Digital strategy of p&g

S.M.80.9062: DIGITAL STRATEGY & MARKETING (IN CHINA)
Final Project Paper on:
Digital Strategy of Fabric & Home Care Brand of Procter & Gamble
Submitted to:
Prof. Jeffrey Towson
Prepared by:
Kazi Mustafizur Rahman (st120943)
Master of Business Administration
School of Management
Asian Institute of Technology
Session: January, 2020 Submission date: 20 February, 2020

Contents
1.0 Procter & Gamble: An overview and the future of its Fabric & Home Care Segment............ 3
2.0 Demand and Market for Fabric and Home Care Products...................................................... 4
2.1 Future Trends........................................................................................................................ 5
2.2 P&G’s current state and strategies adopted......................................................................... 5
3.0 Digital Platform Business Model: What Procter &Gamble is missing out? ............................ 7
4.0 Recommendation for P&G’s Fabric & Home Care Business Segment.................................... 9
4.1 Value Proposition................................................................................................................ 10
5.0 Conclusion .............................................................................................................................. 11
6.0 References ............................................................................................................................... 13

1.0 Procter & Gamble: An overview and the future of its Fabric & Home Care Segment
With over a century’s history Procter and Gamble (P&G) stands as one of the global leaders
in the fast-moving consumer goods industry (FMCG) across the globe with a dominant lead in the
Fabric and Homecare segment. Although, the company started as a puny soap making firm through
a joint partnership between William Procter and James Gamble in Cincinnati, USA in 1837, today
it stands as a billion-dollar multinational company spreading its product and prevalence in more
than 180 countries and on ground operations in 70 countries.1
The company currently has more than 50 brands with numerous products under each brand
and divided into six business segments namely Fabric and Home Care, Baby, Feminine and Family
Care, Beauty, Healthcare and Grooming. In this report, the Fabric and Home Care segment will be
the kernel of discussion as 33% of the company’s consolidated revenue comes from this segment
while the operation and sales concentration (60%) circles around North America and Europe. 2
Over the decades the revenue from Fabric and Home Care segment has grown five-fold and still
remains as one of the strongest brand segments with significant organic growth in market share.
However, in this era of the fourth industrial revolution retention of the market share is highly
challenging as online platforms and digital media have opened up the room for even puny and
regional players to compete against global brands. The platform businesses are accounting for
direct to customer approach by the firms and as such small businesses are slowly nibbling into the
market share of the global brands like P&G. In a report, it was also cited that 39% of online
1 P&G: A company history 1837 - Today
2 P&G: Annual Report, 2019

consumers were willing to try out new brands.3 Moreover, as the economic power shifts towards
Asia and Africa, sustaining growth and retaining consumers’ loyalty towards the brand would be
highly challenging for generic products like detergents and washing powders under the Fabric and
Homecare umbrella.
Therefore, P&G seems to be vulnerable to enjoy brand loyalty and growth in the particular
segment and needs transformation across its operational and marketing strategies. As an innovative
company P&G has already taken number of initiatives to embrace to the changes posed by digital
age that will be discussed in the following sections along with a forward outlook towards the new
economies and probable strategies in light of digital technologies to expand and retain market
share.
2.0 Demand and Market for Fabric and Home Care Products
Home Care products like laundry detergents and cleaning items are considered as regular
household items and purchased on a daily basis. Their demand is also fairly inelastic in nature and
effect of quantity shift is very likely to be subtle while brands only come into play when there is a
change in household income. The biggest challenge companies face in marketing the product is
differentiation. As a generic product, it is very difficult to place the brand uniquely and therefore
a more personalized approach is required to gain customer attention and retention.4
As the world moves towards a more urbanized mansion, positive growth in demand of
home care products can be sensed right now as cleanliness, hygiene and awareness becomes pre-
dominant factors for the society to uphold living standard and lifestyle. Therefore, the market for
3 MonllosK., 2019, Procter & Gamble is looking to add more direct-to-consumer brands to its roster – Digiday.
Retrieved from https://digiday.com/marketing/procter-gamble-looking-add-direct-consumer-brands-roster/
4 https://www.marketing-schools.org/consumer-psychology/marketing-laundry-detergent.html

