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					    INTRODUCTION OF THE COMPANY

    Proctor and Gamble of Pakistan is a subsidiary of Procter and Gamble USA established in1990 and
    started production in 1991.The P&G Company were founded in 1837 in Cincinnati, Ohio and from the
    very beginning have been a leading manufacturer and marketer of the consumer goods. Company sells
    more than 250 brands in more than 130 countries and its operations are in more than 70 countries. It is
    therefore also rated in the top 25 of the FORTUNE 500 companies.

    Procter and Gamble is actually the name of two persons William Procter and James Gamble. Both of
    them wives were sisters and their father in-law asked them to become partners. In the start Procter’s
    business was candle making and Gamble’s business was soap making. The Partnership year 1837 was a
    difficult time to start the business although Cincinnati was a bustling market place; the nation was
    gripped by financial panic. Hundreds of banks were closing around the country. In the 1850s, despite
    rumors of an impeding civil war in the US, they built a new plant to sustain their growing business.
    Later they pioneered one of the nation’s profit sharing programs and were among the first in American
    industry to invest in the research laboratory. By 1890, the fledgling partnership between the Procter and
    Gamble had grown into multi million dollar corporation .Television in USA introduced in

    1939and P&G is the only company that commercialize its product just after five months .With the
    passage of time P&G acquire different other companies to enhance the business. In 1980, as it
    approached its 150th anniversary, P&G was poised for a most dramatic period of growth in its history.
    Company serves 106000emloyees allover the world.

    P&g is a recognized leader in the development, manufacturing and marketing of superior fabric & home
    care, baby care, feminine care, tissues & towel, beauty care, health care, and food.


    PROCTER & GAMBLE, GLOBAL FIRSTS

·   The first branded products
·    The first profit sharing program
·    The first vegetable oil
·    The first market research department
·    The first company to introduce brand management
·    The first company to introduce the concept of soap operas advertising
·    Crest, the first toothpaste with fluoride
·    P&G literally invented the disposable diaper category
                         PROCTER AND GAMBLE IN PAKISTAN:

  P&G started its operations in Pakistan in 1991. First it introduces its brand of Head& Shoulder After that
  it gave brand of Vicks and Olay oil.
  Now company has eleven brands in Pakistan .The yearly sales consistently doubled during the past three
  years. P&G Pakistan establish local manufacturing base.




                                    BRANDS IN PAKISTAN:

· Head & Shoulder
· Pert Plus
· Vicks
· Pentene
· Rejoice
· Camay
· Safeguard
· Pampers
· Always
· Ariel
                           TOTAL SALES OF P&G IN PAKISTAN:


In 1991 =1.1Billion Rs
In 2001= 12 Billion Rs




EYES ON THE FUTURE:
Doubling unit volume every years
Achieving share growth in the majority of its categories
Delivering total shareholder return that ranks P&G over time among the top third of its peer group.
Most importantly, P&G's goal is to continue to provide products of superior quality and value to the
world's consumers. As a result, P&G's business, people, shareholders and the communities in which they
live and work will prosper.



VISION of P&G
“To be a leading consumer goods company and to improve the lives of world consumers by providing
valuable and innovative products”.
Ten years ago Procter and gamble started the journey to improve the lives of Pakistani consumers by
providing them with world famous quality brands. P&G want to be an outstanding organization with a
passion for winning that would felt by everyone everyday; in the office, in the field every where P&G
vision is to lead business growth by proactively identifying opportunities and positively contribut ing to
volume growth.



MISSION STATEMENT

We will provide products and services of superior quality and value that improve the lives of the world's
consumers.
As a result, consumers will reward us with leadership sales, profit and value creation, allowing our
people, our shareholders, and the communities in which we live and work to prosper.
GOALS
       Think globally act locally
       Build major global brands through strong programs based on local understanding.
       Improve the environmental quality of its products, packaging and operations around the world.
       Produce quality products at very competitive costs.
       Build superior relationships with all the parties who contribute to fulfilling their corporate
        purpose, including their customers, suppliers, universities and government.




