Case Study 3 - P&G - Tarea requerida PDF

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Case Study 3 By Milagros Fernandez Valle Organizational Architecture at P&G Case Let's know a little about the company, Procter & Gamble according to (Reuters, 2020) visualizes the company as one of the largest companies in the world as it reaches more than 180 countries with a very wide range of brands and products. “The company operates through five segments: beauty; Cleanliness; Health care; Fabric and home care, and care for babies, women, and families. The Company sells its products primarily through mass merchants, supermarkets, membership club stores, pharmacies, department stores, distributors, baby stores, specialty beauty stores, ecommerce, high-frequency stores, and pharmacies. It offers products under the brands, such as Olay, Old Spice, Safeguard, Head & Shoulders, Pantene, Rejoice, Mach3, Prestobarba, Venus, Cascade, Dawn, Febreze, Mr. Clean, Bounty, and Charmin. Question 1 Advertising is important for most companies, especially companies such as P&G that sells mostly to end customers. But, most people already know about P&G products such as Charmin bathroom tissue and moist towelettes, Crest toothpaste, and so on. Does P&G really need to constantly put money into advertising when its products already have a strong hold in the global marketplace? For P&G, due to the number of brands and products, advertising is one of their most important tools to maintain customer loyalty or attract new ones. What the authors tell us (Hint and Hult, 2019) for a global company like P&G to change its strategy "the organizational architecture must coincide or adjust to the company's strategy: the strategy and architecture must be consistent" this wants us To say that if P&G is thinking about continuing or not investing in advertising this will have to be evaluated by geography since many times the company is not at the same level of growth in all areas. If a company stops investing in advertising, it will have to invest in another type of medium to incentivize the purchase, which means a change in the organizational structure. From a marketing point of view, (Kotler, 2007) advertising is not only used to present a product, when it comes to a product or brand already positioned, but advertising also helps companies to

“create and maintain the image of the firm, organization and brand ”this means that in the case of P&G a global company it is necessary to keep its brands in the consumer's mind since it could make the change at any time, this due to the number of products on the market and that many times they are very similar. In the case of P&G, which is a global industry, they have to present their structures and strategic positions to face their competitors in the main geographic or national markets. (Kotler, 2007) mentions to us that “global companies, both large and small, plan, operate and coordinate their activities and exchanges worldwide. Today we can distinguish between a market and a market space. The market is physical, like when you go shopping in a store; the market is digital, like when you go shopping on the Internet. ” This means that today, just as markets have changed, consumers also change in the way they shop and interact with brands. In the case of P&G, it is a company that is interested in reaching the consumer, so no matter how much it sells its products to large retailers, the end-user will always be its main focus. So P&G cannot stop investing in advertising by establishing marketing actions through retailers for which it sells, with in-store advertising models, such as inserts or display to reach the consumer. Marketing actions should be differentiated by the type of geography and market and according to the positioning of their brands. Even if the P&G brands are very well positioned, the company must not stop investing in advertising, perhaps the frequency is less, but it must do so to keep the brands present in the consumer's mind.

Question 2 P&G cut its marketing and advertising agency roster by 50 percent over the past three years from around 6,000 to 3,000 companies in a bid to increase its marketing productivity, efficiency, and effectiveness. At a $9 billion worldwide spend on advertising, should P&G have more or fewer marketing and advertising agencies doing its advertising? P&G, by reducing 50% of its advertising agencies, responds to generating global efficiencies within this process. In my experience of having worked in a company similar to P&G in Peru, these types of companies seek efficiencies to continue innovating in new products and in new ways

of reaching the consumer, one of the parts of the value chain that is affected in this Process is the area of marketing specifically advertising. According to the point of view of (Vizard, 2018) where it says: “Procter & Gamble plans to reduce its list of agencies by another 50%, as it seeks to" reinvent "its relationship with agencies and automate and internally more planning, purchasing, and distribution media". This means that the company will seek efficiencies in its processes to generate savings and the initial goal was $ 400 million and $ 750 million was achieved. Although companies like P&G are prepared to pay for the creativity of the agencies, the company will always look for new ways to maintain the relevance of its brands, applying speed, quality and reducing costs in its processes. In other words, if P&G reduced the number of agencies to carry out advertising, in this type of companies, in my experience, it is due to a global objective which is to reduce costs, improve processes and innovate in new products since the mass consumption market It cannot be static, consumers will always look for new products that improve the quality of life. Another objective, in my opinion, was to find efficiencies in the “visibility” process, which means optimizing advertisements, verifying the frequency, relocating the ads that are not seen in places of greater relevance, and eliminating unnecessary advertising in the channels of distribution. All this means that P&G sought efficiency and effectiveness in this process, which was successful. Question 3 By consolidating and cutting 100 brands from its consumer portfolio of brands, does P&G run the risk of ultimately losing out on global market opportunities? In my experience, when a company wants to be profitable, it is necessary that the organizational structure is adequate and that it conforms to the strategic plan. In his analysis (Ritson, 2014) he tells us: "P&G, by considering reducing its portfolio, is seeking to generate global profitability and that translates into higher income." One of the first tasks that I was assigned when I entered the P&G competition in Peru was the reduction of the portfolio, there were 250 products of which only 180 generated 90% of the income and it was necessary to decide which ones were eliminated, for this it was established a team with different areas of the company and they managed to eliminate 50, which meant hours of meetings and financial support. One of the main variables to

carry out this task was “profitability per product”, followed by sales, product life cycle and production capacity. In the case of P&G I verify that something very similar happened, the company selected the most profitable brands with a strong position in the market, healthy growth and the essential brands for the growth of the company. In the analysis that the company carried out, it found that 95% of its income was due to 80 brands out of 180 in total, with which they had to eliminate 100. By carrying out this elimination task, based on my experience, the company can then focus on improving production processes, growth within the market and innovating new products. However, the 5% that is being neglected has to be re-evaluated to decide if the company stops receiving these revenues or saves some brands from this elimination since some of these brands could be very profitable in other markets. Doing this type of exercise in a global company has to be very successful to take advantage of the opportunities of new markets and growths in which it already operates.

References: 1. Editorial, R. (2020). PG - Procter & Gamble Co Profile | Reuters. Retrieved 11 March 2020, from https://www.reuters.com/companies/PG 2. Hill, C. and Hult, C. (2019). International Business Competing in the Global Marketplace. United States: McGraw Hill Education. 3. Kotler, P. (2007). Marketing internacional de lugares y destinos: estrategias para la atracción de clientes y negocios en Latinoamérica. Argentina: Pearson Educación. 4. Vizard, S. (2018). P&G to cut agency roster by another 50% as it looks to ‘reinvent’ relationships

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