also helps to tangle free and makes your hair healthy and strong.

CONSIDERATIONS: Currently the company has following variants in shampoo, each catering to a different segment which is mentioned below:

Hair fall defense Refreshing Smooth and Sleek Sheer Volume

Guaranteed 100%* Dandruff gone and a solution for hair fall Cleans your hair and refreshes your scalp. It contains the amino Pro-V complex which makes hair glowing finish, and sleek. Specially designed for shining and body.

Daily Moisture Renewal it helps to protect your hair from polluted environment Color Revival Classic Care Full and Thick Classic clean Specially designed for maintaining the true color of your hair Help in balancing the hair and to give shine and health look to your hair. Specially made for the thin hair to make your hair full of body. Makes your scalp cleanses and regenerates your gorgeous hair

INTENDED BUSINESS: They want to penetrate in existing market and also planning for distribution extension. But these all are segmented according to the general needs of customer. The company doesnt have the specific segmentation of shampoo for men. Today the shopping trends of customers are change and they are very specific in selecting their personal care products. So in order to expand its business in future, the company needs to come up with different varieties which will fulfill the needs of customers. Men usually prefer to Shampoos which address their problems like dandruff, hair fall and fizzy hairs.

All Pakistan shampoo is 18%.

Urban areas 67% Rural areas 23% A-C segment is the fastest growing segment in Pakistan.

COMPETITORS AND THEIR BUSINESSES: There are many local and multinational direct competitors operating in Pakistan which are mentioned below: 1. Sunsilk, (Uniliver) 2. Clear (Uniliver) 3. lifebuoy (Uniliver) 4. Garnier 5. Samsol by Samsol International Private Limited 6. Medicam by Marriana International 7. Bio amla

Proctor and gamble: It is expected that the usage of shampoo in rural areas will rise in 2011, So P&G have a plan to expand in rural areas where they are behind unilever shampoo, prices are relatively low as compared to P&G, but we are focusing on the quality. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption.

1. EXTERNAL ANALYSIS Market structure

Applications

Anti-dandruff

Beauty (shine, healthy, Herbal straight, silk) smooth and

User & products

Head and shoulder (P&G)

Sun

silk

for

shinny

Bio Amla Garnier frutcis Herbal essence

hair(unilever) Lifebuoy Anti Dandruff (unilever) Decrease(unilever) Selsun antishampoo

(p &g) dandruff Pantene smooth & strong (P&G) Darbar fall (Dabar) vatika

Sun silk Anti Dandruff Lifebuoy anti-hair (unilever) (unilever) Dove (unilever) Life buoy (unilever) Organics Flex

Selsun Blue for Itchy Dry Scalp

DISTRIBUTION STRUCTURES Household Consumer

GENERAL STORES

MEDICAL STORES

UTILITY STORES

RETAILER

WHOLESALER

GLOBAL CUSTOMERS

MODERN RETAIL

DISTRIBUTORS

WAREHOUSE

MANUFACTURING PLANTS

It is showing that from factory floor it reaches to agility warehouse of the company then it moves to distributor (abu dawood) the only distributor, then from distributor to global customers, modern stores, high frequency stores and the wholesaler who directly buy from distributors. it will move to the distributor premises as well as to wholesalers. They forward inventory to the retailers. the retailer sells the products to utility stores, medical stores and general stores and final consumers as well. GLOBAL CUSTOMERS: Our global customers are metro and macro. There are five metros in Pakistan, two are in Lahore, and 1 is in Karachi, Islamabad, and Faisalabad. And out of five macros, three are in Karachi and two are in Lahore. MODERN RETAILS: In modern retail we have Naheed, Aghas, and Imtiaz. HIGH FREQUENCY STORES: High frequency stores include. Wholesaler Retailer General stores Medical stores Utility stores Cosmetic shops Beauty saloons

