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- 1. Capstone Assignment MGT 420 Team 1 Nicholas Aiello - Timothy Akers - Shelly Alaska - Krista Alumbaugh
- 2. PURPOSE Products Approach: to provide patented products of superior quality and value that improve the lives of the world's “We aim to continue to delight consumers with meaningful consumers in more ways than one. sustainable innovations that reduce the environmental impact of our products across the full product lifecycle.” VALUES Proctor and Gamble value the opinions of their customers and have conducted much research into the minds of their consumers. Proctor and Gamble believe that their enablers They also take into account the technological insights using Life are their employees and their shareholders. Cycle thinking . FUTURE GOALS Operations Approach: Powering their plants with 100% renewable energy Through every manufacturing step, Proctor and Gamble strives to reduce waste, water, energy, and CO2 through conservation using Using 100% renewable or recycled materials for all innovative eco-design improvements and recycling. In the logistics products and packaging stage, they have successfully reduced waste in customization by applying more sustainable designs. They have altered and Having zero consumer and manufacturing waste go to optimized their transportation efficiency by making changes to landfills the rate, route, mode and method of transportation. They have really focused on eradicating inefficiencies such as loading and Designing products that delight consumers while unloading delays, rush transport up-charges, dead legs (empty maximizing their conservation of resources trucks) and P&G production line stops. Supplier engagement has also helped the company improve its operations by creating close supplier relationships; implementing a supplier sustainability scorecard (which assesses the environmental footprint of our suppliers) and enabling P&G to partner and help reduce the environmental impact along the supply chain.
- 3. Key Components of a Diaper: Absorbent Pad Nonwoven Fabric Other Materials: Elastic Threads Adhesives Tape Ink (for patterns)
- 4. As an American company, P&G will abide to all needs to make this move as effective and expedient as possible. P&G will be using the Democratic Management Style, where employees and managers alike contribute to the success of the company, as a whole, equally. P&G will send information regarding this management style, which will marry P&G's to China.
- 5. AMERICA CHINA Procter and Gamble practices China, nationally, practices the the Participatory Management Autocratic Management Style Style. This style is the most (Walsh, 2006). This style laid-back, and displays the displays the highest level of lowest level of control control, where managements management has over their make all decisions for all employees and the company insubordinates. (Lafley, 2012).
- 6. The Democratic Style displays communication between a highly-expected management Since the management style is so extreme between P&G, structure and a low-expected. and China's larger businesses, the management style that sits in between these two Since Pampers Diapers are a extremities will be used. The trademark, and a subsidiary Democratic Management Style is the perfect the company of P&G, Pampers will intermediary between benefit the most using this as Autocrat and Participatory management styles. their globalized management style.
- 7. P&G Net Income: $2.4 billion P&G Levered Free Cash Flow: $8.6 billion (P&G, 2011) Cost of building production facility Cost of direct materials, direct labor and overhead once Pampers’ production has begun Increased competition in disposable diaper market Lower market share, lower profits
- 8. There are three common entity statuses to choose from when setting up in China; equally joint ventures, representative offices, and wholly foreign owned enterprises, or WFOE. Equally joint Representative offices A company can have 100% ventures require a are strictly non-profit, ownership using WFOE. business to form a and “is not a legal entity However, “a WFOE is much partnership with a and is not allowed to more complicated to set native citizen of directly participate in up. It takes more time to China. As China has revenue generating get approval from the banned wholly business activities (for government, and it owned subsidiaries, example, conclusion of requires a minimal capital this method is a contracts, buy and sell investment that you must popular choice. directly, issuance of put in a Chinese bank” invoice, etc.)” (Lapowsky, 2010). (LAMOREAUX, 2011).
- 9. The Regulations on Environmental Protection for Foreign Invested Enterprises (253, 2007) include such obstacles as: Before the formal manufacturing, the enterprises must abide by the regulated procedure to declare to the environmental agencies for examination and inspection. All foreign-invested projects with environmental impact must abide by regulations for construction projects of the country and carry through the ratification of the environmental impact assessment. Polluting raw materials, products, manufacturing technics [sic] and equipment shall be strictly supervised for importation.
- 10. According to the Journal of Accountancy (LAMOREAUX, 2011) China has social taxes just like the U.S. They also have holiday and overtime pay, as well as severance pay requirements, which typically equate to one month pay for each year or portion thereof worked. Total costs of social security, health and unemployment taxes equate to about 40% of basic payroll costs.
