DR. D. Y.

PATIL DEPARTMENT
OF BUSINESS MANAGEMENT

ASSIGNMENT NO : II

SUBMITTED TO

DR. R GOPAL

Department of Business Management

Padmashree Dr. D.Y. Patil University
CBD Belapur, Navi Mumbai

SUBMITTED BY :

PARESH REKHI – MBA PHARMA – 24

RAHUL CHAKRAPANI - MBA PHARMA – 31

VINU JOHN - MBA PHARMA – 41

NITIN RASKAR - MBA PHARMA – 23

SUBMISSION DATE

15/10/09

Indust r y Ove r vie w

The US soap and detergent manufacturing industry includes

about 650 companies with combined annual revenue of more

than $30 billion. Major companies in the consumer sector

include divisions of Procter & Gamble (P&G); Unilever; and

Dial. Major companies in the commercial sector include

divisions of Ecolab and US Chemical. The industry is highly

concentrated: the top 50 companies generate about 90 percent

of revenue.

C ompe ti t i ve La ndsc a pe

Population growth, particularly among households with

children, drives demand in the consumer sector, and economic

growth drives demand in the commercial sector. The

profitability of individual companies depends on efficient

operations and effective sales and marketing. Large companies

have scale advantages in purchasing, manufacturing,

distribution, and marketing. Small companies can compete

effectively by offering specialized products, providing superior

customer service, or serving a local market. The industry is

capital-intensive: average annual revenue per worker is more

than $1 million.
The industry is about evenly split between the consumer and

commercial segments. Both segments are highly competitive,

and large companies spend millions to maintain market share.

Products, Operations & Technology

Major products include laundry detergent, soap, dishwashing

detergent, and toothpaste. Laundry detergent accounts for 40

percent of industry revenue, soap for 20 percent, and

dishwashing detergent for 15 percent. Laundry detergent comes

in powder or liquid form, and may contain bleach additives or

color brighteners. Dishwashing detergent comes in powder,

liquid, or gel form. Soap comes in bars or liquids, and may

have moisturizing, antibacterial, or deodorant benefits.

Companies in the commercial sector may also sell dispensing

equipment and provide related training.

Detergent production starts by combining liquid and dry

ingredients. Spray drying produces powder detergents by

spraying the liquid mixture through nozzles under high

pressure to create small droplets. The droplets fall through hot

air and dry into hollow granules. Heat-sensitive ingredients,

such as bleach or fragrance, are added after spray drying.

Agglomeration produces higher density detergent powders by

using a liquid binder and a different mixing process known as

"rolling" or "shear mixing." Dry blending mixes dry raw

materials with small quantities of liquids. Detergents are

packaged in cartons, bottles, pouches, or bags.

Soap production starts by heating fatty acids or fats and oils,

and combining them with alkali, such as sodium or potassium.

The process, known as saponification or neutralization,

produces a combination of soap and water (known as neat soap)

plus glycerin, which can be resold. Neat soap is converted into

dry soap pellets through vacuum drying. An amalgamator mixes

pellets with fragrances and colors. Rolling mills and refining

plodders refine the mixture to achieve uniform texture. The

final mixture is extruded, cut into bars, and stamped into

shapes in a soap press. Soap bars are wrapped and packaged

into single or multiple packs.

Soaps and detergents are made of surfactants or surface-active

agents, chemicals that help water soak and clean surfaces.

Many surfactants are petroleum-based. Oleochemicals are

surfactants derived from natural fats and oils. Soap reacts with

minerals in hard water, diminishing cleaning properties.

Builders boost the efficiency of surfactants by counteracting

hard water, emulsifying oil and grease, and preventing soil

from redepositing. Phosphates, an environmentally

controversial chemical, are a commonly used builder.

Raw materials include surfactants, solvents, phosphates,

silicates, alkalis, salts, and perfumes. Suppliers include major

chemical manufacturers like Shell Chemical (a division of

Royal Dutch Shell) and Dow. P&G has a separate business unit

that manufactures key chemicals as part of a global supply

network. Packaging is about 20 percent of product costs, and

includes bags, boxes, bottles, tubes, and labels.