OBJECTIVES

       Bring together transactional activities such as accounting and order management in a single
        organization to provide services to all p&g units at best in class.
       Remains on the cutting edge of the industry.
       To be a thought leader within each corporate function.
       To be the first consumer goods company in Pakistan.
       Be competitive with other high quality companies in order to help, attract, motivate and retain
        the talent needed to lead and grow P&G’s business.
        Strive to be best in all areas of strategic importance to the company.




ANALYSIS OF VALUES & PRINCIPLES
Organization’s culture is a pattern of basic assumption invented, developed by a given group as it learn
to cope with its problem of external adoption and internal integration. Value s, principles, policies, and
structure of the organization are the main miles stones to analyze the company’s strength.


CORE VALUES
P&G PEOPLE: They attract and recruit the finest people in the world. They build their organization from
within, promoting and rewarding people without regard to any difference unrelated to performance.
They act on the conviction that the men and women of Procter & Gamble will always be their most
important asset.
LEADERSHIP: They are all leaders in their area of responsibility with a deep commitment to deliver
leadership results. They have a clear vision of where they are going. They focus their resources to
achieve leadership objectives and strategies. They develop the capability to deliver their strategies and
eliminate organizational barriers.
OWNERSHIP: They accept personal accountability to meet the business needs, improve their systems
and help others improve their effectiveness. They all act like owners, treating the Company’s assets, as
they’re own and behaving with the Company’s long-term success in mind.
INTEGRITY: they always try to do the right thing. They are honest and straightforward with each other.
They operate within the letter and spirit of the law. They uphold the values and principles of P&G in
every action and decision. They are data based and intellectually honest in advocating proposals,
including recognizing risks.
PASSION FOR WINNING: they are determined to be the best at doing what matters most. They have a
healthy dissatisfaction with the status quo. They have a compelling desire to improve and to win in the
marketplace.
TRUST: they respect their P&G colleagues, customers, and consumers and treat them, as they want to
be treated. They have confidence in each other’s capabilities and intentions. They believe that people
work best when there is a foundation of trust.




ENVIRONMENTAL ANALYSIS
NATURE OF THE ENVIRONMENT
P&G Safeguard is operating in a complex and stable environment, complex because there is a number of
factors in its environment, about which less information, stable, because the changes in these factors is
predictable factors, which makes its environment complex are:
RETAILERS
A group having strong influence over the opinion of the consumers regarding which soap should be
purchased. This group is becoming more and more concern to their own incentives/margin.
LOCAL PRODUCERSS
Small soap manufacturing units, having no or very low overhead charges, under fix tax system or hidden
units evading tax and growing like mushroom, involve in the low price soap war, exploiting consumers
through retailers.
REFERENCE GROUP
People having social influence on their neighbors also affect on the sale of soap.

TECHNOLOGY
Moderate changes in the technology of soap manufacturing decrease the PLC of soap.
URBANIZATION
Increase in rate of urbanization especially in Pakistan has made the environment more complex of soap
industry.
    PEST ANALYSIS
    POLITICAL AND LEGAL FORCES

    Rapid changes in the political scenario of the country along with the uncertain policies of the
    Government have made the whole business community as uncertain. Also there is terrorism prevailing
    in the important cities of the country like Karachi and Afghan War, which are affecting the business
    activities. Policies about taxes are changing continuously due to changing government.


    ECONOMIC FORCES
·    Increasing inflation in the country, persistently reducing the purchasing power of the people and
    dropping people from high price soap to low price soap and providing more fuel for expansion of local
    Producers.
·   Increased import duties on the finished goods and raw material have increased the price of the product,
    along with this, increasing inflation in the country have made it difficult for soap industry to transfer the
    whole increased cost at the consumer, thus forcing the industry to operate at a very low margin.
·   Sanctions imposed by the developed nations on Pakistan due to nuclear experimentation create the
    uncertainty in business activities.

    SOCIAL
·      The greater the tendency towards urbanization in Pakistan, the living standard which is forcing the
    people to use standardized product and people are diverting from the beauty soap to anti bacterial
    soap.