Market Size

market share
Proctor & Gamble28 Unilever Bio Amla Garnier Others

18% 31% 11%

14% 26%

Analysis
Market share of the shampoo companies are shown above, which is indicating that Procter and gamble has 31% market share in shampoo industry, unilever 26%, bio amla 14%, garnier 11% and remaining 18% are the other local and international companies. Proctor and gamble shampoos are anti-dandruff, beauty and herbal. Procter and gamble capturing the major share in market due to high share in anti-dandruff segment, which is providing the world No.1 antidandruff shampoo. Unilever shampoos stand in second position and it has 26% market share but the share of unilever in beauty segment is more than Procter and gamble, so proctor and gamble need to focus more on beauty segment.

MARKET SIZE (PAST)

Volume in msu (million in state unit) Market Segment Anti-dandruff 683.760 Beauty 305.190 Herbal 5.06% Overall growth 316.482 336.736 360.644 5.6% 744.715 818.332 914.076 6.9% 2006 483.760 2007 500.691 2008 550.259 2009 604.774 Growth P.A 2.7%

Value in millions

MARKET SIZE(PAST)

Market Segment

2010 665.856

2011 721.122

2012 774.485

2013 837.218

Growth P.A 2.7%

Anti-dandruff 1016.452 Beauty 389.13 Herbal 5.06% Overall growth 412.208 433.636 462.689 5.6% 1126.228 1239.977 1382.574 6.9%

MARKET SIZE (FUTURE)

Volume in msu (million in state unit) Market Segment Anti-dandruff 1068 Beauty 394 Herbal 5.4% Overall growth 438 481 514 6.3% 1149 1214 1306 7.8% 2010 649 2011 662 2012 695 2013 718 Growth P.A 2.1%

MARKET SIZE (FUTURE)

Volume in msu (million in state unit) Market Segment Anti-dandruff 1468 Beauty 508 Herbal 5.4% Overall growth 583 678 756 6.3% 1548 1636 1709 7.8% 2010 892 2011 921 2012 956 2013 998 Growth P.A 2.1%

MAJOR CHANGES FOR SALES INCREASE

Population is keep on increasing with an average annual rate of 1.6% and the problem of dandruff and hair fall is increasing day by day and the women have become more conscious about their hair style. Constant innovation and aggressive marketing by hair care companies also lead sales trends upward of almost all segments. As Procter and gamble has vast array of advertising campaign. Delight the consumer with sustainable innovations that improve the environmental profile and sales of our products. Increasing awareness of hair care issues and the growing influence of western lifestyle trends and consumption habits were the main factors that extend the consumption of the shampoos. P&G Shampoos sale can also be increase if they provides the extra benefits to the customers like if they provide the more solutions in one product

ASSUMPTIONS FOR FUTURE GROWTH (2010 onward) Due to intense competition in FMCG industry, P&G should place strong emphasis on innovation across all functions and activities. Head & shoulder safeguard and Pantene are the leadings products of P&G and they are catering the 20% markets of dandruff they should also focus upon the hair falling by doing the more research . Still people has hair falling problem in our society so p&g should be take more concern on the shampoo and insert those quality which protects customers from hair falling They should build separate brands for men as men has also become style conscious about their hair. In rural area, people are still unaware about hair care problems and their solutions. As per our research during 1950-2008, Pakistan's urban population expanded over sevenfold and it corresponds to 32.34%. This shows that majority of our population is living in the rural area so it is huge segment which need to be cater in future.

PRODUCT LIFE CYCLE STAGE:

REPRESENT INDUSTRY Market Segment Anti- Dandruff Introductory Growth Maturity Decline

Beauty

Herbal

Analysis Antidandruff market of P& G has achieved the position in the minds of consumer and now it is on the maturity stage while the industry is growing. In beauty P&G is behind the industry because its competitor is already on the top of the mind of customers. Herbal shampoos are also on the growing segment in both the industry and Proctor and Gamble product herbal essence is in the induction stage.

