Procter and Gamble Company (A) Harvard Case Solution & Analysis

Problem Diagnosis

            The current position of Procter and Gamble in the light duty liquid detergent market has become quite stable and the growth of this business segment has become quite stagnant over the past 5 years. Therefore, in response to this, the associate advertising manager of Procter and Gamble is considering a range of options through which the current strategic situation and the market position could be strengthened. He was evaluating on how the volume of the light duty liquid detergent could be increased and in order to achieve that he was considering three key opportunities for achieving volume growth.

            The first option was to introduce a new brand along with the currently established three brands of this division. The second option was related to the improvement of the products under any one of the existing brands and the third option was simply to increase the marketing expenditures on the existing brands. A deep analysis needs to be performed to recommend the most suitable option or combination of options based upon the profit potential, volume growth, time period and costs etc.

Situation Analysis

            The overall economy is going through a tough time and the price sensitivity factor has increased a lot within the growing population. The growth of the light duty liquid detergent market is low and this is mainly because of the fact that the growth of the Automatic dishwashers had increased rapidly. On the other hand, the unemployment in the market has also increased significantly. The overall light duty liquid detergent market currently has three major players in the market which are Procter and Gamble, Lever Brothers, Colgate Palmolive and other private and generic labels in the market. Each of these holds a market share of about 42%, 7%, 24% and 27%.

            The total share of the light duty liquid detergent market, which is held by Procter and Gamble, is valued at around 357 million dollars per 25 million cases approximately. The products that are currently being sold by the company in the light duty liquid detergent market are very low involvement products. These are although used daily, but the repeat purchase of these products takes usually after a month if it is available readily in the market. Furthermore, if we analyze the usage behavior, preferences and the needs of the households, then the customers of the company could be classified into three classes.

            The first segment is one in which the customers value cutting powers, greasing powers and long lasting suds. The second segment customers are those who value and prefer more gentleness to their hands by the use of the cleansing powers and the last segment of the customers is the one which emphasizes only on cost as compared to all the other factors associated with the products. These three could be named as the performance segment, mildness segment and the price segment; each holding a market share of 35%, 37% and 285%. The three products in the performance and the mildness segment are as follows:

            Currently, most of the marketing support of the marketing group is given to the performance and the mildness segment and the price segment has the lowest marketing support as a result of the small private brands and generic brands. Therefore, out of the three considerable options available to the brand group of Procter and Gamble for future expansion, if the company goes ahead with the introduction of a new brand in the market, then the greatest risk posed by the company would be of cannibalization with the other three established brands in the performance and the mildness segment.However, the impact of this cannibalization might not be significant based on certain factors, which would be discussed in the next sections of this report.Procter and Gamble Company (A) Case Solution

            The light duty liquid detergent market is a mature industry and the company normally introduces a new product every two and half years and the company introduces two price brands each year and discontinues them per year. Looking at the information that is presented in exhibit 8, the market is expected to grow at a moderate rate of 0.6% per year for the three products and the percentage share for each of the three product segments is likely to remain stable........................

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