    TECHNOLOGICAL
·   No major and rapid breakthrough in the technology of soap and their manufacturing process, but
    innovations is required so that the product does not become obsolete.
SWOT ANALYSIS
STRENGTHS

     Heavy and impressive promotional plan for safeguard.
     Strong social & corporate image of P&G.
     Strong financial position of company.
     More concern towards total quality management.
     Highly health caring product, safeguard gives protections against germs.
     Direct contact with customers.
     P&G’s good relations with the supplier.
     Strong emphasis on environmental prosperity.
     Worldwide research and technology, engineering and manufacturing.
     Well-established and renowned distributors.
     Highly enthusiastic sales team of the company.
     They identified directly influence group such as wives and children in their target market.
     Fifth-lowest Injury/Illness Rate for employees.
     Fourth-lowest lost Workday Rate for employees.
     Fifth-lowest property loss.




WEAKNESSES

     Safeguard is available in limited pack sizes; only two sizes are available. One is 125 gm and other
      is 75 gm.
     Unwilling to serve low-income market. Price is especially very high towards lower income
      groups.
     Due to limited manufacturing facility, they cannot reduce production cost of the safeguard




OPPORTUNITIES

     According to the information obtained by Chamber of Commerce and Industry Lahore, the soap
      market is growing at an annual rate of 9.8%. The main reasons for this growth are:
     Rapid growth in population,
     High urbanization
     Increase in awareness among people about new advancements.
     Due to this growing market, there are lots of opportunities for P&G to exploit this growin g
      market by introducing new soaps.
     P&G has a good corporate image among consumers. Therefore, they can get maximum share
      from the soap industry by introducing multiple brands of soaps because they have already
      different soaps in their international health and beauty care product line.
     Due to rising awareness among people, switching trend toward health care soaps is high.
      Therefore, it is a good opportunity to capture this segment through efficient marketing
      practices.




THREATS

     Increasing market share of local Producers. The local Producers are playing an important role in
      soap industry, because they are providing low price soaps and try to penetrate in their local
      market by replacing the branded products.
     Threat of new entrants is also present. As Lever Brothers is a potential threat in soap industry,
      because they are already involved in different related businesses and providing raw material for
      soap production to different manufacturing companies like Colgate Palmolive, etc.
     Increasing inflation in the country is also a major threat of P&G because it is reducing the
      purchasing power of consumers.
         STRUCTURAL ANALYSIS
         PORTER MODEL

         Structural analysis helps to analyze the competitive process as well as the sources of competitive
         pressure. In the structure analysis, certain questions like what are the strengths of these pressures, what
         type of competition is prevailing and what future competitive conditions will be included. Generally,
         there are five forces which affect the competitive position in an industry and these forces are as
         follows:-
1)          Competitive rivalry
2)          Buyer’s power
3)          Supplier’s power
4)          Threat of new entrants
5)          Substitute products

         COMPETITIVE RIVALRY
         Competition is concerned with the degree of rivalry within the industry. Danger of rivalry is greater
         when the competitors are of equal size. In the soap industry, the competitors are;
     ·    Lever Brothers Pakistan Limited
     ·    Colgate-Palmolive Ltd.,
     ·    Reckit Benckiser



         So competition is very tight. Rivalry is greater between these three firms due to their equal sizes. Soap
         industry shows growth rate, which is 9.8% per annum. It seems that it offered very lucrative business
         opportunities but these opportunities also carry threats with them. Because to capture the high market
         share, an organized distribution channel is required for this industry which carry heavy cost.

         THREAT OF NEW ENTRANTS
         It is generally said that the industry where the threat of new entrants is low, the industry is considered
         to be secure and attractive. In the case of soap industry, the barriers to new entrants are large initial
         capital requirements and product differentiation as well.
         Also the available soaps have a strong image among consumers and it is very difficult for new comers to
         break that image. Due to these reasons, the threat of new entrants is low but not zero. Because, there
         are chances that ICI may enter into the soap industry. Anyhow, it is very difficult for new comers to
         enter into the soap industry.