Companies may rely on or provide third-party contract

manufacturing services. Large companies may own multiple

plants, including many facilities outside the US.

Soap and detergent manufacturing is highly automated, and

involves significant capital investment in plants and

equipment. Computers control production equipment and

inventory management. Many companies use electronic data

interchange (EDI) to optimize the purchasing process. Due to

the high level of automation, the average plant has fewer than

20 employees.

R&D involves creating, testing, and improving product

formulation, and evaluating environmental compatibility.

Technological advances have reduced the amount of product

needed, thereby reducing the amount of packaging. Micro

encapsulation technology allows manufacturers to deliver

unstable ingredients, like vitamin C, through soap to the skin.

Manufacturers also test new enzymes and bleaches that improve

the efficacy of products.

The growth of cities and the textile industry in the early

nineteenth century increased soap usage and stimulated the rise

of soap-making firms. By 1840, Cincinnati, then the largest

meatpacking center in the United States, had become the

leading soap-making city as well. The city boasted at least

seventeen soap factories, including Procter and Gamble

(established 1837), which was destined to become the nation's

dominant firm. A major change in soap making occurred in the

1840s when manufacturers began to replace lye made from

wood ashes with soda ash, a lye made through a chemical

process. Almost all soap makers also produced tallow candles,

which for many was their major business. The firms made soap

in enormous slabs, and these were sold to grocers, who sliced

the product like cheese for individual consumers. There were

no brands, no advertising was directed at consumers, and most

soap factories remained small before the Civil War.

The period between the end of the Civil War and 1900 brought

major changes to the soap industry. The market for candles

diminished sharply, and soap makers discontinued that

business. At the same time, competition rose. Many soap

makers began to brand their products and to introduce new

varieties of toilet soap made with such exotic ingredients as

palm oil and coconut oil. Advertising, at first modest but

constantly increasing, became the major innovation. In 1893

Procter and Gamble spent $125,000 to promote Ivory soap, and

by 1905 the sales budget for that product alone exceeded

$400,000. Advertising proved amazingly effective. In 1900

soap makers concentrated their advertising in newspapers but

also advertised in streetcars and trains. Quick to recognize the

communications revolution, the soap industry pioneered in

radio advertising, particularly by developing daytime serial

dramas. Procter and Gamble originated Ma Perkins, one of the

earliest, most successful, and most long-lived of the genre that

came to be known as Soap Operas, to advertise its Oxydol soap

in 1933. By 1962 major soap firms spent approximately $250

million per year for advertising, of which 90 percent was

television advertising. In 1966, three out of the top five

television advertisers were soap makers, and Procter and

Gamble was television's biggest sponsor, spending $161

million.

Advertising put large soap makers at a competitive advantage,

and by the late 1920s three firms had come to dominate the

industry: (1) Colgate-Palmolive-Peet, incorporated as such in

1928 in New York State, although originally founded by

William Colgate in 1807; (2) Lever Brothers, an English

company that developed a full line of heavily advertised soaps

in the nineteenth century and in 1897 and 1899 purchased

factories in Boston and Philadelphia; and (3) Procter and

Gamble.

Synthetic detergent, which was not a soap, but was made

through a chemical synthesis that substituted fatty alcohols for

animal fats, had been developed in Germany during World War

I to alleviate a tallow shortage. Detergents are superior to soap

in certain industrial processes, such as the making of textile

finishes. They work better in hard water, and they eliminate the

soap curd responsible for "bathtub rings." In 1933 Procter and

Gamble introduced a pioneer detergent, Dreft, which targeted

the dishwashing market because it was too light for laundering

clothes. It succeeded, especially in hard-water regions, until

World War II interrupted detergent marketing.

In 1940 the "big three"—Colgate, Lever, and Procter and

Gamble—controlled about 75 percent of the soap and detergent

market. They produced a wide variety of products, such as

shampoos, dishwashing detergents, liquid cleaners, and toilet

soap, but the most important part of their business was heavy-

duty laundry soap, which accounted for about two-thirds of

sales. Procter and Gamble had about 34 percent of the market.