homecare products is likely to grow at a higher pace and companies like P&G, who are already
popular brands can reap the advantage of this growth by tapping the developing economies and
new middle-class consumer segment.
2.1 Future Trends
The world is currently taking a dramatic shift when the economic power shifts from the
west to the east. Emerging economies will account for more than 50% of the global economy while
`80% of the rising middle-class will be from developing regions.5 Emerging economies will be
growing 75% faster than developed nations. 35% of the world population will be only in China
and India by 2030 and their combined GDP will account for 25% of the world GDP.6
Technological advancement will reshape the consumer behavior and all products are
expected to become services.7 In this world of rapid changes, even large conglomerates will face
nose dive to stand on their competitiveness if unable to keep pace with the changing trends.
2.2 P&G’s current state and strategies adopted
The Fabric and Home Care Business segment of P&G comprises of a variety of fabric care
products, including laundry detergents, additives and fabric enhancers; and home care products,
including dishwashing liquids and detergents, surface cleaners and air fresheners. In fabric care,
P&G is a market leader with 25% global market share while in home care products it captures 20%
of the global market share. Since P&G has different business segments, it has many competitors
across different industries but this generic segment brings in majority of the revenue for group that
5 ECB, Monthly Bulletin,October 2010
6 UN, Economic and Social Affairs, Population 2030,Demographic challenges and opportunities for sustainable
development planning,2015
7 ParkerC. 2016,8 Predictionsof the world in 2030,World Economic Forum. Retrieved from
https://www.weforum.org/agenda/2016/11/8-predictions-for-the-world-in-2030/

is concentrated in the European and US market while the world rising economies tend to shift
towards Asia and Africa. Particularly, China is predicted to be the most advanced and dominant
economy in the world by 2050 and will surpass the US economy by 50%.8 P&G, although has
taken several steps in retaining large market share in China and other parts of Asia, technological
disruption is always posing challenge on these global leaders to sustain the growth as small traders
and new brands erode the market share in tiny portions but significantly impacting on higher
investment and marketing efforts.
One such example is the case of Unilever’s acquisition of Dollar Shave Club as it entirely
disrupted the market through Direct to Customer (DTC) strategy. As a result, Unilever had to
acquire Dollar Shave Club at a premium value to retain the market share and competitiveness.9
Similarly, to maintain the competitiveness P&G have also acquired many start-ups over the last
decade for its many segments.10
P&G in recent years have embraced major changes and have heavily invested in its supply
chain management as a competitive measure. It has also embedded real-time demand signal
features in its system to meet the ever-evolving demand of the customers. Moreover, it has also
initiated cost-effective measures through strategic sites for manufacturing and digitizing them.
They are also in the process of saving on media costs.2 As its latest marketing strategy involves
featuring multiple brands and a TV show far different from the traditional product placement and
claims to innovate advertising from mass clutter with too many nuisance messages to useful,
8 Kupchan C.A., 2012,The World in 2050:When the 5 Largest Economies Are the BRICs and Us, The Atlantic,
Retrieved from: https://www.theatlantic.com/business/archive/2012/02/the-world-in-2050-when-the-5-largest-
economies-are-the-brics-and-us/253160/
9 Brown J.M> & Massoudi A., 2016, Unilever buys Dollar Shave Club for $1bn,Financial Times, Retrieved from:
https://www.ft.com/content/bd07237e-4e45-11e6-8172-e39ecd3b86fc
10 https://www.bizjournals.com/cincinnati/news/2018/02/06/p-g-acquiresinternational-competitor.html

creative and interesting contents focused towards the need of the customers.11 “It is also pursuing
external partnerships to monetize P&G innovation, creating revenue streams that can be reinvested
back in game-changing technologies needed to create winning brands. P&G claims that it is
leading the disruption into brand creation by shifting from traditional mass marketing to mass one-
to-one brand building through the essence of data and technology.”2
It is also embracing digitization and data analytics to capture data and unique insights to
solve business problems, and embedding these skills in the businesses to help accelerate results.
This is very critical to determine the value chain and future of business as it has always led the
path of traditional sales channel but in todays online world, direct link with the customers is the
key to dominance. The Direct to Customer (DTC) brands are in charge of their customers data
while the wholesale horizon of P&G has not enabled them to capture this opportunity of holding
customer data. DTC brands also tend to be associated with certain “values” at a time that brand
purpose becomes more important as a marketing strategy. P&G has already started borrowing the
DTC marketing playbook using influencers, PRand social, as well as a more data-centric approach
to marketing for its few brands but it seems to be late to the party.3 However, for the Fabric and
Home Care brand, such initiatives are yet to be evident and the thus the focus goes to the segment
as it is the biggest driver of the revenue of the entire group.
3.0 Digital Platform Business Model: What Procter &Gamble is missing out?
The digital platform can be attributed to the strengths of a physical market place connecting
two or more parties to transact however, with massive powerful features. It not only connects
11 Handley L., 2019,P&G moves away from ads and toward TV shows that go way beyond product placement,
CNBC, Retrieved from: https://www.cnbc.com/2019/09/05/pg-moves-away-from-ads-and-toward-creative-content-
partnerships.html