         THREAT OF SUBSTITUTES
   Substitute means a product which can perform the same functions as the original product can perform.
   Substitute of the anti bacterial soap is beauty soap. Since the quality of these substitutes is not
   comparable. So there is low threat of substitute to the soap. But due to rise in inflation in the country,

   threat of the substitute of high price soap like Safeguard is gradually increasing.

   BUYER’S POWER
   When there are a few number of buyers those purchase the large portion of a company’s sale, then in
   this case, they have maximum power. But in the case of soap industry, the buyers are the distributors, to
   whom bulk amount of products is sold and this sale is maximally on the cash basis. So the buyers have
   no handsome power to interrupt or interfere in the Soap industry.

   SUPPLIER’S POWER
   Supplier’s power is less because they are having support from their parent company for raw material
   and technological assistance.

   COMPETITOR’S ANALYSIS
      Competitors of Safeguard can be categorized into two segments:-
1. Competitors in organized sector
2. Competition with local Producers



   COMPETITORS IN ORGANIZED SECTOR

   LEVER BROTHERS LIMITED


   Lever Brother Limited is the oldest company in Pakistan. It is operating in Pakistan since its
   independence. They introduced soap with the name Lifebuoy Gold 1997, which became the lot selling
   soap.
   Their target market is upper class, middle class and lower class. They have produced products for each
   class with respect to different prices. For example, lifebuoy with 95gms is a lower price product for
   lower income people, while lifebuoy 140gms is high price quality product for upper class.
   Lever Brothers Limited emphasizes on the direct approach to the consumer and they have well-
   established sales force, and distribution channel. Mostly they are following Pull Strategy. They company
   offers 6% profit margin to retailers on retail price. No bonus is given to retailers. Also no discount is
   available on bulk purchases. There is no scheme for retailers of any kind. Distributor’s full force reaches
   almost every retailer irrespective of the size and delivers the product to him or her. Distributors also
   distribute the products to villages also after taking into consideration the budget as well as the business
   level of that village. There is a campaign started by company in order to cover the rural population, as
most of the population lives in the villages. For this purpose, they have made rural cluster zones. They
have

heavily advertised their products on mass media. They display their product brochures at every retailer.
The company has strong financial background and has much excess budget for launching a new product,
because their market share is maximum in soap industry and they are carrying marvelous profits.




RESEARCH AND DEVELOPMENT

With respect to R&D, P&G Pakistan has a strong back from the P&G worldwide network of research and
development P&G’s innovations is a major competitive strength and is driven by the market place. The
company sets out to deliver the customers the right science with the right processes at the right place. It
must be seen to provide a quality of service, which is the best in the market.

P&G is spending millions of dollars in R&D worldwide, while they have R&D cells in the countries in
which the operations of business are going on. These R&D cells are responsible to identify the
technological breakthrough, taking place in these countries. They are mostly customer oriented for
which they test the products in the market and then introduce it to the whole target market.

FINANCIAL RESOURCES
The safeguard business accounts contribute nearly 6.3% of the company’s profit. The impressive growth
recorded by the soap industry enabled it to make this contribution. This is due to increase in sales of
safeguard in 1999.
SALES VOLUME (Rs. in 000)
Year                   1999                   2000                   2001
Sales                  276,558                308,915                358,525



A financial analysis for the last three years is:

Year                                                1999          2000            2001
Operating Profit Margin                             6.2%          6.7%            5.9%
Asset Turnover                                      8.3 times     8 times         6.6. times
Return on Assets                                    35%           34.4%           32%
Increase in Sales                                   60%           50%             112%
Increase in Assets                                  120%          125%            128%
Along with this internal resource generation, corporate name is at its back as sound credit worthiness
for any borrowed fund.




EXISTING STRATEGIES OF P&G for SAFEGUARD
P&G is following different strategies in different marketing practices for safeguard.


MARKETING STRATEGIES


PROMOTIONAL STRATEGIES
P&G gives high emphasis on direct approach to customers. Its sales teams visits
schools after schools along with the medical practitioners and demonstrate
experiments of hand and face washing in comparison with other soaps. They
involve children and house wises in their campaign and then asks them to give
comments. This way they create awareness and demand for the safeguard.
They try to satisfy the customer at the spot and then sell a small size of 75 gm
pack for trial basis. They also advertise these practices on television, often
sponsors famous plays on dramas on TV. P&G gives high media coverage to
Safeguard. Regarding the commercials on TV, they follow the policy that their
commercials will not be executed right before and after the commercial of
competitors.

