2009

Procter & Gamble Europe: Vizir

Launch

Arsen Alikhanyan, Federica Betti, Erhan

Keskin, Selma Krkid
Procter & Gamble
11/30/2009
2 Procter & Gamble Europe: Vizir Launch

1.0 Introduction
Our analysis of the Procter & Gamble (hereafter referred to as ‘P&G’ or ‘the Company’) Vizir
product launch is divided into three broad discussion areas which seek to carefully answer the
vice-president’s pressing questions. In the first section, we explore the possible options P&G
has in regards to launching the product followed by an examination of whether the company
should launch the product Europe wide. The last section includes an evaluation of the impacts
the imminent launch of the product would have on the organisational structure and the move
to a new approach to international marketing.

2.0 To launch or not to launch?

In 1981, P&G European sales represented a whopping 15% of their total sales worldwide.
Germany and UK were the largest European markets representing 20% each, with France and
Italy closely following (30%) and Belgium, Holland, Spain, Austria and Switzerland contributing
to the remainder of the market share (20%) (Source: case study, pg 2).

The sheer importance of the European market combined with increasing competitive
pressures in a market which was mired with slowing growth, indicates perhaps that P&G
cannot afford to forgo the future income that would be generated from successfully
launching Vizir.

Although, there had been positive feedback on the product based on the results of four
months of market research, the brevity of the process was not in line with P&G policies which
are designed to hedge launch failures and practically leave no stone unturned. However, the
risk of a looming pre-emptive strike by Henkel poses a significant threat to the Company and
by not launching the product ‘prematurely’ the Company could risk losing the German
market altogether. In fact, Baker (2000) suggests that in Japan, a large number of P&G
products were pre-empted by a competitor with copycat products prior to the Company
completing its necessary 24 month market research period.

In essence it is due to this risk, coupled with unfavourable market landscape, that we
recommend that P&G follows Wolfgang Brent’s ‘hunch’ and launches Vizir even in the
absence of the full market test period.

3.0 Eurobrand and 'adaptation versus standardisation'

A major dilemma is whether to launch the product as a German product or as a single

European brand. Prima face, market conditions could indicate that P&G should limit the
launch to Germany and thereby limiting the initial outlays in infrastructure and promotion
that would enable such a large undertaking.

Group 7: Arsen Alikhanyan, Federica Betti, Erhan Keskin, Selma Krkid| Confidential
3 Procter & Gamble Europe: Vizir Launch

However, we believe by changing the organisational structure (further elaborated on in the

following section) and launching the product as a Eurobrand the company can truly establish
itself in the European market and homogenise its image as well as reinforce the brand.

By launching the product simultaneously in all European markets, P&G would have the
distinct advantage of being the market leader and in this manner protect itself from similar
products making it harder for competitors to enter into the market (Beiske et al. 2002). In
addition, by capturing a larger market the significantly higher initial capital expenditure (five
or six times higher than the German launch only) would be offset by much higher profits and
thus justify the means.

Furthermore, we believe that the extent of the Europe-wide launch will largely depend on the
degree of standardisation of the marketing mix and this. Buzzell (1968) indicates that there
are several advantages and disadvantages of standardisation indicating that the benefits
perhaps outweigh the costs:

Advantages of Standardisation:
I. International uniformity.
II. Reduced confusion of customer by uniformity.
III. Brand loyalty which derives from uniformity.
IV. Economies of scale.
V. Improved quality in marketing activities.
VI. Easy coordination and controlling.

Disadvantages of standardisation:
I. Different shopping habits.
II. Different legal applications.
III. Different marketing activities in Distribution channels.
IV. Different competition environments.
V. Differences in resources.
VI. Difference in cultures.

However, we believe that taking either of these strategies is not so straightforward and that
the key to the success of the product is to make the marketing mix a delicate balance
between standardisation and adaptation. This issue has been the subject of much debate
amongst experts, and Kotler et al. (1999) suggest that ‘many possibilities exist between the
extremes of standardisation and complete adaptation’ (pg 212, for example Coca-Cola).

Group 7: Arsen Alikhanyan, Federica Betti, Erhan Keskin, Selma Krkid| Confidential
4 Procter & Gamble Europe: Vizir Launch

The extent of the marketing mix standardisation and adaptation should be as follows:

Product:
The product formulation should be adapted to the market to adapt to legislative requirements, for
example in Finland and Holland legislation limited the phosphate levels (Source: case study, pg 4).
The formula of the product should be customised to the degree that it does not compromise the
quality of the product. Also, the formulation should fully adapt to the European front loading
machine so as to avoid product incompatibility with a commodity which consumers do not replace
for an extensive period of time.