- 11. Simply having a trademark set up in the U.S. does not mean the same trademark holds in China. “In China, the first person to register a trademark owns the rights to it, regardless of whether or not that person is the first person to use the trademark” (Lapowsky, 2010). Not taking the proper steps to ensure trademarks are correctly secure can cost the company hundreds of thousands of dollars and can set back the project for months.
- 12. Procter & Gamble: Manufactures more than 25 different brands $82 Billion in Sales $12 Billion Net Earning $16 Billion Operating Income Pampers Available in over 100 countries Manufactured in 25 countries
- 13. Diaper Wars Average Dollar Amount Spent on Diapers: $2,500 per child (till potty- V.S. trained) 27 billion disposable diapers used annually.
- 14. 80% use in the United States 2.1% of total waste. Disposable vs. Cloth: Landfills High-heat washing The Carbon Footprint 500 years to fully deteriorate
- 15. Economic and competitive constraints on P&G’s incoming FDI Ownership restrictions Prohibit nondomestic companies from investing in certain industry or certain types of businesses Performance demands Guaranteeing that at least part of the disposable diaper initiates locally Requiring certain quantity be exported Demanding that specific technologies be shifted to local businesses within China (Wild & Wild, 2012)
- 16. Some Technologies Already Greater Than Ours: Geography: High Voltage Transmission China is located in Southeast Asia along the High-Speed Rail Advanced Coal Technologies coastline of the Pacific Ocean, and is the Nuclear Power world's third largest country, after Russia Alternative Energy Vehicles and Canada Renewable Energy It has an area of 9.6 million square Supercomputing kilometers and a coastline of 18,000 Business Customs to Honor kilometers. Working through an intermediary is crucial The population of China, as of 2011, was Face-to-face meetings are preferred 1.3341 billion. Make appointments at least one month in advance Their capital is Beijing. Information about your company and what you China is often divided into four regions; the want to accomplish should be discussed at the first North, South, Northwest and the Qinghai- meeting Tibetan areas. Punctuality, time management, conservatively formal dress etiquette and business cards are Because of geographical differences, essential residents of each region have distinctive life Highest ranking member speaks at meetings so a styles and customs senior member should always be present
- 17. Primary Target Market Middle class adults with children between newborn and 3 years of age living in urban areas Secondary Target Market Lower income adults with children between newborn and 3 years of age living in urban areas
- 18. First $10 Billion Company The Best of the Best
- 19. Styles: Pampers Swaddlers Pampers Swaddlers (Sensitive) Pampers Baby Dry Pampers Cruisers Pampers Extra Protection
- 20. Ranges in sizes from NB - size 6. Smaller sizes, NB- 3 have wetness indicators. Print images of cartoon characters and designs Swaddler Sensitives have aloe to make the diapers softer to sensitive skin. NB size diapers have a notch to allow for umbilical cord.
- 21. SERVICE WARRANTY The former method of both “Warranties are seen as cloth diapers and the total lack of reducing perceived performance diapers at times will need to be risk by providing protection upgraded to disposable diapers against product defects leading to meet the new fast paced to failures within the warranty lifestyle change. period” (AMWarranty, 2012). Pampers Swaddlers have a Placing a warranty on the cloth-like feel, allowing parents product, perhaps allowing new to feel they are still using a consumers the option to sell quality, family-styled diaper. back the un-used portion of a product they do not like, might help boost customer confidence.
- 22. Current Exchange Rate: 1 USD = 6.36 CYR CYR is Chinese Yuan Renminbi Average cost of a single diaper is $0.30 Diapers are a better deal if they are bought in bulk.
- 23. Current Advertising: Television Newspaper (Periodicals) Magazines Retail Promotion in China: Focus on moving from cloth diapers Relate to the audience
- 24. Good Media: Pampers wants to get good reception from China. Bringing new jobs to their country Offering an easier way to perform a common task Bringing publicity to the country. Bad Media: Pampers will receive poor media from the U.S. probably for moving jobs to China.
