Introduction
This study analyses the marketing strategies of two multinational companies: Proctor and Gamble and Unilever. Proctor and Gamble have been in the global market for a long time, and their products are sold to millions of people globally. The company started as a privately owned business, but it quickly grew into a publicly owned company with millions of shares floated in the New York and Paris stock markets.
The company deals in the sales of more than 300 high quality branded products to several consumers worldwide, with the aim of improving their lives (Peng 219). Some of these products are: “Braun, Gillette, Old Spice, Lacoste, Hugo Boss, Max Factor, Pringles, Olay, Fairy, Ariel, Daz, Bold and Duracell batteries and IAMS dog food” (Peng 219). Though Proctor and Gamble are centrally located in the US, its operations span more than 180 countries, with an employee base of more than 135,000 people (Peng 219).
Big Brands-All change
Unilever Company almost shares the same profile with Proctor and Gamble because it deals in the production and sales of several products worldwide. The company started in the 1890s when its founder William Hesketh Lever developed several products to improve hygiene in the household environment (Peng 219). The first major product for the company was sunlight soap, which became very popular among most English households after it was proved to ease the input women made in washing common household items.
Unilever’s existence now spans more than three centuries, but its major driving forces have been major world events such as economic booms and depressions, world wars, technological changes, and similar events (Peng 219). Regardless, the biggest motivating factor for Unilever has been the improvement of the lives of its customers by enriching their lives and improving their nutrition through their products. Some of Unilever’s main products are: “Ben & Jerry’s, Walls, Bowyer, Marmite, Bovril, Lyons, PG Tips, Persil, Comfort, Cif, Lynx, Dove, Vaseline, Pepperami, and Lox” (Peng 219).
In the recent past, Proctor and Gamble have been engaged in re-modeling their marketing strategies by cutting down their brand portfolios. This strategy has been made possible by the use of disposable marketing tools. This paper seeks to explain why both companies adopted the strategy of cutting down the brand portfolios. Secondly, this strategy investigates the marketing tools to be used by the companies in achieving the above objective (with an explanation of the type of information to be sourced when using the marketing tools). These explanations abound; this paper will finally explain the strategic marketing choices the companies would have made and what alternative strategic marketing choices would have been made as well.
Task 1: Justification for Drastic Actions
There are several reasons why Unilever and Proctor and Gamble should discontinue their products. One major reason is that the existing products are not as profitable as they should. This is the major reason both companies would reduce their product portfolios because there is no reason why a company should discontinue a product that creates good revenue for the company (Stuff4Beauty 1). Even though the product may provide some other benefits to either the consumers or the producers; at the end of the day, Proctor and Gamble and Unilever aim at making money, and if some of their products do not sell well, they will discontinue them because they offer no benefit to the companies.
However, the discontinuation of a product, based on the premise that it does not sell well, is an abstract concept because the expectations of the producers when developing the product also matters (Stuff4Beauty 1). For instance, Proctor and Gamble and Unilever may decide to discontinue some of their products, even though they make decent sales, based on the fact that they had higher expectations on the products’ sales, more than the expected (real sales).
Usually, the discontinuation of such products may be frustrating for consumers who depend on such products, and especially if they know most people buy them because if a product is being bought by many people, it would be an obvious fact that the company realizes decent sales from the product (Stuff4Beauty 1). However, this analysis is subject to the producer’s expectations. Nevertheless, meeting producer’s expectation is often a very important concept in determining if to discontinue a product or not.
Going into the future, Unilever and Proctor and Gamble may be under intense pressures to conform with current trends, especially because they are companies that started a long time ago, and their products may be reflective of past customer needs (Stuff4Beauty 1). For instance, some of Unilever’s products span three centuries ago, and a variety may not be reflective of current market trends. Due to this reason, both companies would find it appropriate to discontinue some of their brands because of the notion that such brands may be outdated.
Reducing the brand portfolio for such products may therefore be a good strategy for the company, even though the company may still be enjoying good sales from the products and realizing high customer interest from the products as well. Often the discontinuation of products that fit this profile is deemed as a “crazy” strategy, but in the past, manufacturers have admitted to the discontinuation of such products (Stuff4Beauty 1). Products that are past their prime time are, therefore, often subject to discontinuation.
The third reason for the reduction in the brand portfolio for both Unilever and Proctor and Gamble would be that some of their products may have recently suffered a huge dip in sales volumes, and they are likely not to revamp back to their initial status in the near future (Stuff4Beauty 1). The reduction in sales volume is normally witnessed even for products that have performed well in the past, prompting the managers to discontinue the products because of a lack of faith in the product’s ability to revamp back to its initial state. Often, such products are deemed to have a very low potential of reaching their initial sales targets, and therefore, for the future security of the company’s operations, it becomes important for the company to discontinue the product (Stuff4Beauty 1).
This reason is often synonymous with the company’s realization that the products offer no potential or very little potential for growth in the near future. Often, when the cost of sustaining the slow growth of the product is compared with the costs of discontinuing the product, it becomes clear that it would be a prudent strategy to discontinue the product in totality because this would be the most economical strategy (Stuff4Beauty 1).
