Based in Cincinnati , USA
The company had made
attempts to streamline many of its marketing practices and cut costs. P&G
had also made efforts to simplify its product line by standardizing formulas
and packages worldwide and selling marginal brands. P&G had also been
cutting inefficient promotion expenditure and curbing new product launches.
In June 1999, P&G
launched the Organization 2005 Program to streamline its organization
structure, and work processes. The program aimed to speed up decision making to
enable the company to innovate and bring new products to the market more
quickly. Till 1998, P&G had been organized along geographic lines with more
than 100 profit centers. Under the new structure, P&G had seven global
business units organized by product category.
The company initiated an
everyday low-pricing policy that reduced its reliance on coupons and trade
promotions. The move helped in smoothing demand fluctuations and allowed
P&G to cut prices on major brands. A year later, P&G initiated another
restructuring program, cutting 13,000 jobs and closing 30 manufacturing plants.
Cultural
Changes under the Organization 2005, Program
Before Organization 2005
|
After Organization 2005
|
Misaligned objective with high penalties for failure
|
The organization is aligned on common goals with trust as a
foundation.
|
Internal inspection keeps everyone under control
|
A focus on coaching and teaching enables informed risk taking
and team collaboration.
|
Risk is avoided and victory is narrowly defined
|
Victory is defined as stretch with trust and candor.
|
Complexity is delegated down
|
Leaders take on complex challenges.
|
Creating a slow moving organization that lacks stretch,
innovation and speed
|
An organization driven by stretch, innovation and speed toward
breakthrough goals.
|
 |
| Project and Presentation |
P&G did not pursue
overseas markets vigorously until after World War II. P&G had very limited
export activities and its operations in Canada, Cuba, Philippines and Indonesia
were regarded as mere extensions of its US operations. After the war, P&G
began to view overseas markets as a potential source of growth and profits.
P&G took full advantage
of its superior technologies, product development capabilities and accumulated
marketing expertise while expanding overseas. When P&G first
introduced disposable baby diapers in Japan, it offered the American product
without any modification. The American product was thicker and more expensive.
Besides Asian babies were smaller than American babies. When the product failed,
P&G offered a redesigned version that was smaller, three times thinner,
less expensive and packed in a more compact way so that it was easier to store
and carry while travelling.
China was the largest
emerging market in the world. P&G realized the tremendous market potential
for its products. Disposable diapers were used in only about two percent of
diaper changes in China compared to 98% in the US. The per capital consumption
of toilet tissue was 5.4 rolls in China, compared to 53.3 in the US. P&G changed
its marketing approach in China. It came up with a more reliable way to target
and distribute product samples—through the Communist party.
P&G customized its hair care products to
suit the needs of Chinese customers. In China, dandruff seemed to be a big
problem that few Chinese shampoos solved. P&G entered the market with Head
and Shoulders followed by Rejoice (Pert in the US) and Pantene, adding anti
dandruff formula to each of these products. The three shampoo brands together
grabbed over 50% of the market in China’s major cities.
Whenever possible, P&G
used existing packages, product formulas, and advertising campaigns in as many
markets as possible, rather than customize the brand for each market. Pampers,
Pantene, Whispers, Pringles and Oil of Olay were global brands whose products
had more similarities than regional differences. Vidal Sassoon shampoos and
conditioners contained a single fragrance worldwide, with variations only in
amount—less in Japan.
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