美国作业指导：关于美国宝洁公司的论述

This dissertation investigate the P&G use product differentiation strategy in China hair care market, and how they attempt to communicate with customers with such segmentation and product mix, to evaluate the efficiency of current strategy. 

This dissertation reviewed the brand differentiation, marketing segment process and marketing communication methods. Critically analysed the market environment and trend of the Chinese hair care market by the Porter's five force model. The analyse of the company's market segmentation and product differentiation strategy was conducted next, along with the analysis of the marketing communication strategy. The finding from questionnaires proved that the marketing segment strategy applied by P&G is significant efficient, however the concerns about the problem brought be the massive micro segments was discussed. 

The conclusion of each sub questions and the recommendations are listed in the followed section The final section is the personal reflection to the whole MA International Management programme. 1.Introduction
P＆G的创始人是威廉·普罗克特和詹姆斯·甘布尔。创始人一个来自英国爱尔兰的蜡烛制造商，另是一个肥皂制造商，他们都移民到美国辛辛那提。而且他们是已经结婚的一对姐妹，Olivia和伊丽莎白·诺里斯，并组成一个家庭。

As globalisation of international market has intensified over the last few decades the importance of selecting and employing appropriate marketing strategies, which enable the strength of the company to meet market opportunities, have become crucial factor for large companies operating internationally in determining their success or failure in future.

Among those marketing strategy approaches, the marketing segmentation is one of the most important factors to enable the company success in specific targeted markets. Along with the segmented markets, the products and service offered by the company would be differentiated. The successful marketing segmentation and product differentiation methods has become important elements for the company's core competitive advantages, especially in the FMCG product industry.

FMCG products are short for fast moving consumer goods, which are daily need basic products, refer to all kind of personal care products including health care, hair care, skin care, oral care, baby care and fabric care products etc. Those products have one common characteristic, they are the daily needs products, they must be used in daily life, therefore the demand of those types of products is constant in market. Another common characteristic for those products is that, they are all cheap, the profit might be small for each product, however due to the huge demand in the market, they still can generate large amount of profit, as the scale economy. Therefore most companies involved into the FMCG industry are Multi-National Enterprises, in order to achieve the scale economy at beginning. As the demand is instant, and profit are ensured, the competition in this industry is quite keen. The scale economy can only ensure the profit for each product, how to stimulate the customer demands to the specific product is the main problem for each company involved in this industry. 

P&G is a U.S manufacturer of consumer commodities, and it is currently the worlds largest commodity companies. In 2008, P&G is the sixth-largest company by market value. They have staff more than 110,000, and P&G build factories and offices in more than 80 countries around the world. P&G operated by more than 300 brands of products sold more than 160 countries and regions, it including home care, hair and beauty, baby and family care, food and drinks. Many entrepreneurs believe that P&G’s success comes from the success of its marketing strategy,such as product differentiation strategy.(Baike,2011) 

This dissertation is going to review the P&G market segmentation and product differentiation strategy in China hair care market. This research is aimed to offer the good marketing segmentation and product differentiation experience of current successful company to the local developing FMCG companies. In the last two decades, most local FMCG companies are either acquired by foreign companies or just bankrupted, the success of P&G is a good example to the current survived local companies on how to marketing its products. 

1.1. Overview of the Procter and Gamble (P&G)

1.1.1 HISTORY OF P&G

The founder of P&G are William Procter, and James Gamble. Procter was a candle maker from England, and Gamble was a soap maker from Ireland, they both immigrant to Cincinnati, the US. And they have married a pair sisters, Olivia and Elizabeth Norris, and become in a family. Due to the Panic in 1837, the candle and soap market competition has become more intense. In this situation, Alexander Norris, their father-in-law called a meeting to convince them to join together, become each other's partner, as their business could use similar resources and materials. As a result, the new enterprise Procter & Gamble was founded on October 31, 1837. (www.pg.com) 

The company developed steady and took some opportunity to grow up in 19th century. Its sale http://www.ukassignment.org/mgzydx/ value reached to 1 million dollars in financial year 1859, with around 80 employees working in the company. During the Civil War, P&G have signed the contracts to supply its soap and candles products to Union Army. Soldiers used the P&G products during the war, and as a consequence, when they went back home after the war was over, they still purchase the P&G products and even recommended to their families and friends. The brand awareness increasing greatly benefit from the military contracts. P&G invented Ivory soap in 1880s, which was cheap and could float in water. In late 19th century, William Procter's grandson Cooper Procter established a profit-sharing policy for its employees, which would give them a stake in the company, he believed that this benefit would ensure the employees work harder, and gain a tied relationship with the company. (www.pg.com)