Lever was a close second with 30 percent, and Colgate trailed

with 11 percent. In 1946 Procter and Gamble radically shifted

the balance in its favor when it introduced Tide, the first

heavy-duty laundry detergent. By 1949, Tide had captured 25

percent of the laundry-detergent market. By 1956, even though

Lever and Colgate had developed detergents of their own,

Procter and Gamble held 57 percent of the market, as compared

with 17 percent for Lever and 11 percent for Colgate. Despite

Procter and Gamble's triumph, the big three still competed

fiercely.

By 1972, detergents had almost eliminated soap from the

laundry market, although toilet soap remained unchallenged by

detergents. In the 1970s, bans on detergents by some local

governments, which feared contamination of their water

supplies, had little impact on the composition or sales of

laundry products. In the early 2000s, the smaller firms within

the industry still produced a multitude of specialized cleansers

for home and industry, although in the highly important fields

of toilet soaps, laundry soaps, and detergents, the big three

remained dominant, controlling about 80 percent of the total

market.

Fabric wash market in india

The fabric wash market is one of the fastest growing markets in
India. The total size of the market is estimated to be around
Rs. 8800Crores. This market is growing at a rate of 10% CAGR
(Compound Annual Growth Rate). The total production is of
around 2.3 million tones. This market is deeply penetrated in
the Indian market . This segment has about 98% penetration in
the Indian market. The products are also available in the rural
areas of the country. These products are used by 99% of houses
in the country. Out of all the consumers 55% are from urban
areas like metro cities like Mumbai, Delhi, etc and the B class
cities. The remaining 45% are from rural India.

The big guns

Source : Business Standard, 29-11-07

H.U.L. is the leader in this segment with 37% of market share

& its Surf Excel being the leading brand. H.U.L. is followed by
Nirma at 2nd position with 13.2% and P&G having 7.7% of
market share.

H.U.L.

Hindustan Unilever Limited (abbreviated to HUL) (BSE:

HUL) formerly Hindustan Lever Limited is India’s largest
consumer products company and has an annual turnover of over
Rs 13,000 crores (calendar year 2007). It was formed in 1933
as Lever Brothers India Limited and came into being in 1956 as
Hindustan Lever Limited through a merger of Lever Brothers,
Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd.. It
is headquartered in Mumbai, India and has an employee
strength of over 15,000 employees and contributes for indirect
employment of over 52,000 people. The company was renamed
in late June 2007 to “Hindustan Unilever Limited”.

In 2007, Hindustan Unilever was rated as the most respected

company in India for the past 25 years by Business World, one
of India’s leading business magazines. The rating was based on
a compilation of the magazines annual survey of India’s Most
Reputed Companies over the past 25 years. HUL is the market
leader in Indian consumer products with presence in over 20
consumer categories such as Soaps, Tea, Detergents and
Shampoos amongst others with over 700 million Indian
consumers using its products. It has over 35 brands. Sixteen of
HUL’s brands featured in the AC Nielsen-Brand Equity list of
100 Most Trusted Brands Annual Survey (2008). According to
Brand Equity, HUL has the largest number of brands in the
Most Trusted Brands List. It’s a company that has consistently
had the largest number of brands in the Top 50 and in the Top
10 (with 4 brands).

Hindustan Unilever distribution covers over 1 million retails

outlets across India directly and its products are available in
over 6.3 million outlets in India, i.e. nearly 80% of the retail
outlets in India. It has 39 factories in the country. Two out of
three Indians use the company’s products and HUL products
have the largest consumer reach being available in over 80 per
cent of consumer homes across India.

The Anglo-Dutch company Unilever owns a majority stake

(52%) in Hindustan Unilever Limited. HUL was one of the
eight Indian companies to be featured on the Forbes list of
World’s Most Reputed companies in 2007

1933
Founded
Vision “To earn the love and respect of India, by making real
difference to every Indian.”
Mission “Our mission is to add Vitality to life. We meet everyday
needs for nutrition, hygiene, and personal care with
brands that help people feel good, look good and get
more out of life.”

