1. Soaps and Other Detergents
Brian Amato
Daniel Froats
Eileen Min Byul Kim
Maegan Nevins

2. Agenda Introduction Industry Analysis Advertising Strategies
Recommendations

3. Highly Saturated Market
Why the Industry?
Ad-to-Sales Ratio
Highly Saturated Market
Overall Spending

4. Industry Analysis

5. Industry Definition
Industry that produces substances that loosen and remove soil from a surface for personal hygiene, sanitation or cleaning clothes, linens and furnishings
Major Products
Primary Activities
Manufacturing & packaging soap
Preparing, manufacturing, and packaging cleaning compounds
Major products include soap, laundry detergent, dishwashing detergent, etc

6. Industry Structure HHI = 562.7 C4= 40.5%
Calculated using top-5 companies
Slightly skewed by “Others” of 54.6% of small other firms
C4= 40.5%

7. P&G
S.C. Johnson & Son
Colgate-Palmolive
Top - 3 Players

8. Industry Structure
The US soap and detergent manufacturing industry includes about 650 companies with combined annual revenue of about $27 billion
The industry is highly concentrated: the top 50 companies generate about 90% of revenue

9. Industry Structure: Barriers to Entry – Medium
High
Low
Capital Intensity
Competition
Concentration
Life Cycle Stage (Mature)
Regulation and Policy
Technology Change
Industry Assistance

10. Industry Analysis: Key Success Factors
Marketing expertise
Appropriate pricing strategy
Economies of scale
Brand loyalty
Development of new/innovative products
Supply contracts for commodity inputs

11. Industry’s Products Multi-Purpose Products Specialized Products
Line extensions that serve multiple needs
Cross-selling strategies to take advantage of existing brand equity
Multi-Purpose Products
Specialized products to generate growth in mature market
Specialized Products
Offer help in safety and environmental regulation compliance
Provide maintenance services
Superior Customer Service
Industry products are differentiated

12. Industry Analysis Customer Segment Commercial Segment
Supermarket chains, mass merchandisers, drug stores, and warehouse clubs
Industrial and commercial laundries, hotels, restaurants, and healthcare providers
Evenly split between consumer and commercial segments
Heavy reliance on large retailers such as Wal-Mart, Costco, and target for a sizable share of business
Third-party distributors

13. Costs Producer Consumer Ingredient costs 35-40% of the wholesale price
The price of surfactants and related chemicals can fluctuate and affect profitability
Product
Avg. Retail Price
Laundry Detergent $5
Dishwashing Detergent $2
Soap
$2.50
Due to the higher input price, the price has recently increased.
An interesting fact to note is that P&G and Unilever were charged with fixing prices on washing detergent in EU. The two companies, along with Henkel had agreed to raise prices.

14. Producer
Production
Cost
Consumer
Consumption
Cost

15. Employment
Due to the high level of automation at many manufacturing facilities, most production jobs require few skills
Average hourly wages are slightly lower than the national average
Industry Employment Growth / Average Hourly Earnings & Annual Wage Increase

16. Industry
Employment
Growth
Average Hourly Earnings & Annual Wage Increase

17. Industry Trends
Low growth in market volume and wholesale pricing drives manufacturers to increase productivity to cut costs
High levels of automation and improved manufacturing technology have allowed soap and detergent manufacturers to increase output with fewer workers
Because the price for soaps & other detergent generally tends to be low and the growth is slow, the trend in the industry has been to focus on cutting costs by increasing productivity.
Such has been achieved by high levels of automations and improved manufacturing technology. This in effect, has led manufacturers to increase output even with fewer workers.

18. Imports and Exports
The US is a net exporter of soaps and detergents; the value of exports is about twice that of imports.
Main exports nations: Canada, Mexico, Japan, South Korea, the UK
Most large companies have plants throughout the world.
US soap and detergent exports increased more than 70% between and 2010.
In the soaps & other detergent industry US is a big exporter. As you can see from this graph, the export value is about twice that of imports.
Main export nations include Canada, Mexico, Japan, South Korea, and the UK.
Such export activity is possible because most large companies have plants throughout the world.
And, the soaps and other detergent industry is experiencing great levels of growth; it increased more than 70% between 2005 and 2010.