In 20th century, due to the increasing usage of electricity, candles were not necessary any more, therefore the company started to focus on its soap business, and invented more than 30 different types of soap in the market. In 1920, the company officially stopped its candles manufacture. Along with its expansion, the Cincinnati factory capacity can not fully meet the market demand, therefore the company started to open factories in other locations. In 1911, P&G started to produce soap using vegetable oil instead of the traditional animal fats as the material, this is one work example of P&G research laboratories, which was respond for product innovation and test. The company also started to operate marketing activities in early 20th century, such as promotion, consumer investigating and public relation activities. (www.pg.com) 

In 1930, P&G acquired the Thomas Hedley Co., Which is a manufacturing company located in Newcastle, England. This is the sign of global expansion of P&G, after the acquisition, P&G was able to produce and sell its products in the North East England. Along with the development of the scope of company, P&G started to step into other industries related FMCG product more than soaps. P&G introduced the laundry detergent brand Tide to the market in 1946, and a shampoo brand Prell in 1950. The Crest, toothpaste was introduced in 1955. In 1957, P&G acquired the Charmin Paper Mill, this gave the P&G ability to step into the toilet paper industry. In 1961, the baby care brand Pampers was introduced, and the Pampers products were considered as revolutionary products as it simplified the diapering process for babies.(www.pg.com)

During the second half of 20th century, P&G acquired a number of other companies, including Norwich Eaton Pharmaceuticals, Folgers Coffee, Noxell, Richardson-Vicks,  Imas Company, Max Factor, and Shulton's Old Spice etc. Those acquisition further helped the company to diversify its product mix and profitability. Besides the series of acquisition, the company accelerate its global expansion pace, it expanded in European market since 1950s, and entered the Japan market in late 1970s, in 1988, it entered the China market and established a local factory in Guangzhou. As a result of its geographic expansion, the company was already operating in more than 23 countries by 1980 with total sales of $11 billion which was 35 times greater than in 1945 (www.pg.com).

In 1996, Food and Drug Administration approved a new product developed by P&G, the skin care brand Olean. Which had become the main brand in skin care industry of P&G brand mix. (www.pg.com)

In 2005, P&G acquired the Gillette, and formed the largest FMCG company in the world. Since then P&G was listed as one of the ten most valuable companies around the world. (www.pg.com)

1.1.2. Current performance 

Procter and Gamble (P&G) is America’s biggest maker of household products with more than 300 brands in six main categories: laundry and cleaning, paper goods, beauty care (shampoo and cosmetics), food and beverage, feminine care and health care (toothpaste, medicine).

The company’s famous brands include Ariel, Tide, Pantene, Head & Shoulders, Fabreze, Pampers, Pringles, Duracell, Gillette and Whisper etc. The sales from these top ten brands account for almost half of the company’s revenue (P&G’s Annual Report, 2010).

According to company’s Annual Report(2010), while the company has on-the-ground operations in more than 80 countries with more than 100,000 employees, its products marketed in more than 180 countries around the world to more than 5 billion consumers. The total turnover for the last year equaled to $78,9 billion with net profit of $12,7 billion.

1.2 Dissertation questions and objective

The success of P&G is significant, there are many analysts try to explain the secret of P&G's success, one of those reasons is that P&G is aim to different market to develop different products. This dissertation is going to analyse the P&G Multi-brand strategy, and the research is focused on the hair care market in China. 

Question: How the P&G use product differentiation strategy to create competitive advantage in China hair care market?

Objectives: 1.Identify The competitive environment in China hair care market

        2.Identify P&G segment the market to supply specific target with differentiated products

        3.Identify what is the P&G’s marketing communication 

        4.Identify performance of P&G current marketing segment

        5.Identify the potential risk and weakness for current segment

 

2.Literature Review

2.1 The literature review of Product Differentiation

“Differentiation is a competitive business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firm's products and services”

-CharlesW.L.Hill,Gareth R.Jones (2006)

Along with the development of markets and competition grows, companies need to take strategies that could improve their competitiveness. 'product differentiation' strategy is right one of those strategies to the market share increasing. This concept was proposed by Chamberlin(1933) and become the basic to modern marketing views. And it was agreed that being unique or different is much important to success marketing and competing activities.

The products differentiation concerns about the added value of the products. According to Kotler et al (2005), the consumers always will be more interested in the products and services which could give more added value, therefore if the company could know the needs of customers and their buying processes, better than its competitors, will absolutely enable the company to deliver more value, and this action would make sure the company success in market and gain more customers.