between consumers and markets but also have profound impacts on other parties and stakeholders
with economies of scale, versioning and most importantly data. A platform once started possesses
nearly zero marginal cost of production with the propensity to scaling up across the whole world
and very low distribution costs.
Among the platforms, the marketplace platforms like Alibaba, Amazon, Taobao have
become major disruptors for global brands in the consumer brands industry as the small traders
and manufacturers now have access to a massive user group while the platforms have created
consumer convenience in shopping and building direct relationship with the customers. The
platform model has also enabled to generate user data to help the producers and suppliers to
customize the product and deep understanding of customer demand while the customers are also
being offered with bundle options and induced to repeat the purchasing habit. Moreover, it also
provides the open floor of discussion and reviewing the experience.
Major global brands, particularly like Procter & Gamble who have always depended on
pipeline business model and in improving efficiency and supply chain have also faced nosedives
to infinitesimal and new local brands with the advent of the platforms. The key problem lies in its
reliance on the sellers for the information on consumer data while the platforms have enabled even
small producers and sellers to directly sell to the customers and build a relationship for their brands.
Even the heavy marketing efforts did not give enough advantage to supersede the superpower of
the platforms.
P&G and similar brands try to fill out the shelves of the sellers, stores, departmental stores,
etc. They hardly have direct connection with the end users. On the other hand, they only reap the
advantage by establishing their supplies centers of production factories in strategic locations to

build competitive advantage in supply chain. However, it is highly difficult and also investment
intensive to establish physical stores around the globe and then solely compete in the retail market
but digital strategies and investment in digital tools can widen the possibility. The next section will
thus focus on the digital strategies and measures to retain the brand value, generate customer
information and also reduce transaction cost to remain strategically competitive by P&G,
especially for its Fabric Care and Home Care business segment.
4.0 Recommendation for P&G’s Fabric & Home Care Business Segment
The economics of digital is vast and no one strategy is a perfect measure to give competitive
advantage in the market. But the digital world’s vastness always creates new opportunities and
numerous options for exploring. The overall plan can be expressed through a graph as presented
below, but the core essence is creating its own platform to generate user data on both customer
and merchant.
Fig.: Platform of P&G Fabric and Homecare business
It is high time that P&G embrace the digital strategies to remain competitive. A market
place platform could be one of the probable measures to always retain customers to its brand. The

platform can connect both household and nearby stores and shopping malls who are selling P&G
products. Customers can easily order their products while the platform can use geographical
location and connect the order to the nearest store/supplier selling the product (alike UBER,
GRAB, etc.) and products can be delivered at the shortest possible time.
Payments management would also become easy as the platform could also associate the
gateways and payment platform partners to ease the process through online payment system. On
the other hand, it could be a great tool for the resellers/suppliers to manage their inventory of P&G
products while P&G can contain consistent orders and manage its supply chain more effectively
reaping cost advantages and building a new competitive edge.
Alongside the group can also promote its other brands and bundle packages towards the
customized need of the customers. The data generated will provide insights on usage, brand
preference, and customized requirements to fulfill the need of the customers as well as new product
development. The second recommendation is providing convenience through new devices. P&G
along with the platform can develop, automate and promote digital devices of storage that can send
automatic signal to refill the device when the products quantity lowers below a certain level which
can add more convenience and better experience to the customers. As, customers tend to pay less
time on shopping for these generic items, added convenience will retain the ordering process and
the customer to P&G as well as the seller/store/shop.
4.1 Value Proposition
Customer
 Convenience (Just a click)
 Quick delivery

 Convenient payment options
 Product information and variety
 Able to provide feedback
 Bundle products
 Information on other P&G brands and products
 Information about new products and functionality
 Value addition: Health & hygiene tips
Merchants/Retailers/Sellers
 Inventory management
 Order management
 Sales and commission increase
 Customer relationship and personalization to promote other products
 Continuous and consistent sales support
5.0 Conclusion
Platform business model is a super power and soon an oligopolistic digital economy will
emerge as the basis of all transactions across the globe. Many large companies are expected to face
hardship to sustain if remain uncanny of the mega disruption. The platform all over the world is
shaping and giving new look to the industries and there is no alternative to other than embracing
the change and keep pace in transforming organizations and the way of doing businesses. Procter
and Gamble, as one of the largest consumer brand conglomerates in the global market can also not
escape this disruption. Therefore, they also need to change as the global economy changes with
digitization and online phenomena.