- 25. Culturally sensitive Target market appropriate Parenting magazines Floor displays in grocery and specialty stores Commercials on television and radio Social media Monetary incentives Coupons and discounts
- 26. “Since its inception, P&G has improved life for more than 300 million children around the world through our Live, Learn and Thrive cause. Every second of every day, two children As part of their ongoing efforts to maintain their social benefit from P&G Live, Learn and Thrive responsibilities, Proctor and initiatives (Live, Learn and Thrive Overview, Gamble have created an 2012 ).” organization called Live, Learn and Thrive where they help disadvantaged youth through donations, disaster relief and employee engagement. To this day there are more than 100 programs in over 65 countries that are running continuously towards this great cause (Live, Learn and Thrive Overview, 2012). This goes to show that some companies are not just in it for the money; they are also focused on the wants and needs of their consumers.
- 27. At first, the company was focusing solely on the Packaging features: diapers’ outstanding ability to stay dry. When this lot of yellows to give off a comforting vibe to stopped working in Europe, they found their new consumers with infants brand ideal: Pampers didn't just keep babies dry; it bright exciting colors for motivation with their training pants was a product that would partner with parents different sizes and designs are aimed throughout their baby's stages of physical, social towards every consumer through the child’s and emotional development. different stages. every box is sure to have the defined They broadened their product range as well: Pampers logo newborn to large size diapers and they also take the incentive to use their big kid’s training pants packaging to inform consumers with tips on wipes for every skin type proper baby sleeping and information on swimming diapers SIDS. Distribution includes: Soaps almost all grocery and retail stores, as well and more. several convenience and drugstores, They even provide services like: including Wal-Mart, Target, CVS and much online forums more. When expanding to China, they have Tips several options for distribution since many free products for expecting mothers U.S. stores like Wal-Mart are opening over Coupons there in several different areas. Samples contest prizes and sweepstakes
- 28. Pampers now have products For products in China, the packaging will in over 60 countries and have mirror the classic and formal attitude of Chinese people and all logos and information individual website branches will be written in Chinese. Any sales with appropriate languages promotions will be altered to fit the and customizations for each. preferences and customs of the Chinese They also have their own forum people. for parent’s thoughts and concerns and is customized for the wants and needs of each country. Their packaging also differs according to country and more times than not, the pictures of ‘example babies’ will be altered as well.
- 29. PERSONAL SELLING Water waste, and the harmful chemicals from disinfecting of cloth diapers, can steer the view of not only safety, but necessity. Consumers are moving forward in life, almost like they are evolving with the changing nation. Staying updated with current trends is part of the desire of a progressive nation. LOGISTICS Pampers China, should be made in China. Not only does this help China’s workforce, it also allows transportation to be minimized.
- 30. Channels To get the product into the hands of the consumers, there are several paths to take. From the factory, they will be moved in bulk to stores and then into consumers’ homes. Also, from the factory, they should be packaged in singles and triples, and disbursed to homes, hospitals, and ob/gyn offices.
- 31. Production facility construction budget Covering all aspects of construction of facility and equipment for production Launch budget Allocation of 10% of total budget for advertising and promotional incentives Sales budget Approximately ¼ of Pampers’ budget in the U.S. Sales are expected to grow by 40% in the first year
- 32. Adhering to LEED standards will allow P&G the ability to assure the Chinese people that they care about their lives. Environmental issues have a huge impact on doing business in China. Taking this serious will show P&G’s dedication to such issues. Advance risk management solutions and tools to provide the most efficient methods of containing risk. Improve global communication, improve training at all levels, and develop the management style to individualize P&G/China’s relationship. Utilize marketing to allow the Chinese citizens to understand why disposable diapers are a valid choice for their lifestyle. Keep abreast to changes in Chinese customs and traditions, as to market an unfamiliar product correctly. Boost CSR to focus, in part, on China. P&G already has an extensive social responsibility program. Enhancing this to incorporate China’s youth is an exciting opportunity to connect P&N with the Chinese people.
