Procter & Gamble Group Team Post Final Project

The Procter & Gamble Group Team Post Final Project has been posted on my teammate Annamarie's blog. Welcome to read and comment!

(Thank you Annamarie for compiling and posting the final team post. Please also allow me to express my appreciation to all of my teammates: Linda, Curt and Rambo. Together we made a great team work.)

Did she go too far? --- my extension on Curt's post " Be Careful"

Curtis Fitchett's post Be Careful on his blog drew me great interest.
In this post, Curt referred to an article called Warning: Your clever little blog could get you fired that was written by Stephanie Armour and published on June 15 on USA TODAY . The article investigated a few cases in which the employees were fired by their companies presumably because their blog posts had caused their bosses' concern over the companies' business secrets or public imagines. With the widespread of blog nowadays, it seems more companies are considering making blog policy in this regard.
This article made me relate to a few similar but somewhat different stories that were very hot in China until recently .
One case is that a Guangzhou (the capital city of Guagndong province adjacent to Hong Kong)magazine editor and columnist with the pen name "Mu Zimei" published her sex dairy on her blog with many sex-explicit contents . This had drawn hot debate among Chinese bloggers, Internet surfers, and eventually in most of the media. The reactions seemed evenly split between her supporters and criticizers. Nevertheless, under social pressure, she quit her job and voluntarily closed the blog. (see this linkfor details.)
Also, I found an article published on a Singapore website about the issue of freedom of speech for bloggers and online journalists. It offers a view of itself.
The other case in China is that a college instructor got fired after her nude picture posted by herself on her blog drew attention of many media. (link)
Any public discussion or exposure of sex used to be a taboo in China. This is mainly due to the cultural tradition. But the society is becoming more tolerant gradually. Nevertheless, it is still controversial to publish sex-explicit contents on public media. Therefore, the issue for bloggers in China is not just to be business-sensitive.
Legal or ethical, as blog is getting popular, there sure will be more case and challenges ahead like that. Will blog world become more regulated, or bloggers will conduct self-discipline, or it will fight for the freedom of speech as the core spirit of blog? It will be interesting to watch.

Team Post #1: Holistic, Segmented, Interactive and Innovative -- P&G Ambitious in Leading Market Promotion Trend

Buzz, buzz, … attention: P&G news online …

P&G closes on-line cosmetics business(06-14-2005)

P&G to reduce "upfront" TV spending(06-13-2005)

P&G Tackles Unilever's Successful Sprays with Marketing Blog(05-02-2005)

MTV to Launch Online Channel, Air P&G, Microsoft, Sony Spots(04-07-2005)

P&G Chooses New Agency Roster(07-15-2004)

P&G's Pringles Use Chips as Medium(06-09-2004)

P&G Interactive Structure Rumbling(04-30-2004)

P&G Launches Anti-Traditional Media Review(04-02-2004)

P&G Expands Online Publishing Operations(03-22-2004)

P&G Marketing Chief Critiques Advertising Industry(02-13-2004)

P&G: Kid Marketing Army Grows Quietly(01-23-2004)

P&G: Mobile Phone Text Messaging Advertising(12-14-2003)

P&G Targets Teens With Viral Campaign(10-29-2002 )
…

Thanks to the technology of world wide web, I could conveniently search, compile, and select P&G related marketing news at home. This definitely is very different from the situation 20 years ago. You see, with the development and advance in technology, people's culture, habit, life style has been greatly changing constantly, with accelerating speed. So is the market. What impression can you get from the above news? Mine impression is definitely that P&G is aware of the change, is trying to adjust to the change, and, further more, is trying to lead in the transition.

Now let's take a break by having a brief review of the marketing communication concepts, as described in Principles of Marketing (Kotler & Armstrong, 10th ed.).
The Marketing Communication Mix, also called Promotion Mix, is "[t]he specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its advertising and marketing objectives." ( p.467, Principles of Marketing, Kotler & Armstrong, 10th ed.)
IMC, Integrated Marketing Communication, is "[t]he concept under which a company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products. " ( p.467, Principles of Marketing, Kotler & Armstrong, 10th ed.)
At the two ends of the communication process are the sender (company) and receiver (consumer). The message is normally exerted from the sender through various media/channels, then decoded by the receiver. Of cause smart companies will take feedback from the sender to evaluate the effect the message they tried to convey in terms of the reach, the interpretation , and the action or non-action of the receiver to adjust the communication process, say, market segment targeting, communication objectives determination, message design, media selection, etc. To make this executable, the company will need to decide on the total promotion budget, and create the promotion mix accordingly. Kolter & Armstrong spent three chapters on the topic of promotion. A few of their observations/conclusions/predications are worth of noting here:

The change from mass marketing/advertising to targeted/segmented marketing/advertising

The change from push strategy to pull strategy in promotion campaigns

The change from "mainstream", and traditional promotion tools to integrated marketing/promotion methodology.

