Procter and Gamble Market Environment
Procter and Gamble (P&G) started its PuR project as part of selling water purification technology named the PuR sachets. However, entering the market with water purification technology had three major issues all related to brand and product recognition. Thus, with P&G facing brand and product difficulties, three major problems were threatening to decapitate the investments that were poured into the PuR project. The very first problem that PuR project as creating awareness for the brand and product that had not been traded before in the market. Thus, in promoting the product, the company faced two secondary problems which included difficulties in establishing ready market for the product and convincing customers that the PuR sachets were relevant in their lives. Secondly, the company developed the project through heavy spending. The problem associated with the investment into the PuR project is that the company’s under per sales did not seem to be sufficient enough to cover the costs, hence the management was contemplating on dropping the project. Thirdly, while PuR was a reality and that the company was seeking approval from CDC, a major problem involved the lack of public or customer demand for the product regardless of the fact that P&G tried to convince customers that dirty water was the cause of diarrhea (Hanson and Karen, 11).
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Secondary problems that faced P&G included the fact that the PuR used preparation method that was very difficult to copy but very expensive as well. Thus, the company could not trade its water purification solution at a price that customers were able to afford. Additionally, the target market probably at a higher risk of contracting diarrhea due to consumption of dirty water was the very one that could not afford to buy the PuR sachets at the high prices. Collectively, finding market was a base and persisting problem that did not favor the PuR project and also did not have the potential to sustain the business projection of the company.
- Political Factors
P&G targeted various markets with the PuR sachets. Among these were the pioneer market in Pakistan, Guatemala, and Morocco. The political environment in most of these markets favored the marketing of PuR sachets but Morocco was quite problematic as testing at school level was denied. All of the identified markets allowed for village testing of the PuR sachets which meant that the only major problem the company was facing was associated with its approach in working with various major governmental departments and ministries. Like in Morocco, the company could not get approval for testing at the school level but it was able to get approval of the CDC in the US.
- Economic Factors
Among the economic factor that were facing P&G included the nature of the market as well as the social class of the potential buyers of the product. Initially, the CDC saw potential in the PuR sachets and encouraged the company to continue with the project. However, the company management had had enough of the under per sales due to lack of sustaining customer base. Additionally, with reference to the existence of other brands and availability of bottled water, P&G was not getting as much return on investment as it had hoped for. Finally, multiple tests and commissioning of research and development continued to take more of the company’s financial power thus weakening its promotional power. The company once had to take a desperate stance of signing a contract with nonprofit organization so that it can promote the PuR sachets in developing nations. This approach shows how economically desperate the market was making the company at hand.
- Social Factors
Social factors that most companies are worried about today include the income of their target market and the underlying issues that push the demand for products and services. Among these issues, the target market for PuR sachets were the households that had bottom-of-the-pyramid entities, children. However, the social class of which illness related to dirty water could affect were the low-income families. The problem with the PuR sachet target market is that it had very little experience in using water purification methods and also did not have the financial potential to buy the products that the prices they were traded at. While dirty water was associated with diseases such as diarrhea, the target market had other issues affecting them besides the diseases – the included household income and consideration of other factors besides water treatment.
- Technological Factors
While most of the factors considered under this title played a negative role towards the development and trading of PuR sachets, technology was the only one that had an all-round positive effect to the desperate situation. P&G had the required strength to develop research and development approaches aimed at managing most of its projects. However, considering research and development, P&G had to invest in technology that both identified the need for water purification. Additionally, the packaging of the PuR was light and could store the contents for over three years. This approach in technology enabled the company- despite the low demand- the products did not go to waste due to their extended life span.
Among the strengths of P&G include:
- Financial strength of the company
- The company is well established worldwide
- The company is diversified and has numerous other products it trades which contribute to its financial strength
- The company’s philanthropic tradition connects it with customers as it contributes to various charity events
Among the weaknesses of P&G include
- The company is diversified and offers a continuum of products to the market from health products to domestic animal products. This approach makes the company’s strategic approach unfocused.
- The company is involved in non-effective marketing campaigns that drain the company’s financial stability.
- Due to poor market feasibility studies, the company’s venture in Morocco, Pakistan, and Guatemala all failed to meet expectations
- With unfocused research and development, the company had to call back its products for redevelopment wasting more money.
- The company pioneered a product that continued to attract more customers due to health education programs
- The company’s joint venture with local companies increase its market penetration and spreads risks to create financial security.
- With reference to Morocco, the company is able to reach out for more customers in need of clean water while in Pakistan developing upper class population providing ready market for the PuR sachets.
- Increasing cases of waterborne diseases create a larger market for water purification solutions.
- More companies and brands have ventured into the market and offer far more affordable products as compared to the PuR sachets
- New entry products have the potential to weaken the current market share.
- Regulatory agencies in the current target markets prevent the company from saturating the available markets with the PuR sachets.
The strategic alternatives that can be used to ensure that the company is able to trade more profitably would be to
- Hire marketing agency to properly promote the products and manage finances
- Reduce the product portfolio so that the company focuses better on the most important lines of products
- Promote products in more dynamic markets rather than slowly developing markets
Course of Action
The course of action for each of the alternative is as follows:
Alternative 1: In hiring suitable marketing agency, the company would invite marketing companies to bid for a one year contract to assess potential markets and to incorporate market segmentation relating to social factors affecting each type of market (Kahn, 76).
Alternative 2: Since P&G trades numerous products, the company is to select the products that are least profitable to the company and discontinue their production. This would enable the company to invest more funds to meaningful projects while cutting cost in the production of non-value intensive products (Kahn, 78).
Alternative 3: The Company is to hire a marketing agency in this case or to conduct research regarding the most favorable markets worth investing in. Additionally, the current markets or nations that the company invests in could be measured in terms of economic stability and the per capita for perceived potential customers. In consideration, the company or the hired marketing agency can investigate the Gini Index of the target population of various potential markets to identify how sustainable the company operations can be in a new environment (Masur, 666).
Hanson, Margaret and Karen Powell. Procter & Gamble PuR Purifier of Water: Developing the Product and Taking it to Market. INSEAD. 2009. Print. Retrieved from: http://www.gwu.edu/~clai/training_programs/UChile_MBA_Programs/uchilemba2010/Griffin_Readings/CSR_PuR_A_case.pdf
Kahn, Kenneth. Functional, Multifunctional, and Cross-Functional: Considerations for Marketing Management. Journal of Marketing Theory and Practice, Vol. 17, No. 1 2009: pp. 75-84. Print.
Masur, Jonathan and Posner, Eric. Against Feasibility Analysis. The University of Chicago Law Review, Vol. 77, No. 2: 2010; pp. 657-716. Print.
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