Gross Turnover (2007-08) Rs. 14938 Crore

Profit After Tax (2007-08) Rs. 1769 Crore

Number of Employees 15,000+

Logo

Chairman HarishManwani

Headquarters Mumbai, India

Website www.hul.co.in

Source: Company Website and Wikipedia)

HUL is the proud owner of around 35 major Indian brands. HUL

has divided its products into following categories: Home and
Personal Care, Food and Water Purifier.
In the ‘Home and Personal care’ category HUL has maximum
number of brands. It is again subdivided into eight sub-
categories:

Personal Wash:

• Lux

• Lifebouy

• liril

• rexona

LAUNDRY:

• Surf Excel

• Rin

• Wheel

Skin Care:
• Fair & lovely

• Ponds

• Vasceline

Oral Care:

• Pepsodent

• Close up

Hair Care:

• Sunsilk Naturals

• clinic

P&G
P&G Home Products Limited is one of India's fastest growing
Fast Moving Consumer Goods Companies that has in its
portfolio P&G's global brands such as Ariel and Tide in the
Fabric Care segment, and in the Hair Care segment: Head &
Shoulders - world's largest selling anti-dandruff shampoo;
Pantene - world's No. 1 beauty shampoo; and Rejoice - Asia's
No.1shampoo.

P&G Home Products Limited is a 100% subsidiary of The

Procter & Gamble Company, USA, that in India, has carved a
reputation for delivering superior quality, value-added
products to meet the needs of consumers.

HISTORY OF P&G

1993, Procter & Gamble Home Products is incorporated as a

100% subsidiary of The Procter & Gamble Company, USA.
Procter & Gamble Home Products launches Ariel Super Soaker.

In 1993, Procter & Gamble India divests the Detergents

business to Procter & Gamble Home Products.

In 1995, Procter & Gamble Home Products enters the Haircare

Category with the launch of Pantene Pro-V.

In 1997 Procter & Gamble Home Products launches Head &

Shoulders shampoo.

In 2000, Procter & Gamble Home Products introduced Tide

Detergent Powder - the largest selling detergent in the world.

In June 2000, Procter & Gamble Home Products Limited

launched Pantene Lively Clean its unique Pro-Vitamin formula
cleans oil-build up, dirt and grime in just one wash, delivering
lively, free-flowing and sparkling-clean hair.

In August 2000, Procter & Gamble Home Products Limited

launched New Ariel Power Compact detergent with a new global
technology that breathes new life into clothes, by removing
dinginess from them and restoring the original colors of the
fabric, by detecting and removing deposits which are left
behind from successive washes.

In November 2000, Procter & Gamble Home Products Limited

presented India in the first International Hair Styling and
Beauty Expert Contest- Hair Asia Pacific 2000 in collaboration
with Sri Lankan Association of Hairdressers and Beautician.

During this period, Procter & Gamble Home Products also re-
launched the international range of Head & Shoulders, best-
ever Anti-dandruff shampoo with an improved formula, new
pack-design and logo, in three variants - Clean & Balanced,
Smooth & Silky and Refreshing Menthol, which offers the fine
combination of anti-dandruff efficacy and hair conditioning.

In January 2001, Procter & Gamble Home Products Limited and

Whirlpool India Ltd. launched a special 'Ariel - Whirlpool
Superwash' offer, making washing machines more affordable to
the people of Hyderabad. On purchase of either a 500gms, 1kg
or 1.5kg economy pack of New Ariel Power Compact,
consumers are automatically eligible to buy a Whirlpool
Washing Machine for as low as Rs.238/- in Equal Monthly
Installments for 24 months, by filling in the application form
that comes with the Ariel pack and contacting any one of the
Whirlpool dealers mentioned on the pack.