- 33. 253, S. (2007). Regulations on Environmental Protection for Foreign Invested Enterprises. Retrieved August 21, 2012, from PI XIAN CHINA: http://english.pixian.gov.cn/newsDateil.asp?cid=6&pid=37&id=295 7 Technologies Where China Has the U.S. Beat, Adam Aston, December 2010, http://www.greenbiz.com/blog/2010/12/07/7-technologies-where-china-has-us-beat?page=0%2C0 AMWarranty. (2012). The Role of Warranty in Marketing - 10.4.3 Warranty and Product Choice. Retrieved August 21, 2012, from AMWarranty: http://www.amwarranty.com/PDFFiles/The%20Role%20of%20Warranty%20in%20Marketing.pdf China - Language, Culture, Customs and Etiquette, Kwintessential, N/A, http://www.kwintessential.co.uk/resources/global-etiquette/china-country-profile.html China Geography, TravelChinaGuide.com, 2012, http://www.travelchinaguide.com/intro/geography/ Employee Engagement, 2012 http://www.pg.com/en_US/sustainability/employee_engagement.shtml Fam, K., Jozsa, L., & Richard, J.E. (Eds.) (2010). Sales promotion techniques: Best practice from Asia and Europe. Asia Business Corporation Limited
- 34. Lafley, A. (2012, August 15th). Innovation at Procter & Gamble. Retrieved from Mini Workshop Series: http://www.miniworkshopseries.com/highlights/?p=1330 LAMOREAUX, M. G. (2011, May). Business Basics in China. Retrieved August 21, 2012, from Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2011/May/20113840.htm Lapowsky, I. (2010, July 12). 10 Steps to Starting a Business in China - 3. Choose an entity status. Retrieved August 21, 2012, from Inc.: http://www.inc.com/guides/2010/07/how-to-start-a-business-in- china_pagen_2.html Lapowsky, I. (2010, June 12). 10 Steps to Starting a Business in China - 7. Trademark your intellectual property. Retrieved August 21, 2012, from Inc.: http://www.inc.com/guides/2010/07/how-to-start-a-business-in- china_pagen_3.html Live, Learn and Thrive Overview, 2012 http://www.pg.com/en_US/sustainability/social_responsibility/live_learn_thrive_overview.shtml Marketing Analysis of Pampers Diapers, 2012 http://www.centrorisorse.org/marketing-analysis-of-pampers- diapers.html Operations and Supplies, 2012 http://www.pg.com/en_US/sustainability/environmental_sustainability/operations_suppliers/index.shtml
- 35. Overview, 2012 http://www.pg.com/en_US/sustainability/overview.shtml P&G. (2011). Investor Relations, Financial Reporting, Financial Statements, Annual Report. PG.com. Retrieved from http://annualreport.pg.com/annualreport2011/financials/statements.shtml. Pampers - baby steps to movement marketing, Jim Stengel, January, 2012, http://uprisingmovements.com/case- studies/pampers-baby-steps-to-movement-marketing/ Products and Packaging, 2012 http://www.pg.com/en_US/sustainability/environmental_sustainability/products_packaging/index.shtml Public Data China Population, Google, 2012 http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&idim=country:CHN&dl=e n&hl=en&q=china+population Walsh, T. (2006). Talent: A Key Human-Resource Challenge. Retrieved from Rimas.Org: http://www.rimas.org.sg/files/Understanding%20China's%20Business%20Risk%20Environment.pdf Wild, J. J., & Wild, K. L. (2012). International Business (6th ed.). Upper Saddle River, NJ: Pearson Education. Zhongxim, Z. (2004, July 16). Open-crotch pants make way for disposable diapers. China Daily.com. Retrieved August 17, 2012 from http://chinadaily.com.cn/english/doc/2004-07/16/content_349150.htm.
