FREE ESSAY ON P&Q DISTRIBUTION

P&Q DISTRIBUTION

CASE STUDY
Procter & Gamble
Going Global in Cosmetics
Q1. Critically review the current marketing situation facing P&G.
Company, which wants to grow, develops ambitious aims and a plan to achieve it. A
feasible plan is based on an analyse of the strengths and weaknesses of the company (the
internal analyse) and opportunities and threats (the external analyse). Together it is
called the situation analyse.
Marketing Audit
Internal analyse
The financial opportunities of P&G are very good according to the annual report. It has
bought important cosmetic lines, like Max Factor, Cover Girl and Clarion to gain more
market. One can talk about a blue-ship company. The used product technology is of high
quality. The capacity of the representatives and the reputation of the company are very
positive by its customers. 
However, the quality of the marketing department and the composition of the assortment
are weak. Those internal factors of a situation analyse are controllable variables for
the business.
External analyse
In the external environment, we are especially looking for opportunities, which have not
been, took yet by other businesses. Those can proceed from changes of Social, Legal,
Economical, Political or technological factors. P&G have already a good production
technology. More important, is the social environment. Because it changes very fast and
rapidly under young women. The company must be aware of using the four P's in a right
way. For example, if P&G want to sell its cosmetics in a Moslem country, the products
should not consist alcohol. Another social factor is the age of the target group. It must
be aware of composition of the population. In Japan for example, there is no problem such
as a growing grey. That is a good choice of a country to operate in. This because P&G
target group is an especially young woman now. 
Swot-analyse
Internal analyse External analyse
Strengths Opportunities
The brand name Expansion of the assortment
Distinguished capacity Set foot on new markets
Good name by its buyers Contacts with competitors
Possibilities for scale benefits Fast growing market
Abilities for product innovation Vertical integration
Weaknesses Threats
Lack of experience/expertise in the Growing competitive press
Cosmetic industry Fast changing wishes and 
Complex strategic direction needs of buyers
Limited assortment Possible entrance of new 
Insufficient marketing knowledge competitors 
Deficiency on particular skills Threat of demographically 
Changes
Increasing sales of substitutes 
When we take off the strengths against the opportunities in the environment and against
the weaknesses of the competitors, we can see the competitive advantages of P&G.
Confrontation matrix
Strengths Weaknesses
Opportunities Exploit Improving (e.g. mar- 
Growing keting department)
Bend into strengths
Threats Defence Avoid or retreat
Compete with strongest Searching for co-operation
Recommendations
To compete successfully, P&G has to improve its marketing skills and expand its
assortment to provide in the different and fast changing needs of the consumers. They
have the possibilities to achieve this.
Q2. Propose an international marketing strategy for P&G.
It is very important to use correctly the four P′s. if one companies sales are
decreasing, it has to look and consider adapting one or all of the four P′s.
Marketing Mix 
Product
Cosmetics are convenience products. To make it available of those products, at many
places is very important for the marketer. To expand its assortment, the company could
use the strategy of 'Trading up'; add products of high quality to the existing
assortment. The aim of this is to improve the image of the total assortment. Customers
find the brand name, reputation of the manufacturer, the guarantee definitions and the
offered service very important. What P&G should do in order to achieve a much better
brand name is the following:
-  Keep the brand name short, easy and easy to spell
-  Easy to recognise and remember
-  One way pronunciation of the brand name
-  International useful
A product strategy is the adaptation of the product. P&G could take off the articles out
of the market, which are not providing in the needs of the consumer anymore. Like, the
product Betrix, the sales decreased enormously. It can change the packaging of other
cosmetics. Like they did before with the packaging of Max Factor. More styling and
elegant. The packaging has also other functions such as:
-  Recognisable and attractive
-  Emotional appeal, the packaging can achieve a certain position for the product 
It can develop new and better guarantee definitions and the giving service. One of the
most important services is to keep an expanded assortment.