In June 2001, Procter & Gamble in partnership with the

Association of Beauty Therapy & Cosmetology (ABTC), India
hosted the Pantene Artist 2001 a national stylist competition,
which included categories such as Bridal Dressing, Hair
Cutting and Body Painting. Present at the event was world-
renowned hairdresser and stylist Jun L. Encarnecion, who
demonstrated the hottest international haircuts and styles in
vogue via an interesting hairhsow. Mr. Encarnecion has trained
students in leading hairdressing schools like Robert Fielding
School of Hair Dressing (U.K), Pierre Alexander International
Academy (U.K), Vidal Sassoon Academy, (U.S.A) among others
and also enjoys the reputation of being the official hairdresser
for the 1993 Miss Universe pageant.

In July 2001, Procter & Gamble Home Products Limited

launched New Ariel Total Compact with Magicare a New
System of Washing that completely removes stains without
scrubbing, significantly reducing time spent on washing
clothes.

In September 2001, Procter & Gamble Home Products launched

New Pantene Pro-V range of five shampoos in India which gave
consumers the look they want Smooth & Silky for straighter
hair, Volume & Fullness for thicker hair, Balanced Clean for
shinier hair, Lively Clean for livelier hair and Anti-Dandruff
for dandruff-free hair.

In December 2001, Procter & Gamble in partnership with the

Southern India Beauty Specialists & Hairdressers Association
(SIBHA) hosted the Pantene-SIBHA Look N Learn Seminar
where Raman Bhardwaj hairdresser to former Miss India, Celina
Jaitley demonstrated the Latest and Trendiest Hair Cuts
(Modern & Classic) to beauticians and hairdressers in Chennai.

In April 2002, Procter & Gamble Home Products Limited

announced the launch of a special Ariel Bar Refund Offer along
with its new Advanced Ariel Compact. Under the Ariel Bar
Refund Offer, consumers could exchange their detergent bar on
purchase of Advanced Ariel Compacts 1kg and 500gms packs,
and avail of a Rs.15 and Rs.7 discount respectively on MRP.

Additionally, Procter & Gamble Home Products announced the

Beat The Summer Dandruff offer on which 200ml Head &
Shoulders bottle was available for Rs.99/- only, thus giving a
benefit of a Rs.23/- discount to consumers.

In August 2002, Pantene unveiled the launch of the Shine

Morning to Night campaign that helps consumers get long
lasting hair shine with regular use of Pantene. The Shine
Morning to Night campaign had two exciting components to it
The MTV Shine Your Soul contest where one could win
diamonds worth Rs.12.5 lacs and the launch of the Pantene
Shine Booths across the country to help achieve the shine that
lasts from morning to night.

During the same period, Pantene also hosted Hair Asia Pacific
2002 the biggest Hair Cutting & Styling event in Kuala
Lumpur, Malaysia. Pantene Hair Asia Pacific is a prestigious
international hair cutting & styling contest attracting expert
hairdressers and beauty care advisors from more than 13 Asia
Pacific countries.

Additionally, Pantene also hosted Pantene World Teen Queen

contest in Goa. Contestants from UK, USA, South Africa,
Kenya, Tanzania, Mauritius, Middle East and Hong Kong
participated to win the coveted World Teen Queen crown.

In November 2002, Procter & Gamble Home Products Limited

launched Head & Shoulders Naturally Clean, a new variant in
its Head & Shoulders range of Shampoos especially for Tamil
Nadu, Kerala, Andhra Pradesh, Karnataka and West Bengal. Its
Smart ZPT combined with Natural Citrus (lemon) extracts
removes 100% dandruff and rinses oil and stickiness from the
scalp, giving light, loose, free flowing hair.

In January 2003, Procter & Gamble Home Products Limited

reduced the prices of Pantene and Head & Shoulders 7.5ml
sachets from Rs. 4/- to Rs. 3/-, with no change in its superior
product-quality or packaging, improving affordability to a
large number of Indian consumers.

Procter & Gamble Home Products Limited also announced the

launch of its Tide Super Whiteness Gold Dhamaka at the Tide
Junction in Giant Hypermarket, Hyderabad. The Tide Super
Whiteness Gold Dhamaka gave consumers a chance to get their
clothes super-white and Win an Exquisite Handcrafted Pure
Gold Jewellery Set worth Rs.25,000 and other prizes from
EstelleJewellery.

