P&G Case > Read the case carefully Answer the following Questions: 1. What elements of P&G external marketing environment are influencing the company's marketing strategy? Explain your reasoning 2. P&G's marketing research includes face-to-face interviews for the situation described in this case. Would other forms of marketing research also be useful in this situation? Explain your reasoning 3. In what ways are the components of P&G's marketing mix being affected by the situation described in this case? Give examples kets, and the characteris (B2B) buying behaviour. LO-7 Explain the definition of a product as a value pack- age, and classify goods and services. LO-8 Describe the key considerations in the new product development process, and explain the importance of branding and packaging. P&G Marketing: Dealing with a Shrinking Middle Class Tue , Pampers, Bounty, Gillette, Crest, Scope, and Febreze. What do they all have in common? They are just a few of the brands owned by Procter & Gamble (P&G), the iconic marketer of household products. The company was estab- lished in 1837 and today serves over five billion people in over 70 countries. In 2014, sales were over US$83 billion. Of the large collection of brands, 23 actualy have annual sales above US$1 billion. It is estimated that 98 percent of North appeal to dip in sales of the mid-priced Tide brand. During the previous American households use at least one P&G product, a posl- recession, P&G's lower priced Luvs diapers gand market tion that has grown largely by targeting middle-class consum share from their higher-priced Pampers brand. Following ers. However, P&G is facing a puzzling marketing dilemma because the number of mid-range shoppers is shrinking path similar to that of P&G, H. J. Heinz has developed more food products for the lower priced markets. Meanwhile The source of the problem is the reduction in middle- retailers focusing on lower-income class purchasing power. Many HOW WILL THIS HELP ME? consumers, such as Winners and familes e now pinched with rising Dollarama, are attracting custom- Adjusting its marketing strategy is an example of how prices for housing, food, gasoline, a company can apply marketing basics ers from higher-priced retailers, and medical products but little or the forces of the external marketing environment. This Refocusing away from the no wage increases. This economic chapterscaminas the marketing plan, components of mainstream middle onto high-and the marketing mix, and the roles of targeting, market condition has been described as segmentation, and positioning. It also explores the low-end consumers is a new mer the "Consumer Hourglass Theory' fundamentals of market research and the key factors Advocates of the theory believe that influence the consumer and organizational buy keting experience at P&G. They that purchasing power has shifted now new products are developed and how they are ing processes. The chapter concludes with a look at have increased market research away from the once-massive mid- defined by branding and packaging. By grasping the on lower-income households de and is concentrated now at the marketing methods and ideas in this chapter, you will often using face-to-face interviews bottom and top. That's where con- be better prepared not only as a marketing profes to gain in-depth understanding of sional, but also as an informed consumer. sumer action is now, at the high these consumers. So far, the low end market and the low-end end and the high-end segments each are generally smaler Is this simply a short-term issue? Based on P&G's than the former massive middle-class market, which means research, Melanie Healey, group president for P&G's North P&G is splitting its marketing efforts. As one company official America business, expects middle-class downsizing will be noted, historically they have been good at doing things on a continuing trend. Accordingly, PG and other companies a a larger scale, but now they are learning how to deal with are rethinking their target markets. Aming at the high-end smaller sales volumes for products in each of two segments segment, the company introduced its more expensive Clay New product development is affected, too, because the Pro-X skin care product. Previously, P&G introduced Gan, high-end segment often involves fewer products with attrao the bargain priced dish soap, which is amed at the growing tive extra features that will sell profitably at higher prices lower portion of the previous middle-class market folowng a P&G is betting that the Hourglass Theory has set the course for the company's future Principios of Marketing