Market segmentation, market poisoning and market targeting.
We were assigned to prepare a report on Market segmentation, market poisoning and market targeting based on P&G. As assigned, we have prepared the report based on our findings and understandings.
In preparing this report, first of all we have disclosed 1.the companies five years comparative statements. We have also mentioned profit and loss account, balance sheet, statements of cash flow.
Then, in section 2, we tried to show the actual picture of five years ratios such as liquidity ratio, activity ratio, leverage ratio, profitability ratio and market ratio of Beximco Synthetics Limited. We have also mention of the company’s other profile like- board of director,statement of director, financial statements etc.
Finally, at section 3, we analyzed the financial statements of the company through the various ratios and making comments
Thus, in our report, we showed that the current overall conditions of the company is attractive to the stakeholders and thy can take this as a desirable company for their business transactions
In today’s world every company wants to build a profitable relationship with partners inside and outside the company. To maintain this relationship every company has to maintain a particular marketing strategy.
Here our concern is P&G Company. P&G is one of the largest multinational companies in the world. It started its journey by making and selling soap. On April 12, 1837, William Procter and James Gamble started this venture.
On August 22, they formalized their business relationship by pledging $3,596.47 apiece. The formal partnership agreement was signed on October 31, 1837. But at this moment P&G has one of the largest and strongest portfolios of trusted brands, including Pampers, Tide, Ariel, Always, Pantene, Bounty, Folgers, Pringles, Charmin, Downy, Iams, Crest, Actonel and Olay.
In the 1970s, P&G was one of the first companies to put its safety testing data in a computer database, helping to avoid duplicative testing.
The P&G community consists of over 138,000 employees working in over 80 countries worldwide. What began as a small, family-operated soap and Candle Company now provides products and services of superior quality and value to consumers in over 180 countries.
A company can not profitably serve all consumers in a given market- at least all consumers in the same way. There are too many different kinds of consumers with too many different types of needs. Thus, each company must divide up the total market, choose the segments it can serve better than competitors do & designs strategies for profitably serving chosen segments.
For the purpose P&G has divided up its worldwide broader markets into three major steps: – Market Segmentation, Target Marketing and Market Positioning.
Figure: Chart of P&G Marketing
Market consists of numerous buyers and buyers differ in their wants, resources, locations, buying attitudes and buying practices. Through the market segmentation P&G divides its large, heterogeneous markets into smaller segments that can be reached more efficiently and effective with products and services that match their unique needs. This section focuses on P&G’s three important segmentation strategies.
- Consumer Market Segmentation
- Business Market Segmentation
- International Market Segmentation
Consumer Market Segmentation:
There is no single way to segment a consumer market. P&G marketers have to try different segmentation variables to find the best way to view the market structure. Major variables used by P&G in segmenting its consumer markets can be illustrated as below.
1. Demographic Segmentation: P&G divides its market into groups based on variables such as:-
a. Age: P&G produces its products on the basis of age such as ‘Crest’ a kind of toothpaste for kids with different flavors such as Kids Crest Cavity Protection Sparkle Fun. Another paste for adult is Crest Nature’s expression pro-health.
b. Sex: For male ‘Boss’ fragrance for male. For female ‘Naomi Campbell’. Naomi Campbell is a true star. She is famous worldwide for her strong personality, sensual beauty and glamorous lifestyle.
NAOMI CAMPBELL perfumes capture her multi-dimensional character to create expressive, feminine fragrances. Like Naomi Campbell, her fragrance and packaging design will surprise the customers. The prestigious detail will attract the customers.
c. Family size: For large and extended family they produce ”96-tissiues Puffs Plus”. For small family they produce ”60-tissiues Puffs Plus”.
d. Income: For affluent customer use ”Gillette Fusion” with 5 blades. And for low income leveled customer use”Mach3”.
e. Occupation: For a corporate executive use a low fragranced perfume on the other hand, a model use high fragranced perfume.