COMPETITION MATRIX Overall Competition Anti dandruff Beauty Herbal

1.P&G 2.GARNIER 3. UNILEVER 4. Bio Amla

24% 19% 12%

66% 33% 65% 25% 6.9% 7.8% 12%

10% 67% 16% 63% 5.6% 6.3% 8%

100% 100% 100% 100%

Historical Growth 2.7% Projected Growth Company Profitability 2.1% 14%

ANALYSIS: As Unilever is having neck to neck competition with P&G. So P&G needs improvement in hair care products, personal care products specially they should keep focus upon the men hair care product. Because men have also become more style oriented as compare to the previous year. But the overall business of P&G is in profit. Rural market is the best segment to capture more market share along with the new segment identification which is targeting all the customers. 20% shampoo users are using Head & Shoulder as they are dandruff conscious people. 99% of the people are influenced by the advertisement of Head & Shoulder on daily use to get rid of dandruff and more over they are getting the promised results. They have targeted both males and females due to which they have

got more number of shares in market Beauty wise .Pantene is the strongest hair care product of P&G both formula and advertisement wise. Pantene has 35% market share in beauty. Areas to be focused P&G has to focus more on growing market of beauty segments. Areas of new opportunities P&G is almost present in all segments and the competitors are following P&G. Distribution structure:

SHAMPOO MARKET 2009 2013 60 %

HIGH STORES

FREQUENCY 78%

MODERN RETAILS GLOBAL CUSTOMERS

13% 9% 100 %

23% 17% 100%

ANALYSIS: The above mention distribution structure shows that how hair cares industry transfers their goods to the end user. P & G has only one distributor across Pakistan through which the product of P&G Company reaches to end user. Further the company is divided into high frequency stores, modern retails, and global customers. The trend which is mentioned in the distribution structure shows that the consumers are moving towards the key accounts and modern trade because the standard of living is increasing day by day so every segment is increasing their sales through key accounts and modern trades.

In 2009 78% sales of shampoos is being done by the high frequency stores as P&G provides transportation facilities to its distributors and retailers which attract these distributors and retailers to buy The P&Gs shampoo as compared to Lever Brothers Pakistan Limiteds one. As already explained they are giving top incentive to retailers and distributors. P&G sales staff pays more visits to their retailers and stores to check the shelf space of their shampoo. Thus due to these efforts they were getting 78% of market share.

TOP KEY EXTERNAL TRENDS

TREND

POTENTIAL IMPACT

Proctor and gamble

Unilever

Bio Amla

Garnier

Technological Trends

Increase in cost Increase efficiency in

Yes

Yes

Yes

Yes

Bargaining power

Customer of might

yes

yes

NO

Yes

supplier due to compromise on inflation quality and not willing to pay higher prices. Growth rural of Increasing No Yes Yes No

markets competition,

and focus of Price Erosion companies on this area

Application segmentation

Customization

Yes

Yes

No

Yes

ANALYSIS: Current trends in the market bring opportunities as well as threats for the organization so it is the companys competency how to cope up the external trends. Proctor and gamble is one of the top company in Pakistan their main focus is to uplift the shampoo industry by changing products with changing demands. Proctor and gamble is willing to avail all the opportunities present in the external environment and cope up with the threats through its strengths. DRIVING FORCES

Technological Forces Suppliers

Political-Legal Forces Social Interest Groups Government

Internal Environment
Industry

Proctor and gamble

Customers

Social & Culture Forces

Competitors Economic Forces

Political forces

The changes occurring due to uncertain political situation have made the businesses uncertain for its survival in the country and also terrorism prevailing in the important cities of the country like Karachi, Peshawar, swat, Quetta and Lahore which are affecting the business activities. Policies about taxes are changing continuously due to changing government. The shampoo market is very much dependant on Political & Legal forces. In other words we can say that Political & Legal forces can dictate the sales and profitability of the shampoo selling firms. Taxes and Excise duty are of real importance to these organizations because it directly affects the prices which affect the consumers buying decision.