Doole and Lowe (2001) insist that to the certain extent a company can position itself as providing superior value to selected target markets and gain competitive advantage, this can be done either by offering lower prices than competitors or by providing more benefits to justify higher prices. In other words, by being different from competitors in a way that customer wants. This is known as differentiation.

Hence, Johnson and Scholes (2006) define the differentiation as a “competitive business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firm’s products and services”.

Given the differentiation may be harder in some industries, not every company succeed in finding many opportunities for differentiating its offer and gaining competitive advantage. However, in last few decades many creative and successful companies have proved that any market can be differentiated (Kotler et al, 2005).

Product Differentiation has been described as a well defined theory in economics are based on two conditions.(Caves and Wiilamson 1985). Firstly, in the product-market, the customers consider that is close substitutes. Secondly, the brand in the market are sufficiently imperfect substitutes. 

Baker (1996) defined the product differentiation is the concept dealing with the demand and supply wills. It could change the slope of the demand curve for any individual participant in the market.

Mercer(1992) argues that the differentiation 'rely on using factors other than price to contain competition', the differentiation is non price competition methods, which mainly offer the extra value to customer comparing to other similar or same products by competitors.

Dickson (1997) thinks the product differentiation is 'the art of distinguishing a product from its competitors on one or more baisc performance or image features.' he indicated that the product differentiation would reduce the price sensitivity among customers to the product. 

Power (1991) indicated that the differentiated product normally have the opportunity to price higher than the competitors. And this could offer more profit to the company. The differentiation strategies are 'the result of the seller's wishing to establish a firm market position or to insulate itself from price competition'

2.2 The literature review of market segment, targeting and position 

Based on the marketing mix and the concerns of the marketing strategy, the STP process was introduced to help the organisations to set more appropriate marketing strategy to offer different products and services to different customers within the different organisational capability. The phase STP is short for Segmentation, Targeting and Positioning. The process of organisation determinate the market by the different products or customers is market segmentation. Targeting is the process of organisation choose the segmented market to concentrate on. Positioning process refer the organisation how expect itself to be in the market. 

According to Kolter e.g., (2005) the STP process could bring varies benefits to organisations. Firstly, it could enhance the organisation's competitiveness, as it would give a direction that the organisation need to concentrate its resource on. The market concentration would make the advertisement more efficient, new product development much quicker, or the product differentiation more attractive. Secondly, for the segment that organisation did not choose to concentrate on, it would analyse the potential opportunities and customers for the organisation to be aware with, it would give the direction to the organisation about where to go when it need create or develop new products or new market. Thirdly, the concentration on the targeted market would make the return of investment much more effective and efficient, it could provide the long-term value to the organisations, and make the organisation continually gain profit.

The concept of marketing segmentation was originally related to the product differentiation. The product differentiation refers to the same products or products in same category with different details, according to Porter (1985), the product differentiation is one important source of the organisation's competitive advantage, which would create different added value to customers, in order to attract the attention from customers, and increase their demand to purchase the product. However, the different added value should not suit for everyone, some group of customers would like some certain added value based on their taste or concerns. How to distinguish and divide the groups of customers among others is the process of segmentation. 

However, Baines e.g. (2008) argued that the product differentiation is an approach to create new segment based on the new products or new differentiated product, the market segmentation should be another approach to created new products or develop new differentiation based on the demand of new segment. He defines the market segmentation as the division of a market into different groups of customers with particular needs and requirements, each segment should have common characteristics and similar responses to marketing actions.

The market segmentation could be used to ensure the marketing mix elements including price, products and promotions are planed and developed to meet particular needs of different group of customers. Especially when the resource of the organisation is limited, it could only pick the best opportunities to pursue, which means it should only concentrate on the best market segment, in the purpose of maximize its profit. (Beane and Ennis, 1987)

Kotler, (1984) suggested that the segments must have following characteristics in the purpose of making the segmentation more effective:

Distinct- each segment need to be clearly different from others

Accessible- buyers in each segment should be reached through promotion

Measurable- each segment must be easy to identify and measure

Profitable- each segment need to be large enough to provide constant future profit and revenues.

The second stage of STP process is targeting market. After the market is segmented, the organisation need to choose which segment need to be entered or concentrated on. For example, they need to evaluate whether a single product suit for a range of segments, or a range of products suit for multiple segment or a single segment, or each product only suit for a single segment. whatever the segments are targeted, a market strategy need to be made to fit the decision, and it must meet the need of the segments, reflect the organisation's capability including the current competitive strategy and available resource as well. 