2. Geographic segmentation: Being a multinational company operating almost worldwide with a wide variety of products. P&G divides its market into different geographical units such as nations, states, regions, countries, climate & density of population etc.
a. World region: Although a North American company P&G operates almost in all regions of the world more or less. For example, it has manufacturing plant for its product “Head and Shoulders” in Latin America, Asia, Australia and Europe. But there are certain regions where it markets its products though having no manufacturing plant.
b. Climate: Based on climate condition P&G segments its market. For example P&G segments its market of coffee based on temperature of different regions of the world. It has hugely concentrated its coffee markets such as “Millstone”, “Home coffee” in the cold and Scandinavian countries.
c. Density of population: Based on density of population P&G is considering its market segments. It has fewer marketing opportunity in African region with very small population rather than in the Asian part, a huge markets of consumer products. Even it has no manufacturing plant of certain products in Africa.
3. Psychographic Segmentation: By psychographic segmentation P&G divides its consumers and buyers into different individual groups based on social class, life style, life cycle and personality characteristics. But people in a same demographic group can have very different psychographic makeup.
a) Social class: Social class means the classification of the people who live in the society such as: upper class, lower class and middle class. Here we see that, P&G segmented its products according to social class.
For example P&G has introduced the famous brand ‘Olay’ for skin care. Olay is about beauty, inside and out. It’s about keeping in constant concert with a woman’s wants, her needs, her aspirations. But more than anything, it’s about celebrating the unique beauty within every woman, because loving the skin we’re in is the most beautiful feeling of all. With 8 product lines offering a multitude of products, Olay embraces every woman’s skin and cares for it like no other.
Like this it has also introduced ‘Braun’, Cover Girl, Camay etc. In the perspective of our country we can say that, these kinds of products are not for the lower class people. Moreover it has some brands of fragrance which are only for those people who are affluent.
b) Lifestyle: People maintain different lifestyles. Some leads luxurious life, some lead casual life, again some lead ordinary life. These distinct lifestyles play an important role in the market segmentation of P&G.
P&G produces different shaving blade such as ‘Gillette Twin Blade’, ‘Gillette MP3 Power’, and ‘Gillette Fusion for different life styles. It also manufactures and markets “Febreze” an airfreshner highly usable in air conditioned room for people who lead a luxurious life.
c) Personality: P&G has used personality variables to segment market. For example P&G introduced a sort of decaffeinated coffee named ‘Millstone’ for the late nighters to retain the energy during the whole night. And another flavor named ‘Folgers’ for normal users.
4. Behavioral segmentation: By behavioral segmentation P&G divides the buyers into groups based on their knowledge, attitudes, uses, or responses to a product. The company marketers believe that behavior variables are very crucial in segmenting markets.
a) Occasion segmentation: P&G generally produces those products which are used in our daily life. Sometimes in some occasions it puts its concentration in some selected products. In different types of occasions it often provides offers like “buy one and get one” or “buy it and get 20% extra”.
b) Benefit segmentation: Benefit segmentation means dividing the market into groups according to the different bents that consumers seek from the product. P&G has already found that people want to get several benefits from a product class and here P&G has identified several different laundry detergent segments.
Each segment seeks a unique combination of benefits, from cleaning and bleaching to economy, fabric softening, fresh smell, strength or mildness or only a few. Here several brands of detergents and laundry are positioned for different segments as follows:-Tide, Cheer, Downy, Bounce.
c) Other behavioral segmentations
- Usage rate: P&G segmented their market into light user, medium user, and heavy user.
- User status: P&G has already segmented their products into groups of ex-users, potential users, first users and regular users.
- Loyalty status: It’s a very important marketing strategy of P&G for retaining and increasing customers of products. And P&G segments their market by consumer loyalty. Consumers can be loyal to brands i.e. Tide, Gillette etc.
Like other leading companies P&G serves several business markets in line with their consumers. In the African region it operates totally with the help of its distributors and dealers in respect of certain products such as Tide, Pantene Pro-V etc. On the other hand in the most densely populated region i.e. in Asia it operates both as manufacturer and dealers. Again in India that is a huge market of P&G, it has manufacturing plant of certain products such as ‘Ariel’, Tide’ in third world countries like Bangladesh it has barely manufacturing facility.
As a corporate leader with huge market share P&G conducts its business almost worldwide in above 180 countries. It segments its international markets using a combination of several variables such as geographic location, economic, political and cultural factors etc. To operate in different countries it groups by region such as North America, Latin America, Western Europe, South Asia, Australia etc.