Notes de l'éditeur
- Proctor and Gamble aim to provide patented products of superior quality and value that improve the lives of the world's consumers in more ways than one. Their main goals are to uphold environmental sustainability as well as social responsibilities. Their Pampers line of disposable diapers focuses on providing superior products to children of every size at an affordable price. One of Proctor and Gamble’s highest concerns are those of the environment and every day they work one step closer to reaching their goals of:Powering their plants with 100% renewable energyUsing 100% renewable or recycled materials for all products and packagingHaving zero consumer and manufacturing waste go to landfillsDesigning products that delight consumers while maximizing their conservation of resources (Overview, 2012).The company realizes that while these are long-term goals, they can still do everything they can do make a difference now as well as bring them closer to the future innovations (Overview, 2012). When it comes to their product approaches, Proctor and Gamble value the opinions of their customers and after much research into the minds of their consumers; they have found that 70% of the population in the U.S., Europe and Japan fit into a category known as “sustainable mainstream” (Products and Packaging, 2012). This means that they prefer products with environmental improvements but their need for quality and value of price remains. Proctor and Gamble continues to aim to please these consumers and thus far has done a marvelous job. In addition to consumer insights, they also take into account the technological insights using Life Cycle thinking to “determine a product’s entire environmental footprint, from the procurement of raw materials to the product’s use and ultimate disposal (Products and Packaging, 2012).” By knowing this, they are able to assess the product’s overall environmental impact and alter products accordingly; for example creating a laundry detergent that can be used in only cold water (Products and Packaging, 2012). Through every manufacturing step, Proctor and Gamble strives to reduce waste, water, energy, and CO2 through conservation using innovative eco-design improvements and recycling (Operations and Supplies, 2012). In the logistics stage, they have successfully reduced waste in customization by applying more sustainable designs (Operations and Supplies, 2012). They have altered and optimized their transportation efficiency by making changes to the rate, route, mode and method of transportation. They have really focused on eradicating inefficiencies such as loading and unloading delays, rush transport up-charges, dead legs (empty trucks) and P&G production line stops (Operations and Supplies, 2012). Supplier engagement has also helped the company improve its operations by creating close supplier relationships; implementing a supplier sustainability scorecard (which assesses the environmental footprint of our suppliers) and enabling P&G to partner and help reduce the environmental impact along the supply chain (Operations and Supplies, 2012).
- The diaper is made up of two basic parts: the absorbent pad and nonwoven fabrics. The pad is used to absorb the waste. The nonwoven plastic is what the exterior and shell of the diaper is made up of, holding the diaper in place. The other parts are really the accessories: elastic to hug the thighs and waist of the infant, adhesive to strap the diaper together, and ink to create patterns on the diaper.
- The Democratic Management Approach follows two of the most famous business psychologists, Maslow, and McGregor.
- China uses this style of management out of respect to their employees, and expects their employees to display the same attitude toward management.
- This is the management style that will be used to inform and carry out decisions held by the parent company. China is satisfied minimal at Esteem and Self-Actualization, where P&G, as a whole, is satisfied at maximum of Social, Safety, and Physiological.
- P&G is a highly profitable corporation, with a net income of $2.4 billion and $8.6 billion of levered free cash flow, which is adequate to build and operate a Pampers’ production facility in China. Therefore, initially P&G has the financial resources to assume the cost of the land, building materials, project managers, construction laborers, equipment in the production facility and for the cost of direct materials, direct labor and overhead once the facility is operating. Where the financial limitations may begin to appear is with competitors in the disposable diaper market. Competitors such as Unilever, Kimberly-Clark and local manufacturers may cut into the market share that will be initially dominated by P&G. The results of a lower market share will limit P&G’s ability to sustain the profit margin that will enable it to pursue investment in other emerging markets in the future which is one of the company’s goals.
- Environmental laws that are rising in China must also be taken into account, as the product being sold is not only factory made, but also will add to the overall waste in China on the consumers’ end.
- Wage laws are not very different from the United States, and for public acceptance, it would be wise to carefully figure the economies of scale for not only profit, but public image.
- Procter & Gamble is the manufacturing company that created and produces Pampers. The company is well established and has been around for quite some time, they created Pampers in the 50’s. Today, based off their 2011 Annual Report they did $82 Billion in sales, earning a net of $12 billion. Pampers has since exploded into a world renown name.
- The biggest economic threat on the homefront for Pampers is the on-going diaper war with Huggies, Kimberly-Clark’s diaper brand that has been around since 1978. Both brands have similar characteristics and seem to in the same ballpark price range, but according to consumer reporting websites, Pampers seems to have the edge with consumers. Diapers are a huge business and not something that one can live without (as long as they have babies). As you can see on this slide, much money is spent on diapers throughout the infancy of a child.
- The biggest battle Pampers faces at home is the environmental front who believes disposable diapers are destroying nature and crowding our landfills. According to studies though, even with 80% of the US population using disposable diapers over cloth, only 2.1% of the United States’ landfills. Also, studies have been done showing that the carbon footprint created after washing cloth diapers at 194 degrees Fahrenheit, which is the minimum temperature to properly destroy all the bacteria, than the carbon footprint left by throwing away a disposable diaper. The big effort Pampers must make though is finding a better biodegradable product, the average disposable diaper currently takes 500 years to fully break down.
