P&G also faced differences in regards to the types of clothes washed by people in Europe and times between the clothes were washed. Cottons were given more preference over synthetic as compared to Americans and also the clothes were worn for much longer time. Thus, to overcome these differences a substantial amount of changes were required in the new detergent.
Lastly, the local consumers were accustomed to use the powdered detergent and the washing machines were made specifically for them. Thus, P&G will have to convince the target audience (and up to a certain extend try and change their washing habits) that the liquid detergent is not only suitable for their machines i.e. it can be used in machines made for powder detergent and has an anticorrosion ingredient in it, but will provide similar results as compared to powder detergent.
Competitive analysis
The European market was flooded with many detergents manufactured not only by multinational players and P&G’s old rivals like Lever, Henkel and Colgate but also by many other national companies.
P&G will have to compare its products, prices, distribution channels and promotion with those of the competitors. By comparing areas of advantage and disadvantage P&G can launch a more effective campaign against its competitors and prepare a stronger defense in the process. Lever had long been a long time sleeping giant, Colgate pulled out of French market after its profits lost drastically within four months of production, Henkel was the only real threat for P&G in Germany.
Henkel displayed interest in the market by recalling their sales persons from vacations and the word was out that Henkel was planning to launch a new important product. Thus, P&G would have to seek out a way to outclass Henkel on home ground. The company may want to look at historical data and performance of its competitor. To the competitor P&G's strategies are seen as most predictable so it should obtain primary marketing research data from the customers, suppliers, and dealers of Henkel. This will enable P&G to quantify the strengths and weaknesses of its competitor.
Marketing Mix
Product Analysis
The product formulation should be adapted to the market to adapt to legislative requirements, for example in Finland and Holland legislation limited the phosphate levels. The formula of the product should be customized to the degree that it does not compromise the quality of the product. Also, the formulation should fully adapt to the European front loading machine so as to avoid product incompatibility with a commodity which consumers do not replace for an extensive period of time.
Keeping the above in mind, by offering the same product in Europe with some functional variations and design features, P&G can frequently achieve longer production runs and spread R&D costs. In addition, this will reduce customer confusion by standardizing the package and advertising. By offering a standardized product, the company will be able to strengthen its brand loyalty, as a person crosses borders within Europe and is exposed to similar products, as at home, the temptation to buy from competition is hindered.
Price Analysis
Pricing should be adapted from country to country that reflects the buying power of the particular country’s consumer. However, the product pricing should carry a common trait and be positioned as a premium product to reflect its superior quality. Many consumers consider the price to represent and indicator of quality and even small difference in price can suggest differences between products. In addition, because Vizir could potentially cannibalize the sales of its sister products, management decided to charge a premium price for the product so as to make up for the lost sales, ensure the profitability of Vizir, and lay emphasis on the quality of the product.
Thus, carrying a high price and coupled with features that extend the product as high quality, P&G would hence differentiate itself from national companies that were typically stronger at the lower priced end of their markets.
Distribution Analysis
Launching Vizir only in Germany would mean that P&G will lose out on the market in the other countries. Since it is easy for competitors to invade this particular market segment, they can launch similar products in other European countries. On the contrary, if P&G launches Vizir as a “Eurobrand” it might incur heavy financial loses because many countries differ from each other. Thus, they should analyze launching the product in the countries which are similar in nature, technology and habits such as UK, Germany, France and Belgium.
Many European countries differ from each other which lead to varying shopping patterns, disposable income, and purchase quantities. In addition, Marketing institutions and distribution channels also differ, i.e. retail & wholesale outlets, media formats and advertising agencies. In countries like Germany grocery retailers accounted for the most of the retail volume. However in Italy, small corner shops were the places where most of the consumers did their purchasing.
Thus, P&G needs to develop an intense distribution channel to compete not only with the local manufactures but also with the multinational companies such as Lever, Henkel and Colgate.
Promotional Analysis
Standardizing will help the company develop a consistent regional image. It also results in lower manufacturing costs and eliminates duplication of research and development, and product design. However the media advertising and the promotional strategies should be tailored country to country the breadth of advertising and promotion is limited from country to country. In Germany the number of hours allotted for advertising on television is only 46 minutes a year. Government supported consumer protection is strongest once again in Germany which limits promotions further. P&G should take all the restrictions about language into consideration and meanwhile try to be simple and be as consistent as they can.
The packaging of Vizir should be determined by the style, the labeling, trademarks, materials used in the packaging, brand name, quality, and price. The packaging will have to on one hand attract the attention of the consumer, describe the product, and assist in the sale; on the other hand it will have to meet quality and safety standards, and provide "green" information. It is very important to think global and act local and marketing is the major localization part for the Eurobrand proposal.
Recommendations/Options
P&G should follow the recommendations of Wolfgang Brendt, head of the HDL brand group in Germany. Initial bind tests of the P&G HDL liquid won against German market leader Henkel. This may seem too small a reason for launching the HDL liquid; on the contrary, not launching the product could result in P&G losing out on the German market altogether.
However, to really achieve Eurobrand proposal P&G should be allowed to launch the product on Europe-wide basis. “Think global, act local” should be the line to follow. Giving subsidiaries the freedom to develop a marketing strategy that suits the local environment and a production strategy that fits Germany, Belgium, France and the UK.
Launch the product first in these countries as they are similar to each other in terms of washing habits, preferences, technology, competitive environment and product structure (competitive structure) and due to the fact that in Germany P&G is dominating the market, Belgium is Vizir’s testing market, UK and France have similar environments.
Once this is successfully done, take an action according to the market response to see whether or not to make Vizir a read Eurobrand.
For the first wave of standardization, the company should not put Spain or Italy in as launching countries because of their different washing habits.
In launching this product as a “Eurobrand”, P&G would have to change its organizational structure and at the same time not compromise their sound corporate values. The setting up of Euro Brand Team lead by Germany, as could be a way in achieving this, however, a project of this scale cannot be the responsibility of the brand manager alone.
The emergence of the Euro Brand Team should be considered as only one aspect of a much wider spectrum of organizational reforms. The marketing department should not work independently of the ETC centre but rather these two entities should go hand in hand to enable prompt testing of trend emergence.
Individual subsidiaries should be responsible for monitoring marketing trends and suggesting them to the head marketing department which should be in charge of general oversight and decision making.