DISTRIBUTION STRATEGIES
As described earlier that P&G is distributing safeguard through International
Brands Ltd., distribution network which is a renowned distribution company. In
each IBL office, there is an Area Sales manager of P&G who is responsible to
watch the activities of IBL regarding distribution of Safeguard and make direct
contact with customers to obtain the complaints.

PRICING STRATEGIES
P&G always emphasizes safeguard as quality product and they try to differentiate
it as compared to competitors. But they have set the price of 125 gm of Safeguard
Rs. 21 which is equal to the major competitor product Detol soap having price of
Rs. 21 for 125 gm pack. Therefore, we can say they are somewhat following
competitive price strategy.

PRODUCT STRATEGIES
Safeguard is quality product as described earlier and P&G do not compromise on
quality. Therefore, in product strategy, they are following differentiation
strategy.
There are the marketing strategies of safeguard but there are a group of
strategies, which determine the strategies of company regarding a product.


BOSTON CONSULTANT GROUP MATRIX
Market Share
                                                                            High
                        Low
  High 100                           Safeguard

                         STAR                QUESTION

                                             MARK

Market
Growth


      Low           CASH COW         DOG
               10              1                 0.1

Market share




The BCG Matrix tells about the position of the products either as star, cash cow,
question mark or dog. The two dimensions of this matrix are the relative market
share and on y –axis industry growth rate.
The market share of safeguard (P&G) in soap industry is lower than their
competitors because of price sensitivity and its market share is increasing.
Second, the market growth rate of soap business is faster than general economy,
which is 9.8% per annum. This is due to increasing population and urbanization in
the country.

The above analysis shows that safeguard is a question mark in soap industry. It is recommended
for question mark to follow growth-oriented strategies and more investment. P&G have
resources to move it towards star. For growth strategy, company should seek out new
opportunities. So they are now spending $ 3 million to expand the Hub plant where
safeguard is manufactured. From the 10 th of April another production unit has started
production for safe guard to meet the expanding marketing needs.




                            GENERAL ELECTRIC COMPANY MATRIX
General Electric Company (GEC) Matrix uses the dimensions of industry
attractiveness and business strengths to identify the current position of the
company and suggests which type of strategy should be used.
To measure each dimension, certain factors are selected. In soap industry,
following factors are applicable:


BUSINESS STRENGTHS

                                                                Rating
                                     Weight      1=High       Score
Factors                                          .5=Medium
                                                 0=Low

Company’s relative market            25          .50          12.5

share
Price competitiveness                15          .60          9
Financial strength                   30          .90          27
Knowledge of customers and market    15          .60          9
Technological Advancement            15          .70          10.5
Total                                100                      70




INDUSTRY ATTRACTIVENESS

                                              Rating
                                    Weight 1=High         Score
Factors
                                              .5=Medium
                                              0=Low

Market size and growth rate          30            1         30

Intensity of competition             20           .90        18

Profitability                        10           .60         6

Capital requirement                  15           .70        10.5

Opportunities and threats            15           .75     11.25
Barriers to entry and exit                   10         .50          5

Total                                       100                     80.75




               SPACE MATRIX

  Strategic Position and Action Evaluation Matrix is useful for determining the
current strategic position of the organization with reference to its environment
and helps deciding the strategy profiles for the company. In the context of P&G,
     the factors considered and intensity of their influence is given below: -




                            COMPETITIVE ADVANTAGE
                                                     Rating     -
                                                   6=Low
             Factors                               0=High
             Market share                          -4
             Product quality                       -1
             Customer loyalty                      -3
             Control     over   distributors   and -2
             suppliers
             Promotional activities                -1
             Product price                         -3

