ProfSummer12784
CASE STUDY 2 PROCTER & GAMBLE In March 2003, Fortune magazine…
CASE STUDY 2 PROCTER & GAMBLE
In March 2003, Fortune magazine ranked Procter & Gamble (P&G), the world’s leading fast moving consumer goods (FMCG) company, as #7 in the list of ‘World’s Most Admired Companies. P&G was one of the very few companies to have figured in this list for 17 consecutive years (1985-2002). P&G was ranked high on the parameter of ‘ability to develop superior quality and highly innovative products on a consistent basis.’ Analysts attributed this ‘ability’ to the company’s understanding of consumers’ needs and preferences that had evolved out of its continuous focus on marketing research (MR) from the very beginning. With the setting up of its MR department in 1924, P&G became one of the first companies in the world to conduct formal research on consumers’ needs and preferences. Over the next eight decades, the company developed several innovative MR techniques. Its researchers were trained to get the information they required from consumers. P&G employed advanced technology to analyze the feedback it obtained and arrive at the right conclusions. Commending P&G’s focus on, Tankut Turnaoglu, P&G’s country manager in Kazakhstan, said, “P&G has a long history of success – a direct result of finding out what consumers want and developing superior-quality products to best meet their needs. P&G was among the first companies to establish in 1924 a special department for market research to identify consumer preferences and buying habits. They used qualitative research tools, such as focus groups, in-house visits, in-context visits and in-store interviews, and quantitative research tools like blind tests, concept tests, and so on. The company also hired external agencies to conduct MR. In recent years; P&G used the Internet as a medium for research and, in the process, achieved significant savings of cost and time. Commenting on the benefits of the Internet, Barbara B. Lindsey, director of P&G’s consumer research services and new-technologies group, said, “It can save you a whole lot of time and a whole lot of money.” It has also helped P&G to reduce its reliance on external research agencies. According to the 2001 figures, every year P&G spent an estimated $150 million on more than 6,000 surveys, half of which were conducted in the US. Commenting on the importance the company attached to MR, an employee in its market research department said, “They really believe in (research). They do not just do it as a routine thing; they do it with genuine interest in finding out. They’re really curious. They believe in the results; then they act on (that belief).”
Background Note
Procter & Gamble was established in 1837 when candle maker, William Procter and his brother-in-law, soap maker, James Gamble merged their small businesses. They set up a shop in Cincinnati and nicknamed it “Porkopolis” because of its dependence on swine slaughterhouses. The shop made candles and soaps from the leftover fats. From its inception, P&G sought product response from consumers in the form of complaints or suggestions. This feedback was given serious attention and the company incorporated the required changes. In one particular instance, in 1879, an ‘Ivory’ brand soap machine operator discovered that due to over-stirring, the soap floated on water. The consignment of Ivory ‘floating soaps’ was dispatched soon. P&G received appreciative comments from consumers and within a month, it had modified its production process so that the entire range of its ‘Ivory’ brand soap had this unique feature.
Marketing Research Tools Used by P&G
P&G employed market researchers for every product division. The company also had two independent in-house research groups which were responsible for advertising research and market testing.
Qualitative Research Tools
P&G undertook qualitative research to generate new ideas for product and market development. The researchers engaged the customers in detailed discussions over different features of the company’s products. As a result, the personal interaction between the researchers and the consumers was high. The major qualitative research tools used by P&G included focus-group discussions, in-home visits, in-context visits and in-store interviews.
Quantitative Research Tools
P&G also employed quantitative research tools extensively. These tools helped in generating new product ideas for P&G. While the sample sizes for quantitative research was usually larger, the personal interaction between the researchers and the respondents was minimal.
Conducting Marketing Research Online
P&G conducted online concept tests to get feedback from consumers. This feedback helped it in new product introduction and launching improved versions of existing products.
The Benefits
P&G’s online MR surveys saved considerable time and costs for the company. Using traditional methods, a consumer survey cost the company around $50,000 and took at least three to four weeks.
Questions:
1. Which type of research tools will be significant for this research?
2. What should be the factors considered to conduct this research and to what type of research type does this belongs to.
3. Can you consider any type of special research tool in order to conclude the research?
4. What relevance of the output will give scope for further significance of the concept?
5. Can we use time series or trend analysis to project positive future of this research?
6. What innovative technique can P&G can employ for their success?
