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Market Analysis

Discuss about the International Marketing Management Procter & Gamble Company.

International business expansion is an effective marketing strategy through which an organization can attain growth by enhancing the number of stores in other countries where customers can purchase the products and services of company. It is the most significant process that assists a company to increase the sales and customers for its product offerings. When a company plans to expand its business in international markets, it needs to create an international marketing plan. This report includes the international marketing plan for Procter & Gamble Organization (P&G).

Procter & Gamble is one of the largest manufacturers of consumer products worldwide in terms of market capitalization (P&G, 2018). In this report, the company is planning to expand its brand i.e. Herbal Essences Shampoo in China. Herbal Essences is not a popular product of P&G Company as it does not have large brand presence. Now, it is planning to introduce this shampoo product in China. This report includes the marketing strategies for this product by conducting marketing mix analysis. Marketing mix includes different strategies such as product strategy, price strategy, and promotion and distribution strategy. These strategies will assist P&G in enhancing brand awareness of Herbal Essences Shampoo in China and other neighboring nations. At the end, financial summary is given by developing a marketing budget and profit and loss statement for the first year of expansion.

Procter & Gamble is one of the top American Organizations in global consumer product sector. The organization was founded in the year 1837 by British American William Procter and James Gamble. It majorly focuses on wide range of personal care, leaning agents and hygienic products. Before the deal of Pringles to Kellogg Organization, its product category also contained snacks, beverages and foods. P&G is popular as one of the largest organizations which offer consumer products and enhance the lives of people in different continents. The company is headquartered in downtown Cincinnati, Ohio (United States). Currently, 127,000 employees are working with the company on its 300 brands. Looking at the company’s business, it can be stated that P&G averages around 4 billion transactions daily. In the last financial year, the net sales of P&G were 83$ billion (Procter & Gamble, 2018).

Procter & Gamble is a market leader in personal and beauty care products. The key products and brands of P&G include Gillette, Olay, Pantene and Head and Shoulders. Apart from them, there are some products of the company which are not much popular or failed to survive in the market. Herbal Essences Shampoo is one of them which are not famous but it is still surviving under P&G brand. It was launched to the market in November month of 2007 (Kable, 2018). With an exclusive category of shampoo and conditioner, its large range of exciting fragrances and natural ingredients transforms a hair wash into a pleasure and excellent experience. This product is failed to gain popularity due to lack of effective advertising and promotion (Al Badi, and Khan, 2014).

Marketing Mix Strategies

However, Procter & Gamble is the global leader in the consumer product industry. Currently, the organization has recorded the sales of $83.1 billion (Usunier, van Herk, & Lee, 2017). The number of customers is also growing with the passage of time. It has diversified its product range in different brands under personal and beauty care segment. As of 2015, 21 of Procter & Gamble’s brands have over a billion dollars in annual sales. Most of its brands like Crest, Tide and Bounty are the international products which are available in various regions. Herbal Essences was unable to gain popularity and market share in consumer product market. Now, P&G will establish some marketing objectives which it plans to attain under this international business expansion in China. As the organization is introducing Herbal Essences brand in China’s consumer products’ industry so it will determine the objectives and goals accordingly (Babin & Zikmund, 2015). The marketing objectives of P&G behind this expansion are stated below:

  • To enhance the brand presence and awareness of Herbal Essences Product in China and all over the world.
  • To enhance its market share in international market with 10% increase each year to attain the desired targets.
  • To enhance the overall competitive position of company in developing countries like China.
  • To increase the sales of Herbal Essences Shampoo by 15% (Paley, 2017).

The above mentioned objectives of the company are SMART that is explained below:

Specific

The objectives of P&G are specific. By this business expansion, the company wants to increase the brand awareness of Herbal Essences Shampoo in China. The product is less popular in the world so company purposes to target Chinese customers to increase its brand recognition.

Measurable

The objectives can be measured by considering online and offline sales of Herbal Essences in China. In addition to this, the extent of goal achievement can be measured looking at its Chinese customer base (Yu, Park, and Sung, 2015).

Attainable

At Procter & Gamble, there is nothing that cannot be attained. As a most popular and successful organization in consumer product industry, the company will be able to attain the above objectives by implementing effective marketing strategies in China.

Relevant

The marketing objectives of P&G are both relevant and realistic. They are related to company’s operations and practices and they can be attained by making some hard efforts.

The company will set a time frame to attain its marketing objectives in this country. It will make efforts to attain the above objectives in the timeframe of next 2 years i.e. 1 May 2018 to 1 May 2020 (Index Mundi, 2018).