- China, the host country, can impose economic and competitive constraints on P&G’s incoming foreign direct investment through various methods, including, but not limited to, ownership restrictions and performance demands. The Chinese government can prohibit nondomestic companies from investing in certain industries or from owning certain types of businesses. Typically, the businesses that these restrictions would be imposed upon would be those involved in cultural industries and companies that are vital to China’s national security. China is not likely to impose this type of restriction on P&G and its Pampers production facility because if it did P&G would locate its plant in another competing country and the benefits P&G’s Pampers production facility would bring to China outweigh the detriments. The Chinese government would be more likely to impose performance demands. The reason being that performance demands would have an impact on exactly how P&G and other nondomestic companies operate in China, including guaranteeing that at least part of the disposable diaper initiates locally, requiring that a certain quantity be exported, or demanding that specific technologies be shifted to local businesses within China.
- When it comes to levels of technology, China is certainly not dismaying globalizing companies; in fact they are attracting them like flies. Their level of technology has increased so much over the past few decades that they are actually at war with the U.S. in terms of competing levels. Here are a few ways that China is surpassing the United States today:High Voltage Transmission: they have deployed the world's first Ultra High Voltage AC and DC lines -- including one capable of delivering 6.4 gigawatts to Shanghai from a hydroelectric plant 1300 miles away (Aston, A., 2010).High-Speed Rail: they are now exporting this technology and have the world's fastest train and the world's largest high-speed rail network, which will become larger than the rest of the world combined by the end of the decade (in theory) (Aston, A., 2010). Advanced Coal Technologies: they have created a vast amount of supercritical coal combustion plants, which have fewer emissions making them more efficient than conventional coal plants because they burn coal at higher temperatures and pressures (Aston, A., 2010). They are now over 5% more efficient than our highest plant. Nuclear Power: China has over 30 nuclear power plants under construction, which is more than any other country in the world (Aston, A., 2010).Alternative Energy Vehicles: they developed a draft plan to invest $17 billion in central government funds in fuel economy, hybrids, plug-in hybrids, electric and fuel cell vehicles, and aim to produce 5 million new energy vehicles and 15 million fuel-efficient conventional vehicles by 2020 (Aston, A., 2010).Renewable Energy. China is installing wind power at a faster rate than any nation in the world, and manufactures 40 percent of the world's solar photovoltaic (PV) systems (Aston, A., 2010).Supercomputing. Last month, the Tianhe-1A, developed by China's National University of Defense Technology, became the world's fastest supercomputer (Aston, A., 2010).When it comes to levels of technology, China is far more advanced than anyone would have thought possible a decade ago. They have matured, grown and surprised everyone with their motivation towards innovation and discovery. Pampers would undoubtedly fit in in with this country since Proctor and Gamble is continuously trying to find more efficient ways to produce their products; China would actually help rather than hinder the company on this mission. Business customs in China are more formal than they are here in the United States. As Pampers considers moving into China, there are many things to be considered. People in China are very wary of newcomers and they prefer to work with people they are familiar with. When considering the move, it is important to accommodate the other business owners there and seek their approval. Since the Chinese don't like doing business with companies they don't know, working through an intermediary is crucial (Kwintessential, N/A). Pampers needs to recognize that the Chinese prefer face-to-face meetings rather than written or phone communication, so in order to accommodate this, the company should invest in traveling to the country to gain alliances. When arranging to meet potential alliances, it is important to make appointments; the Chinese prefer that they are made at least a month in advance. It is recommended that if there is no available contact within the company, to use an intermediary to arrange a formal introduction. Once the introduction has been made, information about your company and what you want to accomplish should be discussed at the meeting (Kwintessential, N/A). Meetings are taken very seriously and punctuality, time management, conservatively formal dress etiquette and business cards are essential for Chinese business members (Kwintessential, N/A). It is also important to remember that people there go by rank and only the highest ranking member speaks at most meetings so when a business meeting is arranged, a senior member should always be present (Kwintessential, N/A). China is located in Southeast Asia along the coastline of the Pacific Ocean, and is the world's third largest country, after Russia and Canada. With an area of 9.6 million square kilometers and a coastline of 18,000 kilometers, its shape on the map is like a rooster (TravelChinaGuide.com, 2012).The population of China, as of 2011, was 1.3341 billion and their capital is Beijing (Google, 2012). People tend to divide China into four regions, that is, the North, South, Northwest and the Qinghai-Tibetan areas and because of geographical differences, residents of each region have distinctive life styles and customs (TravelChinaGuide.com, 2012). Pampers needs to decide where exactly they plan to relocate to focus on the customs of people in that area along with their wants and needs.