Now let's come back to P&G.

P&G, or Procter & Gamble, found in 1837, is now a giant in household products. It has nearly 300 products in more than 160 countries around the world. Its brands cover widely from fabric & home care, baby care, beauty care, food & beverage, health care, etc. It was the first company to advertise nationally direct to consumers (1880), and it literally created the concept of "soap opera" by sponsoring radio and television dramas targeting women. According to P&G's 2004 annual report, its net sells was $51.4bn, a 19% growth from 2003's $4.34bn. The net earnings in 2004 was $6.5bn, a 25% growth as compared to 2003. Accordingly, P&G has been American top advertiser since 2003: Advertising Age/TNS estimated global measured advertising expenditure of P&G was $5.8bn in 2003. Measured media advertising expenditure in U.S. was $2.7bn. Biggest spending brands were Crest(measured spend $270m), Clairol($236m), Olay($210m), Pantene($175m), Cover Girl($125m), Swiffer($92m), Bounty($83m), and Tide($77m).
(P&G's 2004 annual report has detailed statistics of each product segment )

As the pioneer in mass advertising, it is more obvious that P&G today is proactively seeking way to face the challenge from new technologies and the social changes that they have been bringing. From the news we can tell, the decision of P&G to cut its budget on TV commercials just came, but the thinking was way before. No doubt the Reflect.com, online customized cosmetics sell was an experiment starting as early as 6 years ago. While eBay and Amazon.com were huge success, it doesn't seem P&G's same experiment is as much sweet, at least not now. But this doesn't seem to have any impact on P7F's determination on the transition. In the news above, we see P&G has been testing many innovative, and more interactive ways of advertising and promotion together with existing and traditional channels. The notions we know are: viral market, blog marketing, online publishing, online video website advertising, mobile phone text message advertising, even advertising on food - Pringles chips. The mutual features of these new media are: markets clearly segmented and targeted, more interactive and/or innovative. It is also noteworthy to mention that by and large, P&G's investment on these are not comparable to the traditional marketing/promotion tools yet, and the direct revenue from these is not predominant if any. Obviously when P&G decided to invest and experiment in these new channels, it's mainly with younger generations in mind, the logic, as I presume, being that eventually the market will be dominated by these young generations. I'd like to borrow the term of "market penetration" to describe P&G's philosophy alone the line. By "market penetration", here I mean not the strategy of low price & low margin to penetrate the market. But similarly, I mean to penetrate and dominate the most promising growing market by being the pioneer in these new and innovative media that younger people are so fond and used to. Once P&G has established the dominant influence on these consumers-today, bigger-consumers-tomorrow, it will be hard for its competitors to cut in.
P&G doesn't simply take some media in sacrifice others, even the more traditional and massive advertising and promotion. Instead, the notion of P&G is to integrate multiple channels into a holistic system, each serving its special market and function without hurting each other. In the following, I will take P&G's web site for example to explorer how P&G is using Internet as the overall media and platform for various advertising, sells promotion, and public relations activities to perform on.