The company has already taken few measures to bring in changes across the organization
and the business processes, it seems to lack behind to some extent in coping up with the digital
age. For its many fashion brands, influence based marketing efforts have been adopted but, it is
also true that products that relate to healthcare make their own reputation in in consumer minds as
reliable and good brands. P&G has already established a robust brand value among its consumers
for its certain brands, mostly related to healthcare and fashion. But, how about its fast-moving
goods like the fabric and home care? They are very generic and people fairly don’t mind to pass
the least time shopping for such products. Now, the question is how, P&G can retain the market
and protect itself from the nibbles of the rising brands that already started with the online platform
and making impactful relationship with consumers.
P&G being a giant company has all the resources and competitive advantage in
transforming itself and protect its brands by innovations of the digital era. As the recommendations
stated above, the opportunities should be capitalized by P&G at the least possible time. However,
as the world moves forward the nature of work and future jobs are also changing, and P&G being
the core of manufacturing hub automation into their processes will lead to mass job loss and
requirement of new skill set. This will eventually raise the question of ethical concern for such a
reputable and responsible brand. Above all, the world has become very disruptive and now
disruptors to disruptions are growing and so, to remain competitive and survive in this market it is
inevitable to embrace to the digital changes and also be a disruptor to clear its path for a sustained
future as by only merger and acquisition cannot sustain the competitive advantage rather self-
innovation and forward strategies will ensure the sustained success of P&G.

6.0 References
1. Adams P & Kirkpatric D, 2017, Are big changes on tap for P&G’s digital strategy?,
MarketingDive Retrieved from: https://www.marketingdive.com/news/are-big-changes-
on-tap-for-pgs-digital-strategy/507852/
2. Brightmore D., 2019, How Procter & Gamble’s Pampers brand is embracing the social side
of ecommerce, Gigabit, Retrieved from:
https://www.gigabitmagazine.com/company/how-procter-gambles-pampers-brand-
embracing-social-side-e-commerce#
3. Brinder L., 2017, RANKED: These will be the 32 most powerful economies in 2030,
Business Insider, Retrieved from: https://www.businessinsider.com/ranked-pwc-predicts-
the-most-powerful-economies-in-2030-2017-2#7-germany-4707-trillion-26
4. Bughin J. et.al., 2018, NOTES FROM
5. ECONOMIES AND THE COMPANIES
6. ESPAS, 2013, The World in 2030 Highlights, Retrieved from: http://europa.eu/espas/pdf/
7. espas-report-economy.pdf
8. Hammett E. 2019, P&G puts focus on reach: It’s a more important measure than spend,
MarketingWeek, Retrieved from: https://www.marketingweek.com/pg-reach-ad-spend/
9. Handley L., 2019, P&G moves away from ads and toward TV shows that go way beyond
product placement, CNBC, Retrieved from: https://www.cnbc.com/2019/09/05/pg-moves-
away-from-ads-and-toward-creative-content-partnerships.html
10. HIGH-GROWTH EMERGING
11. Mckinsey Quarterly, 2011, Inside P&G’s digital revolution

12. Neff J., 2019, Procter & Gamble’s best sales in a decade come despite drop in ad spending,
AdAgeRetrieved from: https://adage.com/article/cmo-strategy/procter-gambles-best-
sales-decade-come-despite-drop-ad-spending/2188196
13. Nilsson P. 2019, P&G ad strategy signals more pain for big agencies, The Financial Times,
Retrieved from: https://www.ft.com/content/4bceeee0-9428-11e9-b7ea-60e35ef678d2
14. Parker C. 2016, 8 predictions of the world in 2030, World Economic Forum
15. THAT PROPEL THEM, McKinsey Global Institute
16. THE AI FRONTIER MODELING THE IMPACT OF AI ON THE WORLD ECONOMY,
McKinsey Global Institute
17. Torby O. et.al., 2019, Asia’s furture is now, McKinsey Global Institute
18. Watson P.B., 2019, P&G revitalizes innovation for the digital age, IDG Communications
Inc., Retrieved from: https://www.cio.com/asean/feature/
19. Winston S.A., 2019, The World in 2030: Nine Megatrend to Watch, MIT Sloan
Management Review articles, Retrieved from: https://sloanreview.mit.edu/article/the-
world-in-2030-nine-megatrends-to-watch/
20. Woetzel J. et.al., 2018, OUTPERFORMERS:
21. Woetzel J. et.al., 2019, China and the world: Inside the dynamics of a changing
relationship, McKinsey Global Institute

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