In June 2003, Procter & Gamble Home Products Limited

launched Pampers - world’s number one selling diaper brand
with sales of US$ 6 billion annually. Pampers provides superior
dryness for uninterrupted overnight sleep, with just one
pampers diaper. In India, Pampers Fresh & Dry is available in a
variety of three sizes – 4s, 10s and 25s.

In July 2003, Procter & Gamble Home Products Limited

launched Pantene Long Black, the ultimate solution for
achieving the Long and Black hair look, and Head & Shoulders
Silky Black - the only shampoo in India to offer the dual
benefits of 100% dandruff-free as well as silky black hair.

In September 2003, Procter & Gamble Home Products Limited

announced that its superior quality Tide sachet is now available
at Re. 1 per sachet and its Ariel sachet at Rs. 2 per sachet, thus
making the world’s best detergents available at lowerprices.

In January 2004, Procter & Gamble Home Products Limited

announced the launch of Rejoice – Asia’s No. 1 shampoo, in
India. Rejoice’s patented Micro-Silicone conditioning
technology gives twice as smooth, and easy to comb hair versus
ordinary shampoos, at affordable prices in 100 ml bottles and
7.5mlsachets.

In March 2004, Procter & Gamble Home Products Limited

reduced the prices of Ariel and Tide bags (large packs) by 20-
50%, while maintaining the superior quality. The superior
quality one kg pack of Tide now cleans a family’s one month
laundry in just Rs.23/-, while a one kg pack of Ariel cleans a
family’s one month laundry in just Rs.50/-.

In April 2004, Procter & Gamble Home Products Limited

announced the launch of Pantene Hair Fall Control, which is
designed to free women of their hair fall concerns by reducing
hair fall due to breakage by up to 50% within just two months,
thus giving them stronger, thicker looking and beautiful hair.
The prices of Pantene 100ml and 200ml bottles were reduced by
16%, offering superior value to consumers.

In August 2004, Procter & Gamble Home Products Limited

signed Preity Zinta – Bollywood's #1 Actress, as Brand
Ambassador for its Head & Shoulders anti-dandruff shampoo
that gives 100% dandruff-free soft beautiful hair.

In October 2004, Procter & Gamble Home Products Limited

launched New Pantene Amino Pro-V Complex shampoos, which
makes hair ten times stronger.

In November 2004, Procter & Gamble Home Products Limited

launched New Tide Bar. The New Tide Bar is unique as
compared to the available detergent bars because of its three
unique features: (i) It has green speckles called Whiteons,
which release a unique whitening action on reacting with
sunlight; (ii) Its technology also ensures that it lasts longer,
does not dissolve easily and delivers a good balance between
bar-hardness and ease of application on clothes and; (iii) It has
a lemony & refreshing fragrance that lingers on clothes hours
after wash.
 ARIEL
V/S
SURF EXCEL

V/S

OBJECTIFYING THE MARKET

“P&G”
Section I: Corporate Purpose

1. Corporate purpose acts as a guiding light for an

organization. P&G defined its purpose as providing
products of superior quality and value to improves the
lives of the world’s consumer.
2. C o r p o r a t e V a l u e s a n d P r i n c i p l e s d e f i n e t h e f r a m e w o r k i n
which the strategic plan has to be designed to achieve the
goals of the organization. P&G has defined leadership,
integrity, trust, passion for winning, ownership as its core
values. Explain how P&G’s core values can help it realize
its vision.

Section II: SWOT Analysis

Strengths:-
Over the years P&G has emerged as a marketing
powerhouse ranking 61 among the Fortune 500 companies
in 1999.

Weakness:-
Commenting on P&G’s conservative marketing practices,
Fortune has remarked: "P&G has a cupboard full of aging
brands that do mostly mundane tasks like wash, mop, sop,
and glop."

Opportunities:-
With the opening up of markets and the rising standards
of living, emerging markets hold huge potential that P&G
can tap.

