P&G: The Enduring Legend of Fast-Moving Consumer Goods Industry
When we talk about corporate image and branding in class, P&G is the first to come to mind as a leader in the industry. We think about its pluralistic identity and its flanker brand strategy. We also consider its status an enduring legend in the FMCG sector. I want to seize this opportunity to utilize the analytical methods we've learned in class to explore why P&G has managed to maintain its robust momentum over the years.
Branded Identity: Creating a High-Quality Brand Matrix
P&G is a pioneer in multi-brand management. For instance, in laundry detergents, they have brands like Tide and Ariel; in shampoos, they have Head & Shoulders, Pantene, Rejoice, and Vidal Sassoon. The multi-brand strategy can encircle competitors externally, thereby capturing a larger market share.
How does P&G handle the competition among multiple internal brands and avoid internal damage?
P&G's brands are developed based on different needs, take shampoo products for example: Head & Shoulders is for dandruff control, Rejoice focuses on smoothness, Pantene is for repairing damage, Herbal Essences is known for its fragrance, and Vidal Sassoon represents salon products. Meanwhile, Pantene is the anchor brand, and the other brands are the flanker brands. Through this strategy, P&G can reach a wider group of consumers while protecting its anchor brands from erosion by other competing brands. Each brand has its own unique market positioning and consumer base, which together form P&G's brand portfolio in the shampoo market.
Product in 4P Theory: The Secret Behind Continuous Hit Products
In the 4P marketing theory, the Product takes the leading role. P&G's consistent ability to cultivate hit products is largely attributed to its investment in technological R&D, along with a keen focus on localization strategies.
P&G has a global network of six R&D centers, with more than 7,200 R&D professionals, and is teaming up with startup incubators and investors to create entirely new businesses and categories. Time and again, when P&G encounters development obstacles and a lack of momentum, it's technological R&D that has steered the company towards new engines of growth.
P&G has also innovated in product localization. When Olay entered China in 1989, its primary function was to moisturize the skin. However, market research revealed that Chinese female consumers desired fairer skin. Consequently, in 1997, Olay successfully launched its first whitening product tailored for Chinese women, which led to a rapid increase in Olay's sales. Starting from 2000, P&G observed that Chinese women were becoming more independent and confident, seeking balance in both family and career. In response, Olay introduced the "Her Century" strategy, communicating to Chinese women that they are the masters of their own lives, and launched a series of advertisements with the theme "Fearless of Age, I Have a Story."
The Chinese market is vast, complex, and in transition, requiring products and marketing strategies to be adaptable and dynamically adjusted in response to the psychological shifts of consumer groups.
Big Brand Plus Big Media: Accelerating Consumer Decision
P&G's marketing approach is famously based on the "HBG Theory" (How Brands Grow), which involves building big brands, utilizing large media platforms, and using extensive distribution channels. Firstly, to become a major brand with a large user base is essential to increase penetration rates. Secondly, by saturating the market with advertising through major media platforms and conducting an all-around 'attack' on consumers' minds, the brand becomes top-of-mind when they have a need, sparking the desire to purchase. Lastly, establishing barriers in major distribution channels ensures that once consumers make their decision, they can conveniently proceed with the purchase. This strategy ensures that consumers can "remember" the brand and "find it readily available" whenever they need it. It can be summarized as a formula: Brand Growth = Penetration × Mindfulness × Availability.
That is why P&G is one of the world's largest advertisers. According to its financial report for FY2021, P&G spent a staggering $11.5 billion on marketing, surpassing Amazon's $10.9 billion in advertising expenses for the same period and ranking it number one globally. P&G's business empire is largely built on the foundation of its substantial investment in advertising and marketing expenses.
Discussion
Despite its past glories and established position as a market leader, P&G has recently faced issues such as slowing business growth. The main changes and challenges P&G is facing include the rapid evolution of the Chinese market, the diversification of consumer demands, fierce competition from local brands, and the rise of e-commerce channels that have weakened the advantages of traditional distribution channels. Whether it's a new or established brand, a large corporation, or a startup, everlasting development requires a willingness to observe the consumer trends of the era, truly understand the evolving demands of consumers, and be agile in change.
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