Under this marketing plan, P&G Organization will make its efforts to attain the above-mentioned marketing objectives. To attain these objectives, the organization will create and adopt effective market strategies. It will create the strategies by the use of marketing mix framework that includes different strategies for all the components of a product such as: product, price, promotion and distribution.

Financial Summary

Target Market is a group of customers within the market of business which the company has decided to target its marketing efforts towards. It is the market to which company wants to sell its new or existing products and services. To introduce its product in China, P&G will choose the group of customers so that it can sell its Herbal Essences Shampoo to the people (McDonald, & Wilson 2016). Target market for this shampoo will be higher and middle class Chinese people who are very conscious towards brand and care about the health of their hair. It will focus on the early adaptors for the brand. To determine the target audiences, P&G will consider different characteristics of market segmentation which are given below:

For Herbal Essences Shampoo, P&G will choose the target market on the basis of different characteristics like age, gender and income of people. Considering this, the organization will target both male and females of 15 to 50 years old (Brunsman, 2017). Females of this age group are the largest group in China with the figure of 327 million. In addition to this, the organization will sell Herbal Essences Shampoo to higher and middle class people in China (Index Mundi, 2018). It will assist the people to gain black, shiny and dandruff free hair.

Under this type of segmentation, P&G will expand its product to the Chinese people. It will target both urban and rural areas of China and offer its products. As the Herbal Essences Shampoo has less brand presence so company will try to approach more and more customers in China and its major cities (Wagner and Eggert, 2016).

Under psychographic segmentation, the organization will divide the customers on the basis of values, lifestyles and personality. In China, P&G will target the people on the basis of life style and preferences of customers. It will focus on the population that is early adapters and concerned about the health of their hair as these people are emotionally connected to their hair.

The market segmentation for Herbal Essences Shampoo can be stated in the target market profile:

Variables

Primary Market

Secondary Market

Demographic Characteristics

·         Income: $25000 to $70000

·         Age: 15 years to 50 years

·         Females

·         Income: More than $70000

·         Over 50 years old

·         Males

Geographic Characteristics

·         Major cities of China like Shanghai, Tianjin, Shenzhen etc.

·         Rural Areas of China

Psychographic Characteristics

·         Healthy lifestyle

·         Upper and middle class people

·         Emotionally connected: the people who are very concerned about their hair.

·         Lower class people

·         Early Adapters


In this way, Procter & Gamble will choose the target market and offer the products accordingly. To make them aware about Herbal Essences, it will develop some marketing strategies. It can be summarized that company will target the female adults for this product in China. Additionally, it can focus on the people who are very conscious towards their hair. These marketing strategies will assist the organization in increasing its overall customer base (Hopkins, 2007).

The marketing strategies of Procter & Gamble are very typical in the consumer products market. These strategies of the company are practiced to attain predetermined marketing objectives of the marketing plan.  In the case of this product, Procter & Gamble will use marketing strategies which uses different channels to increase the marketing penetration. The company will use different marketing strategies for different components of Herbal Essences Shampoo. These strategies are given below:

This component of marketing strategy recognizes the organizational outputs which are provides to the targeted audiences by the company. In the case of Procter & Gamble’s products are categorized as consumer products. The organization offers a wide range of products which fulfill the needs and preferences of customers and market segments. However, the organization offers its products in different segments like beauty products, grooming, health care, household, fabric care, baby care and family care. The company will produce this shampoo with the natural and healthy ingredients that will add value to the company’s offerings. Through this, it will be able to develop positive value and perception of customers towards P&G’s product.  

The focus of this international marketing plan is on introducing a non-popular product of P&G Company i.e. Herbal Essences Shampoo. In this, the company is launching this product in China and enhancing its brand presence. Herbal Essences Shampoo is the product that is manufactured by including herbal ingredients and materials (Mcgregor, 2018). In China, the organization will introduce this product to provide an effective solution to targeted audiences regarding the hair related issues. The shampoo and conditioner will assist the people in having black, shiny and strong and dandruff free hair. With this unique product line of conditioner and shampoo, its variety of natural ingredients and attractive fragrances provides an excellent and pleasure experience to hair wash. While manufacturing the products, the company will comply with different health and safety standards. In China, the company will introduce this Herbal Essences Shampoo with higher quality elements so that it can fulfill the needs and demands of Chinese customers. This shampoo will be available in different sizes and packages and packaging will be very attractive (Subramanian, et al, 2016). With the attractive packaging, it will focus on labeling and provide all the information about the product like different flavor, fragrances, sizes, ingredients etc.