Packaging:
The shape of the bottles should be standardised but the size of the bottles should be tailored to the
specific country preferences. As mentioned in the case Dutch customers prefer smaller sizes in
comparison to the German customers. Naturally, the labels and the user instructions should be in the
local languages. However, the same labels can be used for French speaking countries such as
Belgium, Luxembourg and to an extent Switzerland.

Promotion:
The Company should standardise the advertising message and thus reinforce the brand Europe-wide.
This can be done in much the same fashion as Nike for example where almost everyone can
recognise the ‘swoosh’ sign and the message behind. However the media advertising strategies
should be tailored country to country. In those countries where commercial time was limited, for
example Holland, Germany and Italy, P&G should target women’s magazines as well as newspapers.

During every step of ad and promotion it's important to stretch the difference between liquid and
powder laudry detergents in the mind of the consumer. In addition, we also suggest emphasising the
difference of the product in respect to the ‘traditional’ powder laundry detergent Ariel.

Pricing:
Pricing should be adopted country to country that reflects the buying power of the particular
country’s consumer. However, the product pricing should carry a common trait and be positioned as
a premium product to reflect its superior quality. Many consumers consider the price to represent an
indicator of quality and even small difference in price can suggest differences between products
(Kotler et al. 2001). In addition, the price premium placed on the product will ensure that Vizir is
differentiated from Ariel so as not to cannibalise it.

Group 7: Arsen Alikhanyan, Federica Betti, Erhan Keskin, Selma Krkid| Confidential
5 Procter & Gamble Europe: Vizir Launch

4.0 A way forward – organisational change

In launching this product as a ‘Euro’ brand, P&G would have to change its organisational
structure and at the same time not compromise their sound corporate values. The setting up
of Euro Brand Team lead by Germany, as the case study suggest, could be a way in achieving
this, however, a project of this scale cannot be the responsibility of the brand manager
alone.

Nevertheless, the emergence of the Euro Brand Team should be considered as only one
aspect of a much wider spectrum of organisational reforms. The marketing department
should not work independently of the ETC centre but rather these two entities should go
hand in hand to enable prompt testing of trend emergence.

Individual subsidiaries should be responsible for monitoring marketing trends and suggesting
them to the head marketing department which should be in charge of general oversight and
decision making. Subsidiary management should be incentivised to monitor and hence
appropriately rewarded for recognising plausible trends early on. In this way P&G can work
towards reducing bureaucratic decision making processes currently in place which will reduce
the risk of pre-emptive strikes.

To implement this new organisational structure, the Company needs to foster a culture of
effective communication. One way of achieving this is to encourage staff rotation from
country to country and by doing so spread knowledge evenly through the organisation and
leverage more efficiently on its current resources. Moreover, this would avoid the lead Euro
Brand country team to have too much power in decision making to avoid bias. For example,
P&G could bring in managers from France or the United Kingdom to the Euro Brand Team
and create more balance to avoid country partiality.

Group 7: Arsen Alikhanyan, Federica Betti, Erhan Keskin, Selma Krkid| Confidential
6 Procter & Gamble Europe: Vizir Launch

References:

1. Baker 2000, Marketing Theory: a student text, Google Books, Viewed 27 November 2009,
http://books.google.com/books?id=zpch0sOGOPgC&pg=PA121&lpg=PA121&dq=vizir+launch
+student&source=bl&ots=7pum5NqEZl&sig=3KznRQBNiJ7VDNpRzMCX_8nZuD4&hl=sl&ei=3q
QKS5SuHpeZ_QbxmaTQBA&sa=X&oi=book_result&ct=result&resnum=1&ved=0CAcQ6AEwA
A#v=onepage&q=&f=fal
2. Bartlett CA 1989, Proctor & Gamble: Vizir Launch, Harvard Business School
3. Beiske B , Murray J, White S 2002, Procter & Gamble Europe: Vizir Launch, Scholarly Paper
(Advanced Paper), Google Books, Viewed 28 November 2009,
http://books.google.com/books?id=_o4ohReKTYIC&pg=PT35&lpg=PT35&dq=procter+and+ga
mble+vizir+launch&source=bl&ots=jeNiHiBHoI&sig=J5r3Z9aTUzp1IUfGGypj8isDyNU&hl=sl&e
i=VaAOS-
fWONCA_Qb4nJGvBQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CDgQ6AEwCQ#v
=onepage&q=&f=false
4. Buzzell DW 1968, Can you standardize multinational marketing?, Harvard Business review,
5. Kotler, P, Armstrong, G, Saunders J & Wong V 2001, Principi di marketing, Utet, Milano
6. Kotler, P, Armstrong, G, Saunders J & Wong V 1999, Principles of marketing, 2nd European
edition, Prentice Hall, Italy

Group 7: Arsen Alikhanyan, Federica Betti, Erhan Keskin, Selma Krkid| Confidential