P&G's Vocalpoint - Using Moms for W.O.M.

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Case Details:

Case Code : MKTG136
Case Length : 19 Pages
Period : 2001-2006
Organization : Procter & Gamble Company
Pub Date : 2006
Teaching Note : Available
Countries : USA
Industry : FMCG

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

In 1837, candle maker William Procter and his brother-in-law, James Gamble, a soap maker, merged their small businesses and established P&G. Their shop in Cincinnati was nicknamed "Porkopolis" because of its dependence on swine slaughterhouses as the shop made candles and soaps from leftover fats. By 1859, P&G had become one of the largest companies in Cincinnati, with sales of US$1 million. Since the very beginning, P&G placed great emphasis on marketing and developing brands. The earliest brands of P&G, which were advertised in a Cincinnati newspaper in 1838, were Palm Oil soap, Rosin soap, Toilet and Shaving soap, and Tallow candles.

In the same year, the company ran into difficulties because of over-expansion. It was taken over by Franz Josef Pope and in 1918 he named it BMW AG.

In 1918, BMW manufactured its first aircraft engine, the Type IIIa. This engine could power a biplane to reach an altitude of 5000 meters in just 29 minutes, creating a world record. After the World War I, the Treaty of Versailles (1919) put a ban on production of aircraft in Germany.

Thus, in 1919, the company started to manufacture railway brakes. In the same year it designed its first motorcycle engine. In 1923, it started manufacturing motorcycles and its first model R32, a 500cc shaft-driven motorcycle, designed by Max Friz, was launched. BMW forayed into car manufacture in the late 1920s. (Refer to Exhibit I for BMW's Logo). In 1928, BMW set up a car manufacturing unit in the Eisenach region of Germany and started manufacturing a small car called 'Dixi', based on the Austin Seven car under license. In the following year it acquired the Dixi Company.

In 1879, for the first time P&G introduced an all-purpose soap, Ivory. in the US. Ivory could be used for both personal cleansing and household cleaning. Soon Ivory emerged as the most popular soap brand in the US. By the 1880s, P&G sold brands like White, Famous, Perfect, Queen Olive, Topaz, Handy, Town Talk, Good Luck, Blue, Princess Olive, Duchess Olive, Very Good, Countess Olive, Toilet, Green Seal, Polo, Japan Olive, Simon Pure, Yellow Erasive, German Olive, Lenox, Velvet and Golden Bar.

By 1890, P&G was selling more than 30 different varieties of soap including 'Ivory.' At that time, P&G's advertising comprised of full-color print ads in national magazines. The advertisements were very creative, resulting in a growing demand for its soaps from consumers.

P&G encouraged rival brands within the company to compete against one another. In the early 1920s, when Lux, Palmolive and Cashmere Bouquet soaps were introduced by P&G's competitors, P&G introduced Camay. When Camay did not perform well, the management felt that it was because it had not been allowed to compete head-on with Ivory. This episode resulted in the development of a brand management system at P&G...

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