19. Role of Government
Federal, state, local, and foreign environmental and safety laws regulate hazardous materials used or produced
Some large companies are actively involved in cleaning contaminated sites due to past operations
Some companies are reformulating products to meet demand for “green” products
Government also plays a big role in the industry.
Due to the use of chemicals during manufacture, federal, state, local, and foreign environmental and safety laws regulate hazardous ingredients. For example, Phosphates used in powder laundry detergent are banned in many states and European countries.
As a result, some companies have engaged in cleaning activities after operation and have also tried reformulating their products into making greener products.

20. Advertising Strategies
The competitive landscape has caused industry operators to increase spending on advertising and promotions or

21. Why focus on P&G? Advertising Expenditure
Highest Industry Market Share
Diverse Product Offerings

22. P&G Ad-Sales Ratio P&G’s ad-sales ratio has continuously increased
Except for 2009 when it decreased by 0.79%
This probably seems to be related to the financial crisis that happened late 2008
However, the ad-sales ratio soon recovered and P&G’s ad-sales ratio is higher than ever, being 11.28% in 2011

23. Primary Advertising Methods
Informative
“Slice of Life”
Comedy
Comparative
So what kind of advertising does P&G involve in?
P&G’s soaps & other detergent products’ primary style of advertising tend to be
Informative – telling viewers about the products feature
Involves slice-of-life scene, thereby giving a homey feeling
Shows a little humor in the advertisements
Compares its products with other products.

24. Advertising Mediums Television Print Social Media Social Campaigns
Magazine
Social Media
Facebook, Google, Youtube, etc
Social Campaigns
Then, how are P&G’s advertisements executed?
The biggest medium is television; being the nation’s largest TV advertiser. The next is print, such as magazines; in fact, P&G recently announced that it will shift some ad spending from TV to magazine. It also engages heavily in digital social media, such as Facebook, Google, and Youtube. Finally, it also does several social campaigns in order to show its way of corporate social responsibility and to directly engage with consumers.

25. Advertising Mediums and Effectiveness
At this point, I would like to show a data on consumers’ perception towards advertising mediums and its effectiveness regarding soaps and detergent products.
This is a survey result of how 160 homemakers that aged between 20 to 50 perceive the effect of advertising on “product awareness.”
So as you can see, for Audio-visual media, TV and Exhibition was the most effective advertising medium for creating “product awareness” and for print media, it was newspapers and magazines.

26. Effective Medium? Audio-visual media: TV, Exhibition, Window Display
From this graph, we can see that in order to get knowledge about the product,
For audio visual media, window display and TV was the most effective, and for print media, newspapers and magazines were the most effective.
Thus, as a whole, we can learn that effective medium tends to be TV, Exhibition, Window Display, Newspapers, and Magazine.
Effective Medium?
Audio-visual media: TV, Exhibition, Window Display
Print media: Newspapers, Magazine

27. Television Advertising
Now, let’s move on to P&G’s television advertising. We’ve decided to focus on Tide specifically because the data that we were provided were just on P&G’s Tide.

28. Advertised Products
These are examples of just several tide versions that P&G offer. But of these various “Tides,” which are advertised?

29. Advertised Products Tide: Liquid Laundry Detergent
Count: 6,516 times
Total: $15 million
Average: $2,341
Tide Plus Bleach: Liquid Laundry Detergent
Count: 5,318 times
Total: $12 million
Average: $5,413
From the data, we learned that P&G mainly focuses on two products; Tide: Liquid Laundry Detergent and Tide Plus Bleach: Liquid Laundry Detergent.
They are aired the most and spends the most ad expenditure in total.
Interestingly, the average ad expenditure of the most heavily advertised product, Tide: Liquid Laundry Detergent, was only $2,341, ranking 9th among the ad expenditure of other products.
Average ad expenditure on the second most advertised product, Tide Plus Bleach: Liquid Laundry Detergent, remained high.