According to McDonald and Dunbar, (2004) in order to evaluate each segments, the rating approach for different segment attractiveness factors could be used, which could determine the market growth, segment profitability, segment size, competitive intensity, and the cyclical nature of the industry. Set criteria based on the market availability and the organisation's capability, rate each factors of each segment on a scale of 0-10, then calculate and compare the total score for each segment, the segment of the highest score should be more attractive and feasible to the organisation than the segments with lower score. #p#分页标题#e#

Baines, (2008) also pointed out there are two approaches in targeting segment, undifferentiated approach and differentiated targeting approach. In undifferentiated approach, there is no delineation between market segments, the market could be viewed as one mass market with one marketing strategy for the entire market. The differentiated approach suggested there are several attractive market with differentiations to the organisation, each segment need a differentiated marketing strategy to fit its our characteristics.

After the market is segmented, determined by the size and attractiveness, and selected the specific target markets, the final step of STP process is to position the organisation within the targeted markets. According to Kolter, (2008) the Positioning means how the products and services can be differentiated from another, and how it attract consumers to buy it. The positioning includes two fundamental elements, the physical attributes, which means the functionality and capability of the organisation or products or services. The second element is the communication tools of the brand, how consumers perceive the brand relative to other competitors in the market. 

2.3 The literature review of Marketing communication

Although P&G use the product differentiation strategy, they need effective marketing communication.

Research on integrated marketing communication in the early 1980s had begun, American Association of Advertising gives the definition of IMC one of the first: “ IMC is a marketing communications plan concept, fully understand the requirements for the development of integrated used when planning a variety of means of communication to add value- such as  general advertising, direct reflection of the advertising, sales promotion and public relations, and combination of providing good consistency of information and to maximize the impact of communication.”

However Tom Duncan and Sandra Moriarty believes that: “IMC is a marketing methods in the new era, it is the company to focus to establish consumer with other stakeholders. It maintain and develop good relationships. They establish a kind of communication-based marketing model, which emphasizes control of all communications that may affect the brand value of information.”(Duncan,T, Moriarty,S,1988)

Marketing communication referred to the activities of companies trying to inform, persuade and remind to its customers the information of new products or services directly or indirectly. (Kimmel, A.J. 2005) The four main purpose of marketing communication including to category demand, build upbrand popularity, deliver brand attitude and intent purchasing.(Varey, R.J. 2002) According to Fill(2009), there are five component inside involved in the marketing communication mix: Advertising, Sales Promotion, Direct Marketing, Public Relation and Personal Selling.

 

Figure1. Marketing communication components (Fill 2009)

Advertising use the message or image delivered to the viewer, reader or listener, to deliver the product culture, function, usage and other related information to the public. It is the fastest approach to promote the demand of the targeted products, or establish the brand recognition. (Baines, Fill and Page, 2008) The advertising normally been passed through various media and channels such as TV, magazine, outdoor advertising, mail, radio, Internet and hand-outs. The advertisement is costly, however, as the delivery of advertisement would require the overhead expenditure, and especially in the TV and magazine and radio, which might through a third party to process. But the advertisement due could delivery the image and sense of the product more efficiently than other methods, comparing to the investment, it is still suit for the companies who targeted a large scale of market.(Fill, C. 2009)

And in these all communication ways, the Internet communication is a successful way in today. Many people could see the P&G advertisement from the Internet.

Sales Promotion is the activities to stimulate the demand of customer in a short period, normally through the price discount, or price compensation to offer more added value to customers. The scale of sale promotion activities are easy to be control, and do not need too much investment comparing to the advertisement, however, it is still efficient on encourage customers to purchase the products in a short time period during and after the promotion activity. (Fill, C. 2009) 

Personal Selling is 'different from other forms of communication in that the transmitted messages represent mainly dyadic communications’. (Fill, C. 2009) It require the face to face communication between the sales agents and the end-user customers, and it could efficiently and quickly build up the brand awareness and trust of a group targeted customers. And the direct communication could delivery the information of the products and services more precisely. (Peter and Donnelly, 2005) 

Direct Marketing is the method that the company communicate directly with individual customer, in order to carry out a fast reaction to the customers query and requirement. (Fill, C. 2009) The only difference between direct marketing and personal selling is that the direct marketing do not require the face to face communication, however, it is also as efficient as personal selling on build up the brand awareness and trust among customers. (Varey, R.J. 2002)

Public Relation is the management activities of the company launched in the public, in the purpose of represent the company's general attitudes, believes, culture, policies, mission, and interests. The Public activities usually will be reported by media, and it have the same function as the advertisement, but it is going to deliver the overall information for the company, to build up the reputation among public.(Fill, C. 2009) 

In summary, the IMC is based on a unified enterprise value-oriented consumer as the core