On P&G's main web site, people interested in a particular product can search or find the brand in Products. For instance, we take Vicks. You will find the brief product history and product descriptions and features. If you are very interested in more details, there is a link leading to specific web site for Vicks. On this web site, you will find information like ingredients, Uses, Warnings, Instructions, and Online Retail Store information, etc. Now you also can find Cold & Flu, Sinus, and Baby info. And tips. Sleep Better link can educate you on some sleep-related science or tests. To make it more interactive, you can have a look at their Q&A site, or use the online form to directly contact with P&G experts for questions and answers. Oh yes, this Vicks-specific web site has the latest news about Vicks product line that may be helpful to active consumers.
Coming back to Products main page, not only do you have the convenient access to other related brands, you will notice the link called "Samples, Offers and sweepstakes". Click it, you are entering the wealth of promotion world. You are not only seeing samples, offers, contests, sweepstakes that you are familiar with, but also other innovative promotional, and entertaining or educational ideas such as WeatherBug (get live weather forecast along with P&G's latest offers & promotions), Expert Solutions (subscribe to P&G online publications for solutions enjoy exclusive membership benefits), Newspaper Insert Finder, etc.
Back to the company's main web page, you will feel more inviting, because you are welcomed to the Home of Everyday Solutions. Instead of feeling pushed to buy their products , you find a lot of tips, advises, which naturally attract you to find out P&G's solutions: their brands and products.
What else do you see? I see two very important components in P&G's overall marketing strategy.
There is a piece of news about P&G and UNICEF Join Forces on Water Project in under-developed countries. This is a good example of public relation. The other is Get in Touch with Us. You are invited to communicate with P&G in an interactive way.
Speaking of public relations, the company's web site has tons of rich information about its history, every aspect of the company, purpose, values, and principles, commitment, and R&D efforts. The sub pages of News, Careers, and Investing each contains same rich information that are open and transparent.
Compared to the web pages of many other companies, it is very obvious that P&G takes web site seriously in conveying their image and message by making it rich in content, transparent, useful and helpful, attractive and inviting, interactive and innovating. Moreover, different and plural marketing communication tools/channels are integrated into an holistic system to supplement each other in organic way.

Now it is time to review what I have observed and commented about P&G's direction of marketing strategy.

First I cited the P&G related marketing & Advertising news to drew the conclusion that P&G is proactively seeking more segment-targeted, interactive, and innovative channels for current, but more on future market. Then I used P&G's web page as example to analyze how the concept of integrated or holistic marketing communication is adopted.
I have previously posted an introduction of a speech made by Jim Stengel, the Global Marketing Officer of P&G last year. As I proceed further into the class, I am making more connection between the speech, P&G's marketing strategy action, and the book by Kotler & Armstrong. Please forgive me for re-citing what P&G thinks are the three core elements for future marketing: (details please see P&G's Vision of the Future of Marketing)

Holistic Marketing

Permission Marketing

Need for New Measurement

Let's compare back with the three most impressing concepts of integrated marketing communications as introduced in Principles of Marketing (Kotler & Armstrong, 10th ed.).

The change from mass marketing/advertising to targeted/segmented marketing/advertising

The change from push strategy to pull strategy in promotion campaigns

The change from "mainstream", and traditional promotion tools to integrated marketing/promotion methodology.

It is very convincing to me that P&G is taking the right direction in leading the future of integrated marketing system.

Topic Post #2: P&G Cuts Ad Buy -- What Does It Mean?

According to Wall Street Journal news that was cited on CNNMoney, P&G to reduce "upfront" TV spending: WSJ, P&G will cut its expenditure on TV commercials on cable TV by as much as 25% and on broadcast networks by 5%. It will also reduce spending on syndicated daytime programs such as "The Oprah Winfrey Show" and "Ellen."

P&G spent about $3 billion altogether on advertising in 2004, which made it the No. 1 advertiser in U.S. Out of the $3 billion, $2.5, or 80% were on TV.

Alternatively, P&G is showing interest in other forms of TV marketing, such as product placement -- use of its products on TV shows, says the news.

Now what does this means? What impact will this have on P&G's competitors' marketing strategies?

With great interest searching follow up news and comments, I found this article called
Procter & Gamble: TV ads are a turn-off that was published on Datamonitor.

The article says that although the apparent reason of the cut is to save money based on the structure of the U.S. TV advertising market, the fundamental change actually reveals more: it reflects the change in how consumer goods are marketed nowadays. While markets are more segmented, and products more market-segment sensitive and more customized to suit customers' needs and tastes, mass marketing channels like traditional TV commercials are exerting less impact on consumers' purchasing behavior, and hence becoming less efficient as a marketing tool. Datamonitor claims that it found that " the most successful means of marketing to 18-24 year old consumers are through word-of-mouth, Internet and point-of-sale promotions."

Another factor that may have affected the effectiveness of TV commercials is the emerging technology or device called TiVo that can help TV viewers skip the commercials in between real programs that they really want to watch.

In the end of the article, it was believed that P&G is lead the trend that targeted marketing will gradually supplant the mass media, and P&G's competitors will sure to follow.