30. Ad Spending by Day of Week
This seems to show a sign of Pulsing strategy
While P&G airs TV ads continuously throughout the week, the most is spent on Tuesdays and Thursdays.

31. Ad Spending by Day Part
Most products were aired on Prime time, then overnight, and Afternoon Daytime 2.
Obviously, advertising cost in total was most spent on Prime time, as well as the average cost. P&G definitely seems to spend a lot on Prime time due to its high accessibility to wide audience.
Another aspect to note is that while total advertising expenditure of overnight time was high, being second, the average cost of overnight time was relatively low.
For afternoon daytime 2, it was rather consistent; relatively many products were aired during that time, advertising expenditure in total and on average was both high. This is probably due to the strong relationship between the industry and soap operas, which are mostly aired during afternoon daytime.
Most products were aired: Prime time > overnight > Afternoon Daytime 2
Most spent on Prime time (both total & average)
While total advertising expenditure of overnight time was high, the average cost of overnight time was relatively low
For afternoon daytime 2, it was rather consistent; all relatively high

32. Ad Spending by Network
Total advertising expenditure highest for Cable TV
However, on average, Network TV is the most expensive, then SLN TV, and Cable TV is the cheapest

33. Ad Spending by Program Types
- While advertising expenditure on average is highest for AWARD/PAGEANT/PARADE/CELEBRATION, either number of times it is aired or total amount spent is relatively low.

34. Focus mostly on Slice-of-Life, Soap Opera, Feature Film, and Situation Comedy
Award/Celebration?
Average is highest; count and sum is very low

35. AdImpact by Program Type
High Performance?
Detergent: feature film, general drama, and news
Specialty soaps: popular music, instruction/advice offerings
So, what about in general?
This graph, from a research paper, shows the difference in ad impact for the same commercial aired in different programs and program genres.
According to this graph, Detergent advertising during feature film, general drama, and news performs very well. Although specialty soaps are more related to personal beauty category unlike the kind of soap that we focused on, we learn here that specialty Soaps score highly during popular music and instruction/advice offerings.

36. TV Ad Content Analysis 1 Sustainability 83% Informative
83% Contained Elements of Comedy
83% “Slice of Life”
50% Advertised Multiple Tide Products
11% Comparative
One Spot Focused on Sustainability

37. “Dad’s Designer Jeans”
“My Tide” Campaign
“Tide Dad”
“Dad’s Designer Jeans”
Both spots take the creative approach of staging a customer testimonial with a humorous twist.
Indirectly communicates product benefits to the consumer.
Use of humor and indirect approach can reinforce trust in the ad’s message and recall of the brand itself.
Informative ad
Highlighted attributes: good on children’s clothing, tough on stains and preserves the original look & feel of clothing
Informative ad
Highlighted attributes: preserves the original color of fabric, good on delicate fabric and high quality clothing

38. How is P&G Different?
Proctor & Gamble’s strategy of targeting several strategic niche markets
The power of storytelling
Strong brand value & brand equity
The “My Tide” Campaign communicates the brands strategy of targeting niche markets with each type of Tide product on the
In his article published on Forbes Michael Margolis states that in today’s advertising environment “your brand story is how you distinguish yourself from the storm of information overload and attention deficit”
Experts in the industry, especially within the creative realm, preach not only the obvious importance of selling the product but the lesser appreciated need to sell a message, an emotion.
Ultimately how this story makes you feel influences how you feel about the brand itself.
When a story is told in such a way, as it is here, that allows the audience to relate and see themselves within the situation they will have the capacity to see themselves using the product
The Tide brand has been around since its introduction in 1946 and has built a strong brand image and loyal consumer base in its years on the market.
Proctor & Gambles strong R&D department has worked in conjunction with brand management to develop product offerings deliver on their promises with high quality and safe formulas.
Tide’s in…Soap’s Out
Back to the Future How to Reinvent Your Backstory
“Unofficial” History of Tide