P&G segments its world market on the basis of economic factors too. Countries are grouped in their marketing strategy by people’s income levels.
For example, certain products, ‘Satin Care’ a women skin cleaner, ‘Safeguard’ a highly antibacterial soap are more prevalent in the West European and North American countries rather than in the third world countries like ours. Because some times these products are costly enough for majority of the people to afford living in a poor economy.
However P&G applies “Inter-market segmentation” an approach in segmenting its international market. Under this approach it manufactures different fragrances such as ‘Hugo’, ‘Boss’, skin care such as ‘Satin Care’ for consumers with unique needs of these products regardless their countries.
P&G’s overall marketing strategy involves targeting market, a weapon to evaluate the segments the company has developed and selecting one or more segments. In selecting target markets P&G adopts the following strategies:-
- i. Undifferentiated marketing: Using this strategy P&G somehow ignores segment differences and targets the whole market with one offer. This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different. For example, P&G produces and markets ‘Camay’ saying that a moisturizing bar soap enriched in French perfumes that leaves your skin feeling fresh, soft and sensual. It does not signify any segment regarding male or female, young or adult. In the market it has ‘Head and Shoulders’ an anti dandruff shampoo for users who want to get dandruff free, to relieve from dry scalp and itch regardless the users are male or female, having silky or curly hair.
In using undifferentiated marketing P&G faces obstacles. Difficulties arise in developing a brand or product that will satisfy all consumers. As a result it adopts several other marketing strategies i.e. segmented, niche marketing too.
- ii. Differentiated marketing: Using a differentiated marketing strategy, P&G attempts to target several market segments and designs separate offers for each. P&G has introduced several brands in one product category i.e. hand soap (Ivory, Safeguard, Zest, Olay, Old spice), Shampoo (Pantene, Head and Shoulders), Laundry detergent (Tide, Cheer, Bold, Dreft), Tissues and towels (Charmin, Bounty, Puffs) instead of concentrating its resources on a single leading brand. This is because different people want different mixes of benefits from the products they buy. For example, people use laundry detergent to get their clothes clean. But they also want other things from their detergent such as economy, bleaching power, fabric softening fresh smell, strength or mildness, lots of suds or only a few. To some people cleaning and bleaching power are most important to others fabric softening matters most; still others want a fresh-scented detergent.
Thus there are segments of laundry detergent buyers. P&G has developed different brands of laundry detergent to target each segment to meet the special needs of each.
For example,’ Tide’ is the best in fabric cleaning ‘Cheer’ is the color expert, ‘Bold’ is the fabric softener and pill remover, ‘Ivory’ provides mild cleansing benefits for pure clean.
Thus P&G evaluates its segments in terms of consumer needs and wants and selects one or more segments to enter introducing various products or brands in a similar product category. P&G has differentiated its market by developing several brands of bar soap that fulfill different criteria. It produces ‘Safeguard’ an anti-bacterial soap for all consumers male or female. It produces ‘Olay’ beauty soap for women of all ages who want to feel their skin fresh, smooth and sensual.
P&G’s such offering products and marketing variations to segments result in higher sales volume. But differentiated marketing also increases the cost of doing business. The company finds it more expensive to develop and produce different small units of a product category than producing larger units of the products. Trying to reach different market segments with different advertising increases promotion cost. For example, for different brands of dishwashing detergents such as Ivory, Dawn, Joy, Cascade P&G has to advertise separately.
- iii. Concentrated and Micromarketing: P&G a giant in the world market operating with a wide variety of products and larger market share almost ignores concentrated or micro marketing. It has hardly any single product in which it has concentrated deeply or tries to meet specific individual needs. But it has certain products such as Ivory Aloe with Ivory Lavender creating a classical purity for aged people (above 60) only. In fact the product is not to fulfill the specific individual need but to meet the need of an individual segment.
Another important Marketing segmentation Strategy of P&G to occupy a distinct Position in the market place is market positioning .A Products Position in a place the product occupies relative to competitors in consumer minds.
P&G markets constantly and wants to develop unique market position for their products if products are perceived to be exactly like other markets consumers would rarely buy it. The company markets plan positions that distinguish their products from others competitive brands. To occupy a desirable and distinctive place in the laundry detergent market P&G has developed several brands instead of single brands each brand having distinctive features to meet the different mixes of benefits of different people.