1. In the introduction phase (1993-1995)
-  The product is just introduced
-  The gross margin and growth is limited
-  Adoption and diffusion has still to come
-  Possibilities for lost, because of high launching costs
2. The growth (1995-1997)
-  High growth in gross margin and revenues
-  The appearance of competitors on markets
-  Increasing profits
3. Satiation (1997-1999)
-  The growth is out of market
-  Less possibilities for expansion
-  The profits become stable
-  Increasing competitiveness
Personal expectations for Cover Girl in Europe:
4. Sediment (1999-2005)
-  Decreasing demand for the product
-  New products/substitutes which better provides the needs of the consumers
Price
The decision of the right price is very important and even more difficult for the
Marketer. Too high price will scare off the customers. However, a low price will
influence badly the profits. Some important issues, which P&G have to consider, are:
Which discounts can be given? Are the buyers ready to pay a higher price? In Japan the
cosmetics are much cheaper then Europe of P&G. Actually, it could raise its prices in
Japan. That is because of, it distinguishes itself especially in the packaging and brand
name. However, we should consider if the decision of the price must lead to a profit on
short term or on long term? P&G want to go global. That is related in a long-term profit
choice. More profits will be fetched in the future. That means P&G should start asking
lower prices for its cosmetics, in spite of the distinguished character of its products.
However, according to the annual report, the financial results of P&G: The revenues are
higher in countries where the prices are lower, like Japan for example. This strategy is
called a penetration pricing. The aim of this strategy is to gain more market. It is a
strategy of low prices. Nevertheless the margin per product becomes lower, but this will
cover, because of the big sales. P&G should use this strategy, because;
-  It can join economic scales, relative high fixed costs and relative low variable
costs
-  The demand for the product is sensitive for pricing
-  The competitors could following it very fast and easy
-  Fast diffusion of consumers
Place
An effective distribution system means the obtainabilty of the right products on the
right time and at the right place. Efficiency is necessary. Which strategy of
distribution will fit for P&G? The company wants to go global in cosmetics. The products
must be the quantitative available which means the following:
-  At least at 80% of all relevant distribution points
-  80% of the revenues should be achieved at the relevant distribution points 
Which motif is there for the distributor? The distributor takes a certain brand name,
because he knows that the brand name positions its self compared to other competitive
suppliers. The product must fit at the shop′s formula. Examples: private labels,
very selective/exclusive distributed brand names. For P&G products, an intensive channel
design is for granted. P&G should be direct in business with the retailer. This results
in two benefits. Firstly, the wholesaler will be eliminated, which results to more profit
for the retailer and P&G. Secondly, if P&G operates as much as possible direct with the
retailer, it will be me more up to date in the need of the buyers. That will
automatically result in improvement of the marketing department. The channel choice will
be then horizontal as stated following:
Manufacturer,
P&GAgentRetailerconsumer
Promotion
Saving actions, price questions, gift-articles, demonstrations and other forms of sales
promotion influences positive the chance of purchasing. One knows that old people would
like to be young and young people would like to be older. It could adapt its ads, because
of that. P&G like to target more young people now; it could ad in popular magazines like
Nikkei Woman and Sankei Live in Japan for instance. P&G have lack of experience with
cosmetics it can train and motivate its sales persons and representatives. Systematically
use of displays, discount actions could also be very useful. A very useful strategy for
P&G could be the push-- and pull-strategy. 
-  In the push-strategy, the manufacturer tries to push more products by trade promotions
through the distribution channel
-  In a pull strategy, the aim of the manufacturer is to desire demand by the consumer
through commercials and consumer promotion.
The consumer will go to a retailer with a question. The retailer will approach P&G. At
this way both the retailer and P&G will become more or less under pressure in order to
take a certain product in the assortment.
Q3. Suggest a strategic international marketing plan for P&G for the period 2000- 2005.
The Marketing Plan for P&G, 2000
Mission
P&G want to become a leader in the cosmetic industry.
Objectives
Going global in cosmetics. Gain market, overseas as much as possible.
-  Target market(s),
Gaining market in Japan for the cosmetic industry will be profitable in a long-term for
P&G. This has to do with two reasons. Firstly, Japan has a young population. The company
targets now more young people. Secondly, the prices in Japan for the cosmetics are lower
than in Europe. When you want to benefit of a big profit in future, you should start
asking low prices for your products in order to attract more consumers. 
-  Expected sales,
Will be very high, because of volume producing it will save costs and the presence of a
young population in Japan.