Threats:-
The conservative culture of P&G has become an obstacle
to its growth. If P&G is not receptive to the changing
external world, then it may lose market share.

Section III: Strategic Analysis

 • John Pepper, P&G CEO once remarked, "People think of
P&G as a marketing company, but we are first and
foremost a research-and-development company. R&D is
the lifeblood of our business." P&G holds more than
2500 active patents, protecting 250 proprietary
technologies. Identify the main core competencies of
P&G.

• P&G’s operates in five business segments: Laundry &

cleaning, paper, beauty care, food & beverage, and
health care. Use the BCG matrix to classify these
businesses and identify growth areas for the future.

• As old ways of doing business become redundant,

companies have to transform themselves. Faced with
growing conservatism and sluggish sales P&G felt the
need to change in the late 1990s. It embarked upon the
Organization 2005 program to change its culture and
way of thinking.

• P&G has used acquisitions and global alliances to enter

new markets, expand its product mix etc., For its
pharmaceutical business, P&G has used global alliances
extensively. Explain with examples from the case, how
P&G benefited from its alliances.

• Two key result areas identified by P&G for

organizational growth are: ‘Strengthening its
relationship with retailers’ and ‘using IT as a strategic
tool’. Explain how P&G can strengthen its relationship
with retailers and leverage IT to its advantage.

Section IV: Product Development

• Product lines tend to lengthen over a period of time

due to various reasons ranging from the need to use
excess manufacturing capacity to pressure from sales
force to have a complete product line. The product line
can be lengthened by either ‘Stretching the line’ or
‘Filling the line’.

• The new product development process starts with idea

generation. A few successful ideas emerge after
 filtering numerous ideas. In the 1990s, analysts felt
that P&G must lay greater emphasis on innovation to
generate faster growth.

• Test marketing is an important phase in the product

development process. It gives the company a feel of the
market before going for a full launch. P&G announced
that it would go for a worldwide product testing
instead of following the traditional ‘sequential’
method.

Section V: Marketing Research

• In the long run, successful companies are those, that

are proactive in identifying the latent needs of the
customers and developing products to suit their needs.
Market research plays an important role in identifying
those latent needs. Explain how P&G has used
marketing research to identify latent consumer needs.

• Marketing research links the consumer to the

manufacturers by generating useful information.
However, all data can not be quantified. Explain how
P&G has struck a balance between quantitative and
qualitative research.

• Defining the research objectives is the first step in the

marketing research process. Usually the objective is
driven by the information requirement of the marketing
department. But most of the time, the research
objectives are not clear.

• A very well planned and conducted research is

meaningless if wrong and biased interpretations creep
in.

Section VI: Brand Management

 • Branding is a key issue in product strategy. It helps in
building strong consumer loyalty. A brand is a seller’s
promise to deliver consistently a specific set of
features, benefits, and services to buyers. Explain with
examples from the case, how P&G has used line
extensions, brand extensions, multibranding and new
brands in its overall brand strategy.

• P&G has attempted to ensure that its products do not

mature. It has regularly added functionality to its
products and repositioned them with slight
modifications. The case mentions that in the late 1990s
P&G had a glut of aging and mature brands. Explain
how P&G can reinvigorate its brands.

• While branding, the whole gamut of the product has to

be taken into consideration. All the elements of the
product like name, design of package, colors on the
package, logo etc, should project a uniform image.

• Companies adopt multibranding strategy by introducing

additional brands in the same product category. The
difference between these brands is generally minor and
hence there is always the probability of cannibalize.

Section VII: Advertising and Distribution

• Every advertisement has an objective. The objective

provides a standard against which the results can be
compared. Setting up objectives also helps in
effectively coordinate the various activities of the ad
campaign. The process of setting objectives is very
closely linked to the selection of target segment.

• With increasing number of advertisement clutter on TV,

consumers have started using remote control to switch
channels and avoid advertisements. As a result
consumer’s exposure to ads is decreasing and
advertisers are having a tough time in communicating
their point of view.