“Tide” is positioned as a powerful all-purpose family detergent; “Ivory Snow” is positioned as the gentle detergent for the fine washable and baby cloths. Thus in the laundry detergent market P&G has confined itself to no single brand rather it seeks position in the consumers minds with different brands of detergent each having separate features and thus fulfilling different wants and needs of various customer segments.
Again to create a unique brand image P&G has developed different formulations of the same product category and operating with the same brand in each formulation. For example, “Tide with belch” helps to clean even what’s unseen “Tide Power” “Tide clean Breeze” Gives the fresh sent of laundry and mildness “Tide Free” provides all stain removal benefits without any dyes or perfume etc.
By segmenting the market and having several detergent brands and again a unique brand with different formulations, P&G has an attractive offering from consumer in all important preferences groups. As a result it is really cleaning up in the 4 billion U, S laundry detergent market. Tide by itself dominate approximately 38 percent market share. All P&G laundry detergent brands combined take 60% of the U, S market share than its nearest rival “Unilever”
In positioning its products P&G first identifies possible competitive advantages upon which to build the position. To gain competitive Advantage the company stress on pricing the products as rational as possible as offering more benefits to justify higher price.
P&G has 3 sorts of shaving razors in the market-Gillette Twin Blade, Gillette Mac-3, Gillette Fusion etc. Each has different qualities and prices accordingly.
For example- ‘Gillette Fusion’ a four blade razor providing the fastest and smoothest shaving (controlled by battery power or manually) has been priced higher than any other category. On the other hand ‘Gillette Twin Blade’ providing a smooth but normal shave is priced the lowest considering the service it performs.
Thus P&G’s product is quite well balanced in terms of its price and quality which provides the company a strength competitive advantage over its competitors.
In addition to charging rational price P&G attempts to position its product in the market by delivering promised quality and superior customer value. For this P&G emphasis on continual product improvement, retaining consistency in the product quality and above all differentiates its products from those of others in the market.
P&G differentiates along the lines of product, services, channels, people and image. Along the lines of product it has developed numerous brands of various products on attributes such as-price, quality, and durability, users etc. P&G has 3 brands of razor ‘Gillette Fusion’ high priced, and ‘Gillette Twin Blade’ low priced etc. It has ‘Oral-B’ toothbrush for adults, ‘Oral-B Kids’ for children, ‘Safeguard’ an antibacterial soap for users regardless gender, ‘Olay’ a beauty soap for women of all ages, ‘Satin Care’ a skin cleaner only for women etc. Such differentiated product lines in particular brands having specific features help consumers to choose their products easily to satisfy respective needs in terms of price, quality, sex etc.
P&G gains service differentiation through speedy, convenient and careful delivery. It has a wide range of dealer and distributor firms worldwide to operate globally. In some countries where it has no manufacturing plant such as in most countries of Africa, in third world countries like ours it operates with fur extensive distribution channels not only in the urban areas but also in the rural ones. P&G has various packaging of similar products such as mini pack, family pack, a lump some size etc. Through a delicate distribution channel it tries to reach to all levels of consumers.
For example, in very rural areas of our country people are now using mostly mini packs (with lower price per unit) of various products such as-Tide detergent, Head and Shoulder and Pantene Pro-v etc.
As a result, people living under poverty line even in rural areas or consumers of different countries where P&G has few production facilities are equally enjoying its products like other privileged. And it has only been possible due to operating activities of widespread dealer and distributors.
In case of People differentiation for hiring skilled and qualified employee P&G has divided worldwide environment in three regions-
(2)Europe, Middle East and Africa.
(3)Asia Pacific / Australia.
For developing human skill and implementing it in the workplace P&G conducts extensive training program, motivational approach and better control system. Finally, P&G puts importance on image differentiation. P&G does it by promising a certain quality for a specific products and creating brands accordingly.
For example “Cheer” is a color expert “Bold” is a fuzz Removal “Era” prefers these simple statements about products provide the backbone for its positioning in the market and differentiate the product from those of competitors. P&G strives for creating image recognition.