-  Profit expectations,
Will be lower in the first place, because of the high costs for the launching of the
cosmetics. Nevertheless, that will be make up within a year, because of the very suitable
choice of the market.
-  Market penetration and coverage,
P&G launch an existing product in its domestic market into a new market. We can count the
market penetration for Japan with the following formula:
Number of buyers
Market penetration = --------------------------------------
Number of potential buyers
For Japan, this will be as stated as follow:
67, 000
------------ * 100%= 67%
100, 000
A very high penetration grade for Japan, that means at the same time a huge market
coverage.
Assumptions
The company will carry on its growth. It has the possibilities to carry it out. It should
use its advantages before the competitors start to gain market in Japan. 
Marketing Audit and Swot Analyse see question 1.
Strategies see question 2.
Tactics
Here we have to carry out the strategies we already made before. We should do this
according to the marketing mix. P&G have to divide the tasks for the projects and point
out the persons who will be responsible for those projects. After this, we can give
concrete form to action plans. The brand name has an important role by purchasing of
consumers for a certain cosmetic. P&G have to position its cosmetics then very strong. It
must have a positive distinguished character. To manage this, it should use the best
media for ads and commercials for the right target group. Central is here: Young people
would like to be older and old people would like to be young.
Budget
Budgeting could be used as part of the tactical plan. The best way to make sure that a
planned investment or launch of a new product is going to benefit the company is budget
every aspects of the company including the new plans. Many articles and books have been
written about it. Starting with the sales budget and then moving on to the production
budget, the direct and indirect costs as well as fixed and variable costs are going to be
included. The aim of this process is to create a budgeted (predicted) balance sheet that
will be use later in the process. 'What if' situation could be used as well. Budgets are
going to be compared to the actual and real figures in order to achieve the best results.
In some case budgets are also use for other purposes such as control.
Control
When we compare the achieved results with the formulated objectives, we can see if the
plan has succeeded. In addition, a comparing between times of the marketing spending and
-results with the drawn-up budgets and with the predicted cash flow, profit or other
financial indicators can motivate to corrections. Including the employees in the setting
of the budgets could bring more motivation. On the other hand, this approach could lead
to lower budgets level. The controls and achievements for both the employees and top
managers could be improved.
Budgetary control process
Executive summary 
The mission of P&G is to become a leader in the cosmetic industry. Most of the important
objective is to going global in cosmetics. We can assume that P&G is ready to go global
in cosmetics. It carries on its growth. The most powerful strength of P&G is its brand
name. It can benefit of that in the promotion, positioning and pricing. The most
important weakness is that the firm has lack of experience with cosmetics. To improve
that it could train its sales persons, representatives, and it could improve the
marketing department and the R&D. The opportunity of the company is to expand its
assortment. A limited assortment is also one of its weaknesses. If the firm expand its
assortment, it will get rid off that weakness. The budget will suffice to expand the
assortment. The most dangerous threat is the growing competitive pressure. This means
that P&G should quick attack the market in order to gain more market and position its
products with its well-known brand name before the competitors. An advantage of P&G is
that it could hold its prices lower than its competitors, because of the volume
production which P&G will undertake. To launch its products in Japan will be a profitable
choice for P&G. The company targets now more young people and Japan's population is
young. This does not mean that the older people should be ignored. One of the results of
a marketing research is: Young people would like to be older and old people would like to
be younger. If P&G want to gain as much as, possible market it should also provide in the
needs of the older people. Japan is also very close to the United States of America; the
domestic market of P&G. It will make it then much easier for all operations of the firm.
P&G should than be in business with the retailer directly. It could enlist an agent, but
it should eliminate the whole-saler. It will save costs with transporting the products
and P&G could be easier and faster up to date in the needs and wishes of the buyers. The
sales expectations are high in Japan. We have a market penetration of 67%. That means a
huge market coverage. The profit expectations are lower in the first place, because of
the high costs of the launching. That will make up within in a year. P&G's budgets are
part of their tactical and control plan. The controls cover every aspects of the company
and allow top managers as well as each department to quantify how well they did in the
included period. In case of something goes wrong, budgets will help identify where the
problems are in order to take corrective actions.