Under this component, prices ranges, prices bases and price points are determined according to the targeted population. Procter & Gamble has implemented the prices which assist the organization in maximizing the profits and revenues. It adjusts the prices of company as per the conditions of consumer products market. When the company will introduce Herbal Essences Shampoo in China, it will use lower pricing strategy. The company will set its prices considering the prices of its rival brands.

Currently, the company is selling its products on a price range of $5 to $10. In China, Procter & Gamble will face competition from existing cosmetic brands like Dior, Chanel and Helena Rubinstein etc. From them, Dior is offering shampoo products on premium prices i.e. $69.99. Helena Rubinstein is also offering the products on comparatively higher prices. To attract more customers and deal with the competition, P&G will adopt competitive pricing strategy and it can attain more competitive advantage over existing players in China (Department of Social, Science and Technology, and Cultural Statistics, 2018). As the company is expanding this product in China and this shampoo does not have more popularity. So company will rely on the affordable pricing strategy to entice and maintain the loyalty among people as this product will be reasonable. Herbal Essences shampoo will be available in different sizes and packing so that people can purchases according to their needs. In addition to this, the organization will practice a promotional pricing strategy by giving incentives and discounts to increase the sales and revenues (Toldos-Romero, and Orozco-Gómez 2015).

Promotion strategy is the most significant strategy for an international marketing plan. It is the major component to approach a large population in China. It is also known as the marketing communication mix that includes communication strategies of the company in approaching the targeted audiences. Generally, Procter & Gamble uses different types of communication methods like advertising, personal selling, sales promotion, public relations, direct marketing etc. The reliance of organization on advertising is typical in the consumer product sector. In China, P&G will rely on its marketing division for promotional processes (Steenkamp, 2017). For promoting Herbal Essences Shampoo, it will adopt a policy which will be informative and creative. Herbal Essences Shampoo is one of the non-popular brands of P&G as it did not use promoted this product appropriately. In China, company will focus on promoting this brand so that people can be aware about this. It will introduce a promotional campaign to develop and maintain the brand image in Chinese market. In addition to this, it will give advertisement on television, radio and newspapers. Social media is one of the most effective ways to approach a large population as most of the people are active on social media sites like Facebook, Instagram, and Twitter. So company can promote its products on these platforms. It will display the ads in pamphlets, posters, hoardings, brochures and magazines at the strategic locations of China (Thøgersen, et al, 2015). Earlier, the company has given ad in a magazine “The Jump”. The picture of that ad is given below:

Moreover, P&G will prefer to use celebrity endorsement and tie up with famous celebrities in China to participate in the advertisements of Herbal Essences Shampoo. In the year of expansion, the company will post ads on Facebook and other sites. After making a significant customer base, the company will make personal contact with its customers through e-mails. It will assist the organization in developing brand loyalty among customers towards this product. Thus, this promotion strategy will assist P&G to attract more and more customers towards its products and services. The company will be able to increase brand awareness of this new product in China (Shimp, 2008). To promote its products, the company will create a marketing budget that will include all the expenses and spending on different modes of advertisement.

The distribution strategy of a company plans the places and channels for transacting with the targeted audiences. The mission and vision of Procter & Gamble need to provide the products and services to customer all over the world. There are various units which are engaged in the distribution of consumer goods of organization. Procter & Gamble is the most popular brand in consumer brand industry and it has presence in various nations all over the world. Organization has various products which are very famous in the world but still there are some products which are not popular. Herbal Essences Shampoo is one of them so organization needs to place different distribution channels. By the implementation of penetration policy, the company will be able to capture the international market in China (Lardy, 2016). Shanghai is one of the major cities of China, where it will establish its manufacturing plant and manufacture the shampoo and conditioners.

In this country, P&G will develop an extensive distribution network to provide Herbal Essences Shampoo. The company will use different distribution channels in China like retailers and distributors. It will deliver its products to customers through hypermarkets, supermarkets, discounted stores and local stores in China. Retailers are the major places through which P&G will reach to its targeted audiences (P&G, 2018). In this country, the major retailers of Herbal Essences shampoo will be Wal-Mart, Lotus Supermarket, Lotte Mart, City Super etc. It will offer the products through these retailers. On the other side, there will be some authorized distributors which will fulfill the requirements of businesses which need the products of P&G in bulk. In addition to this, the Herbal Essences Shampoo will be available on online shopping and e-commerce sites that will enable P&G to approach a large group of targeted population. Thus, this strategy of Procter & Gamble is very much dependent on the retailers as this shampoo is available on local departmental and grocery stores (Morschett, Schramm-Klein and Zentes 2015). This is the product that can be used on daily basis so distribution channel of P&G should be very proactive and strong.