Topic Post #3 (Presentation): The Infomercial Triumphant

Infomercial, also called direct-response advertising program, is one form of direct marketing channels that is growing robustly with the widespread distribution of cable and television.
Infomercials are 30-minute programs that television viewers often encounter. In the program, one product will be introduced, and most of the time, demonstrated in detail and length to impress and persuade potential customers. It normally will offer a toll-free number for viewers to call for ordering, or a website where people can order online. This kind of programs sometimes are combined with other promotion tools such as promotion discounts. It is being proved an effective tool of sell & promotion, as one form of direct marketing. According to Elissa Myers, former president of the Electronic Retailing Association (ERA), as cited in As Seen On TV -- The Infomercial Triumphant published in 2002 on Forbe.com -- magazine article, there were about 300,000 infomercial spots on 36 national cables stations and 1,800 broadcast stations. Marketers generally spent $800 million annually on media for infomercials, but of cause the fruit was sweet: American consumers spent $14 billion in return.
Here are more statistics to support the success of infomercials:

two thirds of all Americans report seeing infomercials

over 1,000 products sold annually through infomercials

nearly 63% of all Americans aged 16 and over have experienced at least one form of infomercial

more than one in four Americans have responded by calling and buying

The article cited Carson Productions' cooperation with direct-response advertising company, Respond2 as a successful story. According to Tim O'Leary, the company's CEO, their infomercial directly resulted in the selling of 2.5 million videos and DVDs, which is comparable to the DVD/video sales for a hit Hollywood movie. Moreover, 35,000 copies of the infomercial itself were sold, making the video the first product ever to be an infomercial for itself.
The article continues by commenting that infomercials are becoming mainstream recently. Take Respond2 for example again. They have done long-term ads for major companies like Apple, Gateway, Whirlpool, Sony Carnival and even hospital chains. The list can go on.
What categories of products most likely will gain success through infomercials? The answers are: cosmetics, personal care, housewares and appliances, health and fitness, etc. It is argued that these products select infomercials because they require a lot of demonstration.
However, there are two notions about infomercials that won't be agreed by direct-response advertising marketers:

notion 1: infomercials are fly-by-night

notion 2: the products sold by infomercials are not sold in stores

In reality, many of the products are also sold in traditional retail channels.
As the final summary, the article concludes that untested entrepreneurs who can't afford slotting fees charged by retailers or who simply can't get in the door like infomercials the most, and predicts that infomercials are yet waiting for the best time to come.

Coming back to the textbook, Principles of Marketing (Philip Kotler & Gary Armstrong, 10th ed.)we found direct-response television advertising one of the Seven forms of direct marketing: face-to-face selling, telemarketing, direct-mail marketing, catalog marketing, direct-response television marketing, kiosk marketing and online marketing. Direct marketing is defined as the direct communication with carefully targeted individual consumers to obtain an immediate response, whereas infomercial is direct marketing via television
As an integral part of the marketing mix, direct marketing, no matter in what forms, share the following features:

buyers find it convenient, easy to use, private, with full load of information and easy access, immediate and interactive;

sellers takes it as a powerful tool for building customer relationships;

low cost, efficient alternatives to traditional marketing tools for reaching markets

Direct-response television marketing is no exception. However, infomercials have one more advantage over other media that many marketers like. Dan Ackman remarked in another article,The Darwinian World Of The Infomercial, "Other advertisers talk about eyeballs and awareness. With direct response TV, the impact is immediate and measurable. Ads that fail are quickly pulled."

Both the textbook and the article mentioned that in actuality, many infomericals are incorporated into integrated direct marketing, the holistic marketing notion. For example, infomercials may be accompanied with either traditional retails, or online marketing, or both. Another example is that many infomercials also offer promotional discounts for buyers who call immediately to order the product.
Infomercials, along with all other forms of direct marketing, are not immune to problems/controversy. One kind is that some infomercials are irritating, unfair, deceiving, or false. Although other advertising and promotion tools also have this kind of issues, direct marketing seem less regulated because of the nature and scale of it. The other issue is the invasion of privacy of customers. By collecting large amount of consumers' personal information with or without the awareness/agreement of customers, the companies can improve their marketing strategy on the one hand, but can cause the concern and worry of customers of privacy intrusion, if abused.
To protect the interest of consumers, and reversely, of itself, direct marketing industry is addressing these issues. For example, DMA, theDirect Marketing Association, has launched a"Privacy Promise to American Consumers." Privacy and consumer permission are viewed as the connerstone to a continuing and healthy customer relationship that will eventually benefit both parties.
Earlier I have posted a summary of a speech entitled The Future of Marketing and made by Jim Stengel, the Global Marketing Officer of P&G. In the speech, Jim identified three critical elements for future marketing to face the challenge from new technologies

Holistic Marketing

Permission Marketing

New Forms of Measurement

(see my blog.)
Direct-response television marketing, although not so much of high tech itself, seems to get close to what P&G has in mind. No wonder the company also incorporated infomercials into its integrated marketing forces.
Like it or not, infomercials probably won't recede from marketing platform soon, to say the least.