- Pampers should focus its efforts in China on the primary target market. This market is comprised of middle class adults with children between newborn and 3 years of age living in urban areas. The secondary target market is lower income adults with children between newborn and 3 years of age living in urban areas. Both these target areas are more apt to be persuaded to use disposable diapers as opposed to a “kaidangku, which is a split pant, open-crotch garment for young children that has been primarily used by the Chinese for decades” (Zhnogxin, 2012). The research conducted to determine the primary target market showed that adults with young children in today’s society in China do not believe that using a kaidangku is appropriate. They believe that it is “old-fashioned, not hygienic and bad for the environment” (Zhongxin, 2012).
- In June of 2012, Pampers became Procter and Gamble’s first $10 billion company. By $10 billion, I mean the first company to clear $1o billion in annual sales. As stated earlier as well, Procter & Gamble has dozens of different companies throughout the world, Pampers along being offered known in hundreds of different diapers. Pampers also receives praise such as being the most well-known and liked diaper brand in the world, with diapers being worn by babies in over 100 different countries.
- The three main diapers we will focus on in China from a marketing standpoint will be the Swaddlers, SwaddlersSensitives and the Baby Dry. These 3 diapers come in the smallest sizes and it makes the most sense to focus on the younger infants because of Chinese culture. The Chinese begin potty training their babies at a younger age than the US, meaning they may grow out of diapers before the larger sizes would even be necessary.
- Pampers has a wide variety of diapers, for almost every specific need of a baby. However, every diaper has consistent features such as wetness indicators on all of its early-infancy diapers. Each of the diapers have a specific design and pattern on them as well, be it just a pattern or cartoon characters. Every style in its newborn size also is structured to have a notch for the infants umbilical cord.
- A key concept forming in China that was previously missing, they want to work, be paid well, and to be a part of a growing society.Gaining the trust of the Chinese culture, may be a difficult task.
- The choice currency in China is the Chinese Yuan Renminbi, the exchange on the CYR to a USD is that 6.36 CYR are equivalent to 1 USD. Currently 1 disposable diaper cost approximately $0.30 that is equivalent to 1.91 CYR. Diapers are cheaper to customers if they are bought in higher volume, a 210 ct. of diapers will be cheaper per diaper than a 108 ct. package.
- Pampers is seen through just about every facet of advertisement: television, newspaper, magazine, and more. The advertising in the US does not need to be so intense anymore, because the brand really is a household name. However in China, many families still believe in the use of cloth diapers, so it is important to show the ease of disposable diapers and how these families can benefit from using them versus cloth diapers. They also need to pick a spokesperson that the Chinese can relate to, be it a baby with ethnic similarities, a local family, or even a popular children's cartoon character.
- Pampers will most likely receive bad publicity of some sort through out the United States regarding how Pampers and P&G are outsourcing job and taking away the jobs from Americans. The focus should be on getting good publicity in China though, the need to show that building a plant in China will result in new jobs for the Chinese. Also, to encourage parents in China to switch from cloth diapers to disposable one, this should be a primary media focus. Pampers must show the country that their diapers are easier, more practical, and a great solution to the commonly used cloth diaper.
- Pampers promotion in China should be culturally sensitive and focusing on how best to promote the product to the primary and secondary target markets. Appropriate mediums to promote Pampers would consist of parenting magazines, floor displays in grocery and specialty stores, commercials on television and radio and social media. “Monetary promotions, such as coupons and discounts, are among the most preferred techniques due to their direct and immediate effect on sales and market share” (Fam, Jozsa & Richard, 2010).
- “Since its inception, P&G has improved life for more than 300 million children around the world through our Live, Learn and Thrive cause. Every second of every day, two children benefit from P&G Live, Learn and Thrive initiatives (Live, Learn and Thrive Overview, 2012 ).”As part of their ongoing efforts to maintain their social responsibilities, Proctor and Gamble have created an organization called Live, Learn and Thrive where they help disadvantaged youth through donations, disaster relief and employee engagement. To this day there are more than 100 programs in over 65 countries that are running continuously towards this great cause (Live, Learn and Thrive Overview, 2012). This goes to show that some companies are not just in it for the money; they are also focused on the wants and needs of their consumers.