• A headline is needed to make the story in a visual print

advertisement. The headline can add thrust to the
message and story, only if it is connected to the visual.
From the advertisements in Figure-B identify the
 headlines in each advertisement and explain how they
are connected to the visual.

• Advertisement agencies have traditionally been

compensated as a percentage of the ad budge. P&G has
announced plans to move towards variable
compensation based on the performance of the agency,
i.e. as a percentage of worldwide sales.

• P&G’s complex product line has resulted in a

complicated supply chain system. For a multinational
company like P&G the cost of logistics is an important
expense item. Explain the steps taken by P&G to reduce
its logistics costs.

• The Japanese inventory management philosophy of

‘just-in-time’ helps reduce inventory holding costs
dramatically.

“H.U.L.”
HUL products are a household name in India. Its brands across
categories touch lives of over 700 million Indian consumers
every day. That means roughly two-third of Indian population
uses HUL products. The two biggest strengths of HUL are: its
leading brands and extensive distribution network.

a) Brands:
HUL has around 35 major brands most which are leaders in
their individual categories. In the year 2008 AC Nielsen-Brand
Equity list of 100 Most Trusted Brands Annual Survey featured
16 HUL brands. HUL consistently has highest number of brands
in top 50 or top 10 Indian brand’s list.
b) Distribution Channel:
HUL products are manufactured in over 40 factories across
India. Over 2000 suppliers and associates are involved in its
operations. The giant HUL distribution network comprises of
around 4000 redistribution stockists and 6.3 million retailer
outlets. The wide-spread distribution network reaches almost
entire urban India and around 250 million rural consumers.
With the introduction of ‘Hindustan Unilever Network’ in
2003 - HUL is trying its hand at ‘Network Marketing’.
Lately, HUL’s Shakti program (website: www.hllshakti.com)
which supports rural women to become entrepreneurs and
sell HUL products in villages increases the reach of HUL
and provides it a unique capability to tap the still
unexplored bottom-of-the-pyramid opportunities. Of late,
HUL is trying to reduce the inventory requirements by
unbundling the distributors. As per the pilot project in
Mumbai, number of distributors has decreased drastically
from 22 in 2007 to only 5 in 2008.
 ”Objectives”

Surf Excel v/s Ariel

Surf Excel Ariel

To continue market leadership To increase market share

37.8% in Indian Market 7.7% P&G in Indian Market

Approaching New Markets Switch Consumers from

Existing Brands in the present
Market

Launching Product Extensions Product Innovation

Maintain Brand Loyalty Increase Brand Loyalty

Ba ttl i n g th e p ri c e
Since both the companies are targeting the same segment
therefore there is not much difference in the rates of the two
products do not have much difference. Both the companies have
similar pricing strategies. The price of 1kg of Surf Excel is
Rs.109 while that of Ariel for same amount is Rs.107. there is
not much difference in the prices of other pack sizes as well.
The similar prices are because both the companies are targeting
the same segment. Below is given the MRP’S of different pack
size of both Surf Excel & Ariel.

SIZE S U R F E X C E LS U R F SURF EXCEL

Q U I C K W A S HE X C E L AUTOMATIC
BLUE
SACHET Rs.2/- Rs.2/- -

200gm Rs.23/- Rs.20/- -

500gm Rs.56 Rs.41 Rs.80/-

1kg Rs.109/- - Rs.155/-

SIZE ARIEL F R E S HA R I E L ARIEL

CLEAN SPRING FRONTO-MAT
CLEAN
Sachet Rs.2/- Rs.2/- -
200gm Rs.26/- Rs.26/- -
500gm Rs.55/- Rs.55/- Rs.80/-
1kg Rs.107/- Rs.107/- Rs.155/-

2nd price war

 P&G as new entrant goes with Trial and Shift Consumer.
Ariel 20gm sachets (30% reduction) - Rs2 . P&G reduced its
price in order to stay in competition and be ahead of its
competitor.
Hindustan Lever Ltd (HLL) followed the same strategy and
reduced the price
Both the companies are in constant fight for gaining each
others market share..