Economic Forces The rate of inflation reaches its peak level and it is affected the purchasing power of consumers due to which consumers are shifting towards the low price local products and its adding fuel to local business man to enter into the market of shampoos. The imports duty and excise duty on the other hand become the cause of increased in the prices of raw materials which is ultimately bear by the consumers. The shift in prices in consumers product will force them to switch for low priced shampoos.

Technological Forces Technology is also connected with proctor and gamble to benefit the consumer. Proctor and gamble newly introduced the shampoo with the power of oil but there is a need of rapid breakthrough in the technology of shampoo and their manufacturing process to produce the shampoos which keeps eyes lenses safe from harmful chemicals.

INTERNAL ANALYSIS: SWOT ANALYSIS STRENGTHS: Financially strong company. Social & corporate image of P&G. Focus on total quality management. Direct contact with customers. Good Relationship with the supplier. Worldwide research and technology, engineering and manufacturing. Highly energetic sale force Extraordinary promotional plan for shampoos. WEAKNESSES Unwilling to serve low-income market. Prices of the shampoos are high Weak coverage in rural areas of Pakistan

OPPORTUNITIES There are opportunity for P&G to cater more market share, the main reasons for this growth are: Growing population Increase in the rate of urbanization. Increase in awareness Growing rural market

THREATS Local and Foreign competition. New entrance in shampoo industry Countrys inflation rate is high. The prices of electricity increasing. Changing policies of the government.

Threats and Weaknesses which could be converted into Opportunities and Strength

External Analysis

Internal Analysis

Opportunities

Threats

Strength

weakenesses

High urbanization Increased awareness about new advancements

Major players are still weak in rural areas

Dont serve low income market.

Covering all variants in shampoos through R & D

Analysis P&G is weak in serving low income groups while competitors have the ability to serve the low income peoples. Through capturing in rural markets they can avail the opportunities in terms of more customers.

THE CUSTOMER: BASIS OF PROCTOR AND GAMBLE BUSINESS

WHAT DOES CUSTOMER WANT? Customer wants to have strong, healthy, shiny, smooth, anti dandruff and anti-hair fall all the time at an economical price. The factors which consumers want in shampoos are given below. Use of natural herb, Affordability, Availability, Convenient Packaging, Brand name, Variety, good foam, no side effect, compatible with hard water, no irritation
to the eyes

WHAT MOST IMPORTANT ASPECTS? 1. Affordability 2. Availability 3. Variety 4. Convenient Packaging 5. Use of Natural Herbs 6. Good Foam 7. Prevent from hair damage 8. Shine 9. Fragrance 10. support hair growth

DO YOU REALLY KNOW THAT?

Yes

HOW DO WE SCORE? 1. Variety 2. Prevent hair damage 3. Availability 4. support hair growth 5. Convenient Packaging 6. Affordability 7. Use of Natural Herbs 8. fragrance 9. shine 10. Good Foam

HOW DO COMPETITORS (UNILEVER& BIO AMLA) SCORE? 1. Variety 2. Availability 3. Affordability 4. Prevent hair damage 5. Use of Natural Herbs 6. support hair growth 7. shine 8. fragrance 9. Convenient Packaging 10. Good Foam

RELATIVE IMPORTANCE OF FACTORS

Factors Variety Availability Prevent hair damage support hair growth Convenient Packaging Affordability Use of Natural Herbs Fragrance Shine Good foam