- When it comes to the marketing of Pamper’s products, it took a bit of time for them to get it just right. At first, the company was focusing solely on the diapers’ outstanding ability to stay dry. When they became international and moved into the European countries, they found that this tactic did not work as well as it did in the U.S. and they quickly became the lowest on the chain of disposable diapers. They had marketing managers traveling the world in search of concerned mothers and finally found their new brand ideal: Pampers didn't just keep babies dry; it was a product that would partner with parents throughout their baby's stages of physical, social and emotional development (Stengel, J., 2012). With this they created a new mission that inspired all of the brand's stakeholders and the result was an income change from $3.4 billion in 1997 to $9 billion now (Stengel, J., 2012). So now Pampers offers a whole line of products; diapers that range in size and aspects from newborn to big kid’s training pants, wipes for every skin type, swimming diapers, soaps, and more. They even provide online forums, tips and free products for expecting mothers. Instead of focusing just on a dry diaper, they have efficiently spread their goals to help children every step of their lives, from the womb to potty training to learning personal hygiene, and have increased their customer base and profit. This kind of step-by-step care may be a first for consumers in China, and Pampers could greatly benefit the country as well as the company. Sales promotions for Pampers are often varied, since they offer coupons online, in their product boxes, through e-mail clubs and much more. They offer a whole program for expectant mothers that include, but are not limited to, coupons, samples, contest prizes and free products throughout their journey. They also create several giveaways and sweepstakes for consumers to enter to win money or product prizes. Packaging is important to Pampers; they want to be purposeful and appealing to everyone so they aim to stand out from all the other competing brands and products. They use a lot of yellows to give off a comforting vibe to consumers but also use bright exciting colors for motivation with their training pants. Using colorful packaging helps make Pampers stand out from the other brands. The different sizes and designs are aimed towards every consumer through the child’s different stages. Every box is sure to have the defined Pampers logo and they also take the incentive to use their packaging to inform consumers. On their newborn Swaddler’s packaging, they include tips on proper baby sleeping and information on SIDS (Sudden Infant Death Syndrome). This could become very helpful in a developing country like China, to point out the health related things that they may not be aware of. Marketing adaptation for Pampers is pretty much second nature by now. They now have products in over 60 countries and have individual website branches with appropriate languages for each. Each has their own forum for parent’s thoughts and concerns and is customized for the wants and needs of each country. Their packaging also differs according to country and more times than not, the pictures of ‘example babies’ will be altered as well. For products in China, the packaging will mirror the classic and formal attitude of Chinese people and all logos and information will be written in Chinese.
- Marketing adaptation for Pampers is pretty much second nature by now. They now have products in over 60 countries and have individual website branches with appropriate languages for each. Each has their own forum for parent’s thoughts and concerns and is customized for the wants and needs of each country. Their packaging also differs according to country and more times than not, the pictures of ‘example babies’ will be altered as well. For products in China, the packaging will mirror the classic and formal attitude of Chinese people and all logos and information will be written in Chinese. Any sales promotions will be altered to fit the preferences and customs of the Chinese people.
- As China moves ahead into the eco-friendly world, they may not understand how disposable diapers impact on the environment differs from cloth diapers. This will help with the overall appeal of the product. The exchange rate will remain the same, since there is no worry of currency exchange, or hedging.
- Keep stores stocked and keep the signage abundant, to force consumers to take notice of the product.
- Budgets are an integral component to a company’s planning, implementation and production strategy. Pampers will need to create several budgets in order to effectively manage the opening of the new production facility and introduction of disposable diapers in China. When devising the Launch Budget, it will need to allocate 10% of the total budget to advertising for promotion to the primary and secondary target markets. After the initial launch it is estimated that the Sales Budget will be approximately ¼ of Pampers’ budget in the U.S. Sales are expected to grow by 40% in the first year. It is recommended that the budgets be closely monitored and revised at a minimum quarterly. This will permit management to make any necessary adjustment to the budgets and make modifications where warranted.
- The action program is set to provide a parameter to work toward. Connecting these objectives to daily, weekly, and annual tasks will bring success.