P&G Brazil

Proctor and Gamble (P&G) executives have faced several challenges in developing strategy to stabilize the laundry detergent division in Brazil.  This problem is complex for division management faced with a comprehensive problem of developing equity against an established competitor in an entrenched market.  This situation is comprehensive as it spans strategy, marketing, global business, and potentially new product introduction and developing new market criteria as well. 

At the core, this study presents two scenarios in which P&G must determine whether to: 

A) leverage existing premier/tier 1 detergent brands hoping to find international equity; or

B) develop a new brand following the “Obelisk” model in which they zero in on the critical value-adding aspects and work backwards to land on an acceptable cost matrix with maximized perceived consumer value.

Though the company has had proven success with the latter of these strategies, there are significant differences between the feminine hygiene/paper products and this case.   The most noteworthy difference is the relationship of the overall market.  The previous success stories involved premier tier products with established brand equity.  By zeroing in on critical value-adding attributes, the company was able to hit the ground running with the equity already established by the premier brands.  This is not a luxury P&G possesses in the laundry division in Brazil.  This fact would jeopardize their ability to duplicate success with this same strategy.

Instead of forcing this scenario into the previous mold, P&G needs to evaluate the attributes and demographics of the current market, and apply the same higher-level strategy solving techniques that have been successful in the previous situations. 

The study outlined several critical factors.  First, household penetration of washing machines remains relatively low.  The case quoted 40% of those in urban settings have machines compared to 10% in rural areas.  Additionally, the positioning of P&G products is substantially different in this example to the previous successes of other company divisions.  P&G needs to respect their positioning coming in with a tier 3 product that is failing against Unilever’s Omo as a tier 1 product with 70% market share. 

This positioning, and the market facts, should change the thought process in the room.  In the paper products and feminine hygiene examples the company was able to leverage consumer trust to establish equity for a new line of product.  Here, they have not earned that trust or market share.  So the question instead should be that of the market challenger, “how do we challenge the current state of the market.”

P&G could challenge the market in many ways.  Initially, it would be more beneficial to go with the opposing case-identified strategy of leveraging the mother brand of the organization.  This has international recognition and requires the least amount of comprehensive business development. 

Nonetheless, there is opportunity for P&G to embrace their role as a market challenger.  By adopting a deliberate frontal attack P&G could capitalize on the vulnerabilities of Unilever and change trajectory.  A deeper understanding of Unilever’s strengths and opportunities would be required to further develop this strategy, but in essence it would look very similar to Samsung attacking Apple over the past 18 months.  By identifying the shortcomings and vulnerabilities of the market leader, the market challenger is able to specify a market attack strategy and chip away at market share.  For example, depending on the penetration of high efficiency washing machines within the Brazilian market, the opportunity might exist to further segment the market and target the specific demographics underserved by Unilever’s offering.

P&B is a massive company with wide reaching resources.  In this situation, the company needs to recommit to the culture defining PVP leadership mentality, and adjust their marketing focus.  With a clearer focus on the required role as the market challenger, P&G can ensure they develop a strategy that respects the specifics of this situation and not trust to succeed on the merits of past performance.