Thus, the company will promote its Herbal Essences Shampoo by the use of effective marketing strategies and tactics. These marketing and promotional strategies will assist the organization in increasing awareness about this product in China and other neighboring nations. The company will be able to generate more revenues and profits through increased sales of Herbal Essences Shampoo in China (Papadopoulos and Heslop, 2014).

Under financial summary, the management of Procter & Gamble will create a marketing budget and profit and loss for the coming year. The marketing budget will include all the costs and future expenses on its marketing and advertising activities (). The company will spend the funds on its marketing activities like social media, print media, e-mail marketing, television ads etc. Print media includes both newspapers and magazines which are very expensive so company will expand $60000 on this mode. In addition to this, it will create page on social media sites like Facebook and Twitter and post pictures and ads on them.

The marketing budget for Herbal Essences Shampoo is given below:

Marketing Budget

Media Tools

Amount

Social Media Marketing

1. Facebook

$10,000

2. Twitter

$4,500

Total Social Media

$14,500

E-mail Marketing

$1,500

Google Ads

$1,700

Other Online campaigns

$5,000

Total

$8,200

Total Budget for Online Media

$22,700

Print Media

60,000

Traditional Media

1. TV Channels

$170,000

2. Hoardings

$90,000

Total

$260,000

Events and Sponsorships

$140,000

Total Required Budget for Promotion

$482,700

The below-give table shows the profit and loss statement for this product of company in China. It includes different expenses and cost of sales in the manufacturing and operations of Herbal Essences Shampoo in China. The Profit & Loss Statement for this product is stated below:

Profit and Loss Statement

1st Year

Sales

$385,000

Miscellaneous income

$0

A. Total

$385,000

B. Cost of Sales

$154,000

C. Gross Profit (A-B)

$231,000

D. Operating Expenses

Salary

$10,000

Rent

$12,000

Utilities

$1,000

Insurance

$500

Depreciation

$70,000

Marketing

$10,000

Other

$2,500

Total

$106,000

Operating profit

$125,000

Less: Interest

$250

Profit before tax

$124,750

Less: Tax @ 30%

$37,425

Net Profit AT

$87,325


The profit & loss statement of the company shows the forecasted figures for the costs and expenses in the first year of expansion in China. It shows that organization will have various expenses like salary, rent, utilities and insurance. The statement indicates that company will have a net profit of $87,325 for the first year (Schultz, 2017). The company is expecting a significant growth in the coming years. The company will make efforts to attain its marketing objectives and enhance the brand image of Herbal Essences Shampoo.

Conclusion

From the above analysis, it can be concluded that Procter & Gamble is the global leader in consumer goods market. The company has introduced various products in beauty and health care segment. Most of the products of company have popularity all over the country, but Herbal Essences Shampoo was unable to gain the popularity. The above report includes the international marketing plan for expanding Herbal Essences brand in China. The plan concludes that the company should use effective strategies to promote this brand in the country. By the use of effective marketing strategies, organization can increase the brand awareness of Herbal Essences Shampoo and conditioner in China. This business expansion will be profitable for overall growth of the Procter & Gamble. By doing this, the company will be able to increase its customer base and revenues in consumer good industry.

References

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Babin, B. J., and Zikmund, W. G., 2015, Exploring marketing research. UK. Cengage Learning.

Brunsman, B.J., 2017, P&G wants women to embrace change [Online], Available from https://www.bizjournals.com/chicago/bizwomen/news/latest-news/2017/10/p-g-wants-women-to-embrace-change.html?page=all. [Accessed 8 April 2018].

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Hopkins, B.E., 2007. Western cosmetics in the gendered development of consumer culture in China. Feminist Economics, 13(3-4), pp.287-306.

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Mcgregor, J, 2008, The Issue: How P&G Brought Back Herbal Essences, , [Online], Available from https://www.bloomberg.com/news/articles/2008-06-17/the-issue-how-p-and-g-brought-back-herbal-essencesbusinessweek-business-news-stock-market-and-financial-advice, [Accessed 8 April 2018].

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Thøgersen, J., de Barcellos, M.D., Perin, M.G. and Zhou, Y., 2015. Consumer buying motives and attitudes towards organic food in two emerging markets: China and Brazil. International Marketing Review, 32(3/4), pp.389-413.

Toldos-Romero, M.D.L.P. and Orozco-Gómez, M.M., 2015. Brand personality and purchase intention. European Business Review, 27, 462-476.

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