Absolutely Critical 5

Very Important 4

Quite Important 3

Nice to Have 2

Not significant 1

RATING AGAINST CUSTOMERS BUYING CRITERIA

Quality & Price

Proctor and gamble

Unilever

Bio Alma

Non-Price attributes Affecting % Weight Customer Choice Product - Related Variety Prevent hair damage Availability support hair growth Convenient Packaging Affordability Use of Natural Herbs Good form Shine Total 17% 15% 14% 13% 6% 14% 10% 4% 5% 2% 100% 16% 9% 12% 12% 4% 9% 6% 3% 5% 2% 78% 16% 11% 12% 12% 3% 10% 6% 4% 5% 2% 81% + 125 100 6% 12% 9% 13% 2% 12% 9% 4% 4% 1% 72% + 110 100

Has quality gone up/down (+/-) In past 4 + years Relative Price today Relative Price 4 years ago 135 100

CUSTOMER BUYING CRITERIA: PRICE AND QUALITY ATTRIBUTES

Question its Cost

R E L A T I V E P E R F O R M A N C E Least Variety Shine

Keep it up

Convenient Packaging

5%

Most

20%

Prevent hair damage Affordability Use of Natural Herb

Do Not Sweat at

ATTRIBUTES IMPORTANT TO CUSTOMERS

Improve Fast

What strategic issue does the company face? Proctor and gamble faces the following strategic problems. 1. Proctor and gamble is planning to capture the market share of rural area but they might face huge threat from local competitors because people in rural areas are quite cost conscious rather than quality and brand image. So this is difficult for proctor and gamble to market their product with such approach where they can target the majority of people. 2. Proctor and gamble needs to invest a large sum of amount to promotional activities in rural areas and launch their product in rural areas. 3. Economy play a vital role and Pakistan economy show a constant pace of inflation every year so they must need to curtail the prices of product in a competitive environment and need to stream line their operation in a cost effective manner

SUGGESTED:

VISION To be the most trusted and preferred consumer goods company which look forward to their needs and act to create value in the eyes of consumers. MISSION Our mission is to provide consumers the supreme, high-quality products and to be leading the industry by doing innovations. OBJECTIVES Expanding distribution network to all over Pakistan. To increase continuously offering of new and unique products at affordable prices for all segments. To increase the market shares in rural area by 20% till 2013. To grow by 15% year by year for the next four years. To increase the number of outlet coverage by providing commission based incentives to retailers.

KEY ISSUES: Weak distribution resulting in missed sales usually in rural areas. Increase in input cost due to ingredients imported from foreign companies. No separate brand for men and children. Increase in import duties More fragmented market segments Increase in inflation Shortage of electricity

2. ACTION PLAN ( FOR NEXT YEAR)

WHAT HAS TO BE REFERENCES DONE Customer Complain Weak network in Should rural area customer develop Customer satisfaction/loyalty HOW RESULT

complain Enhance company reputation centre in rural area to Increase in sale address the issue of customers. Identification of customers new needs of

Increase the number Distribution of distributors matrix Competition matrix

Should increase the Increase sales and value for number distributors of company in rural areas because and product will be available

Improve relationship everywhere. with the distributors in rural areas and seek new distributors

Improve communication

Market structure

More advertisements Will become top of the mind and activities. By controlling Cost decreases and revenue promotional Brand awareness

with SWOT analysis external customers Decrease Operating Production

Costs to cope up with Managers. inflation.

wastage and efficient increases and utilization effective of

resources to achieve maximum output.

Increase Production to Procurement and By master production Profitability will increase capture rural market. Production all Will be helpful for achieving Managers along production processes economies of scale. with workers. and operations and by truly forecasting the required demands. Expand Base Customer Senior Middle management (Marketing) and Adopt market Sales will increase. Increase in market share by capturing the competitors share and penetrating to unmet scheduling of

penetration policy

segments. Continuously improvement Research Development R & D Creating synergy in New market segment value chain by Innovation from

in Department and

making new variant New products of shampoos same manufacturing plants.

Build separate brands Brand for men and children management, Senior management

Coming up with new Market share will increase brand children Increase in sale and and men segment to Profitability will increase. cater the needs by providing customized shampoos with more for

different variants and combinations.