             Technical know-how                    -1

             TOTAL                                 -15

             Average                               -2.14=-2




ENVIRONMENTAL STABILITY
                                                   Rating     -
                                                   6=Low
             Factors
                                                   0=High
             Technological changes                 -3
            Rate of inflation               -2
            Barriers to entry into market   -3
            Competitive pressure            -1
            Demand variability              -5
            Price elasticity of demand      -3
            Total                           -17
            Average                         -2.83=-3




INDUSTRY STRENGTH
                                            Rating
                                            0=Low
            Factors
                                            +6=High
            Growth potential                +5
            Profit potential                +3.5
            Financial stability             +4
            Technological know how          +5
                    Resources utilization                   +2.5

                    Ease of entry into market               +4

                    Total                                   +24

                    Average                                 +4


    SCORE ON X=AXIS
            Competitive Advantage            =    -2
              Industrial Strength     =     +4
              Total Score on x-axis   =     -2(+(+4)=+2
    SCORE ON Y-AXIS
            Financial Strength              =     +5
              Environmental Stability =     -3
              Total Score on y-axis   =     -3 +(+5) = +2
              Coordinates (+2_+2)




    The direction vector points towards the aggressive quadrant. Therefore, the
    suitable strategies for P&G safeguard are:-
·   Market penetration
·   Market development
·   Product development

    MARKET PENETRATION
Market penetration means to exploit the available consumer efficiently to achieve high market
share. This is probably done for a product, which is at the growth stage. Market penetration can
be done through heavy advertisement and by providing products of different sizes and types
for different consumers. For this purpose, highly extensive distribution channel should be used.

MARKET DEVELOPMENT
In market development strategy, organization should find the new uses of
product, new segments and entering into new geographic areas. Still safeguard is
being used for germs protection purpose, focusing on urban areas and more
emphasis on middle and upper class. Therefore, they should identify the new such
as for crockery purpose and explore the new and potential customers.

PRODUCT DEVELOPMENT
For product development, development of internal resources is emphasized.
Therefore, P&G should acquire one more product or manufacturing plant for the
production of safeguard to capture the wide market.



For safeguard P&G is intensifying the efforts to increase the market share in
growing industry because soap industry is growing with an annual rate of 9.8%.
Therefore, we can say they are following consolidation strategy for safeguard,
because they are intensifying their efforts on advertisement and promotional
activities.
PROPOSED STRATEGIES
The practice of incomplete market coverage should not be followed because you
cannot hijack other company’s customers and new customers as well. All these
problems require following strategies:

MARKET DEVELOPMENT STRATEGY
P&G is emphasizing on urban areas while it has neglected the suburban areas,
which is also a big market for soaps like safeguard. For this purpose, they should
efficiently utilize their Marketing Information System to collect information about
the demand and attitudes of the people in these areas. By using this strategy,
safeguard can fetch the customers of competitors and will be successful in
building new customers.

PRODUCT DEVELOPMENT STRATEGY
It describes to develop new products or modify the existing products with respect
to size, color, packaging, etc.


Safeguard is a well-perceived product among the customers, and at this moment,
it is available in two sizes; 75gm and 125gm, which cannot satisfy



the demand of every segment. While the products of the competitors are
available in multiple sizes which provide abundant choices for purchases to
customers for example Lifebuoy Gold has 140gm and 95gm and Medicame has
80gm soap available in the market This provide an opportunity to the customer to
have multiple choices. It can be a threat for the market share of safeguard. On the
other hand, in case of safeguard the choice to customer is very limited. This is
what they have analyzed through market survey. Therefore, it is necessary that
safeguard should be available in maximum possible sizes to meet the selection
criteria of the customer.
As far as launching of new product is concerned, it is not necessary for P&G at this
moment, but in future, they will require taking this step as well because they have
some other soap like ivory, and zest which are very famous in international
market.

MARKET PENETRATION STRATEGY
It describes that a company tries to sell more of its product by introducing new
supplementary uses. Safeguard is that product, which contains such chemicals
useful for beauty care as well. This characteristic, we have analyzed through its
product formula. Therefore, it is more useful to supplement this idea with existing
safeguard or introduce safeguard into different pack sizes especially for capturing
the female customers.

				
DOCUMENT INFO
Description: proctor and gamble report.