Unilever and Proctor and Gamble may also decide to discontinue some of their existing products because of a change in company strategy. Often, companies produce products that complement their company goals, but in the same respect, companies often review their goals and objectives to be in line with the business environment (Stuff4Beauty 1). This means that companies are often subject to change strategies, and this change warrants a change in product strategies as well. This is one reason why Unilever and Proctor and Gamble may find the strategy of reducing their product portfolios useful. This means that the companies will eliminate brands that do not complement new business strategies because they will act contrary to the realization of organizational goals.
Also, the two companies can find that reducing their brand portfolios to only a few products is useful because focusing on a few brands may be more fruitful for the company, as opposed to focusing on a variety of brands. Often, this strategy is adopted after a brand audit has been carried out and affirming the above conclusion (Stuff4Beauty 1). Both companies may also establish that running many brands within their brand portfolio may be strenuous on the available resources. It would therefore be economical for the company to reduce its core brands to only a few, which can be sustained with existing resources. Sustaining many brands would mean that the company should require more resources, and probably the return on investments may not measure up to the cost of adding more resources (Stuff4Beauty 1).
Unilever and Proctor and Gamble may also establish that the effect of competition on their bottom-line performance may be negative, and overcoming such pressures equally difficult. In such a case, both companies may realize that they cannot effectively tackle the competitive pressure of other products on their bottom-line, and consequently, they may be forced to reduce their brand portfolios.
Task 2: Marketing Tools of Analysis
Proctor and Gamble and Unilever being some of the world’s renowned multinationals, must have used several marketing analysis tools to arrive at the decision of cutting down their brand portfolios. Some of these marketing tools include PEST, SWOT, and Boston consulting group matrix. These marketing tools are further analyzed below:
PEST analysis would analyze the political, economic, social, and technological forces of the market as part of the wider macro-economical framework of analysis for the development of sound marketing mix strategies (Young 204). These marketing tools would be used to analyze the marketing potential for growth, business position, and the potential and direction to be undertaken by company management in sustaining existing products or in introducing new products in the markets.
This market analysis tool would be of high benefit to the company because it can be easily used to analyze one department of the company producing one product (especially because Unilever and Proctor and Gamble operate various divisions in their company’s frameworks). This marketing tool advantage would be the highest rated advantage because in coming up with the right decision of either discontinuing or sustaining a product, it would be of high benefit to the company if they could establish which product is to be discontinued and which ones should be sustained. PEST analysis would easily identify the right products to be sustained by evaluating their potential in the market place (Young 204).
The second marketing tool to be used by Unilever and Proctor and Gamble would be the SWOT analysis. SWOT analysis would seek to evaluate the strengths, weaknesses, opportunities, and threats for most of the companies’ products (Young 204). These marketing tools would easily function by identifying the goals and objectives of a given product, or a company in general, and determine how the product’s internal and external factors would be useful in the realization of business goals and objectives. The strengths of a product would be the product’s distinguishing characteristics, which elevate it above other products of a similar nature (competitive products).
The weaknesses of the products would define the products’ attributes, which make the product inferior to others. A product’s opportunities would define the possibilities of the product, making more profit in the market place, while a product’s threats would refer to the existing external factors that would cause trouble for the sustainability of a company’s products in the long-term.
Proctor and Gamble and Unilever would use the SWOT analysis marketing tool to establish subsequent strategies to be adopted by the companies in the realization of their ultimate objectives. For instance, the company managers would establish if the company objective is easily attainable if the current SWOT dynamics relating to a business prevail. If it would be difficult to attain the company’s objectives with existing SWOT dynamics, then the company should consider changing its strategies. Through the SWOT analysis tool, both companies can also be able to effectively analyze the competitor’s operating dynamics such as cost structures, competitive positioning, product differentiation, and other factors that will affect the sustainability of their core brands (Young 204).
The Boston Consulting Group Matrix would also be another useful tool in the determination of a product’s success in the market, considering it analyses the potential of several brands in the market by categorizing every product as a star, cash cow, question mark, or a dog (Young 204). A star would mean the product is high share and high growth; a cash cow would mean the product is low growth and high share; a question mark would mean the product is high growth and low share, and a dog would mean a low growth and low share. In the use of the Boston consulting group approach, Unilever and Proctor and Gamble would find the marketing tool very useful in the sense that they would be able to categorize each product within the four groups identified and afterward establish the business strategy needed for each of the product groups identified.
In this regard, they would analyze the product group requirements and the company’s business objective and growth prospects and determine if maintaining a specific product is viable or discontinuing; it is feasible. For instance, is a specific brand is established to be a star, it would imply that the product is likely to generate enough cash for its own sustainability, and the recommended tactics of such a product would be aggressively promoting the product, expand the existing product, or divert a lot of resources to research and development (for the product) (Young 204).
If a product is identified to be a cash cow, such a product would mean that the product can be used to support other business units, while the existing strategy for such a product would be defending and maintaining the product for the long-term (Young 204).