39. Print Advertising

40. Print Advertising Medium With Reliable Metrics Innovative Ad Campaigns
Shift in Spending Toward Magazine Ads
Benefits of Targeted Media
Coupons/Promotions
P&G BrandSaver complimentary coupon booklet with over $100 dollars in promotions
According to Michael McCarthy, “Magazines might be getting an increased share of P&G’s advertising dollars because the industry has reliable metrics that can be used to target specific audiences”
The use of magazine advertising empowers P&G with the ability to effectively use its traditional strategy of targeting specific niche market segments. They’re expansive product mix allows for them to communicate with a diverse consumer base.

41. Social Campaigns

42. “Loads of Hope” Disaster Strikes Help is Sent Laundry is Provided
“A disaster occurs making relief necessary for the families affected”
Help is Sent
“We send our mobile laundromat fleet to the location”
Laundry is Provided
“We spend multiple days at the disaster site washing, drying and folding clothes for the families affected”
13,871 loads of laundry were provided between Nov and Sept after Hurricane Katrina

43. Social Media

44. Social Media
“As we’ve said historically, the 9% to 11% range [for advertising as a percentage of sales] has been what we have spent. Actually, I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media available today and we’re quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available. In the digital space, with things like Facebook and Google and others, we find that the return on investment of the advertising, when properly designed, when the big idea is there, can be much more efficient. One example is our Old Spice campaign, where we had 1.8 billion free impressions and there are many other examples I can cite from all over the world.” –Robert McDonald, CEO

45. “Future Friendly” Program/Sweepstakes
Facebook Based Sweepstakes
Celebrity Endorsement
Interactive Campaign
Special Events
Facebook sweepstakes drives traffic to P&G’s page and encourages the consumer to become involved with the brand in its efforts to remain socially and environmentally conscious.
The use of soon to be mom Vanessa Lachey effectively implements the tool of celebrity endorsement in order to reinforce the campaigns ability to communicate with the masses.
The campaign takes this a step further through the use of special events marketing. Pop-up laundry shops.
Take the Load Off Campaign, part of P&G’s Future Friendly Program, functions with the goal to convert 70% of total washing machine loads to cold water by 2020.
This campaign will motivate consumers to switch to cold water washing by showcasing the environmental benefits, promoting Tide laundry detergents specially formulated to provide a deep clean in cold temperatures and incentivizing the public to participate.
*Reinforce brand equity.

46. Recommended Advertising Strategies

47. Recommendations Target Growing Hispanic Population
Focus on More Targeted Media
Innovative Use of Social Media
US Census Bureau reports that the Hispanic demographic is the fastest growing population
Buying power expected to grow 50% in the next 5 years from 1 trillion in 2010 to 1.5 trillion in 2015

48. Investment Strategy

49. P&G: Great Long-term Investment
P&G has an aggressive global growth plan for the emerging markets in the years to come
Company Goal: 1 billion new customers by
New Manufacturing facilities in Brazil, Eastern Europe, India, and China

50. P&G: How to Accomplish Future Growth
New plant in Luogang China
Up and running by 2013
$490 million in product revenue
Reducing Costs: phase out non-manufacturing jobs in the U.S
5700 layoffs helping the company reach its goal of 10 Billion in cost cutting measures by 2016

51. P&G: How to Accomplish Future Growth
The Market for the poor is not highly-saturated
Africa: To capture the market in Africa, P&G is selling “no frills”(non-essential features removed) versions of its products in smaller sizes that eventually will add up
Persuade people who live on $5 or less a day to buy P&G items
By locking up 10-20% of sales in "the company's top 30 emerging markets would add $5.9 billion in new sales in five years

54. Q&A
Thank You