Introduction Post #2: Intellectual Property in International Trade

There was a short but hot discussion in class on the case that the textbook "Principle of Marketing" had another "edition" published in India, which is much cheaper, but of cause, less enjoyable reading due to the fact that it is completely in black and white. As Alex pointed out, the material cost of a textbook is probably pretty minimum. What makes the book so expensive in the United States really is the intellectual property. However, not all nations or regions in the world have the same level of purchasing power as in the Unites States. If the publisher wants to explore the market in these countries or regions, the high market price in rich countries such as the Unites States will inevitably become the biggest obstacle.

This is a good example of the dilemma of marketing in international trade for products of high intellectual property.

For many labor-intensive products such as shoes, cloth, toys, manufacturing in local country and region can probably greatly reduce the total cost, and hence reduce the price. If sold to the local market, even though the price is much lower than in the U.S., the company can still make decent profit. If imported to developed countries, the profit can be 10 times higher. The company probably will have no problem adjust the market price to local market according to the local consuming power, and probably will have no problem slightly -- at least -- reduce the price in the U.S. market to make it more competitive.

Things will be some different for products of high intellectual elements. Take Microsoft for example. The main cost is not at the material and labor cost of making the cds. Rather, it is the intellectual property of Microsoft. Therefore, lower cost of materials and labor will not greatly affect the overall price. Then the question is: will the company be willing to reduce the price based on the actual purchasing power of local market?

Intellectual property is not so much "tangible" as the products mentioned above, so the benefit of reducing material and labor cost is not that much "tangible" either. It seems very straightforward to many that value of "intellectual property" is universal, as opposed to material and labor cost. Of cause the companies will think of no reason for their products to offer lower price in the U.S. as many of the commodities such as shoes, cloth and toys did after imported from the manufacturers in low-income countries.

Insisting on existing price and hence the existing profit rate certainly will not win the market for the intellectual property intensive products in low-income countries. On the other hand, it is difficult from the perspective of the companies that own the intellectual property of the products to agree to reduce price because they see no reason for such doing.

I wonder how business experts and companies of this category think of this situation and their thoughts or ways of handling it.

Topic Post #1: P&G's Vision of the Future of Marketing

    Holistic Marketing, Permission Marketing, and New Forms of Measurement were identified by Jim Stengel, the Global Marketing Officer of P&G, as the three critical elements for future marketing to face the challange from new technologies.

    Jim Stengel made the above statement in his speech at the AAAA's Media Conference last year when he was trying to elaborate how P&G, in the new era, would be still sticking to their long-time belief that "staying in touch with the consumer" and what exectuable actions or mentalit-changes would be needed to make this belief still feasible.


• Holistic Marketing

    Jim Stengel recognized that in the past, P&G's brands had long been heavily relying on traditional media, say, TV, for advertising without exploring -- at least not enough -- new technologies and connection points. Consumers nowadays, empowered by the new technologies, were gaining more control over the channel, time, place, methodlogy, and content of what they were marketed to. With customer-centric marketing philosophy dear in heart, the challange is: what would be the new marketing approaches, among the longer and longer spectrum of choices, that cusotmer would actually invite? This question itself invited the next element of future marketing as Jim envisioned.


• Permission Marketing

    

Just because we can do it, doesn't mean we should.

     -- said Jim. He took spam email for example. All marketing should be permission marketing, by which it means the future marketing should be so attractive to customers so that they choose to or invite to be marketed to. Jim further introduced the notion of collaboration in building up close relationships with more partners to mutually achieve the goal, and showcased a few examples of P&G's effort towoards the direction.


• Need for New Measurement

    In Jim's own words, "marketing and media metrics have not kept pace with marketing innovation." There should be new standard of meaqsure that can determine how effective the above mentioned two efforts are given the new circumstance.

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    CASE STUDY


    Tide has been launching special offers online, one of which is sweepstakes sweepstakes for Tide Deep Clean.


Questions:


• How would this promotion method fit in the article summariezed above?
  
• What market segment is this promotion targeting?
  
• Advantages and drawbacks of this promotion method as compared to traditional promotion methods?
  
• Will this promotion be effective? Why or why not?
  
• How to measure the effectivness of the promotion?

Comments are welcome!