Also, if a product is identified to be a question mark, it would mean that the company has to invest a lot of money sustaining the product and this would imply investing more cash into the product, or alternatively, the business may be required to terminate the production of the product (Young 204). Lastly, if a business is established to be a dog, it would mean that the product is a “trap” for the company because it would require a company to focus on the short term sustainability of the product and divert the company’s attention from undertaking sustainable future projects (because they will try and avoid risk); meaning that, the company would be operating with a focus on a limited future (Young 204).
Task 3: Information for Research
To use the SWOT, PEST, and Boston consulting group tools of analysis, several pieces of information ought to be analyzed to come up with the right strategies for market adoption. Coming up with the right marketing or brand strategy, therefore, depends on the collection of useful information regarding the market or brand in question. In determining the future sustainability of a product, several pieces of information ought to be collected to review how good a product performs (or will perform in the market). These pieces of information ought to be passed through the marketing tools described above to come up with the right strategy to be adopted by the companies (output). In this regard, several pieces of information ought to be pooled together to come up with the right marketing and brand mixes to be adopted by the companies.
One major piece of information I would need to come up with the right decision-making framework about the products in question would be the function and purpose of the products (BBC 2). The function and purpose of the product will almost always be augmented with the business or company objectives because products designed by companies are often developed so that they complement the company’s goals. For instance, a company’s management will always come up with the business goals and objectives, while the product organizational team would come up with products that make the business goals a reality.
Products would therefore be designed to be in alignment with the business objectives, and the major reason for reviewing the product through the marketing tools described in earlier sections of this study would be to establish if the products complement the business goals or not (BBC 2). This would be a good criterion for decision making, while the product function and purposes will be essential in the determination of these objectives.
Secondly, I would seek to establish how the different parts of the product work together to create the final product. This analysis would be centered on demystifying the common belief that products are tangible elements that come about as a result of designing and building the consumable elements of the products. In reality, products are often developed as a result of a combination of elements that surpass the consumable elements of the product.
Some of these components would include the core benefits of the products, the actual product itself, and the augmented products (BBC 2). The core benefits of the product emanating from the desire among consumers to purchase goods that meet their personal requirements. This attribute defines the core benefits of the products because it defines what customers will derive from the product. The core benefits of the products are often synonymous with the actual products because:
“The core benefits of a product are offered through the components that make up the actual product the customer purchases. For instance, when a consumer returns home from shopping at the grocery store and takes a purchased item out of her shopping bag, the actual product is the item she holds in her hand” (BBC 2).
From this analysis, it will also be important to analyze the augmented products of the initial product because often, companies like to include additional benefits to a product to strengthen the purchase decision of a product (BBC 2). Such augmented products include guarantees, warranties, customer services, complementary products, accessibility of products (and similar services). Such information would be useful when using the marketing tools to determine the branding strategy.
Task 4: Strategic Marketing Choices
The strategic marketing choices for both Unilever and Proctor and Gamble have been to focus on their strongest brand by re-launching the products (for Proctor and Gamble, for example) and fuelling the growth of their highest growing products (for Unilever, for example). Since both companies have refocused their energies on the re-assertion of their soap brands, Unilever seems to be in favor of a market growth strategy, where it seeks to secure the future of its products through supporting its highest growing brand. Proctor and Gamble, on the other hand, seems to be in favor of a market dominance strategy in the soap industry because it seeks to focus on the product with the highest market dominance. In this regard, it strives to be the market leader in the soap product industry.
Alternative marketing strategies that could have been pursued by the companies include innovation strategies (which mean that the firms will have to invest more resources in product development and business model innovation to stay above their competition).
This strategy will require both companies to be at the forefront of embracing business technology and business model innovation. Alternatively, the companies could also have embraced generic porter strategies, which would require them to focus on their strategic scopes and strengths. The companies’ strategic scope would entail their ability to penetrate into the market, while their strategic strengths would be competitive advantages both companies hold over one another. To make this strategy a reality, the companies would have to pursue one of three strategies: product differentiation, cost leadership, or market segmentation (BBC 2).
Conclusion
This study perceives the marketing strategies adopted by both Unilever and Proctor and gamble as competitive in nature because both companies strive to maintain their market dominance while focusing on a single market – household “soaps.” However, to do this, they have also adopted similar strategies for reducing their product portfolios to increase efficiency. The move to reduce their product portfolios is, however, supported by this study, based on the fact that the companies would be seeking to gain a lot from making their business processes leaner. However, for this strategy to be a success, there ought to be favorable utilization of several marketing tools. Comprehensively, these dynamics define Unilever and Proctor and Gamble’s marketing strategies.
Works Cited
BBC. Product Analysis and Design. Nd. Web.
Peng, Mike. Global Strategy. Cengage Learning, 2008.
Stuff4Beauty. The Top 10 Reasons Why Manufacturers Discontinue Hair Products We Like. Web.
Young, Laurie. Scenarios in Marketing: From Vision to Decision. London: John Wiley and Sons, 2006.