Team 1 mgt420_m6_ppt

Editor's Notes

• #3: 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).
• #4: 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.
• #5: The Democratic Management Approach follows two of the most famous business psychologists, Maslow, and McGregor.
• #6: China uses this style of management out of respect to their employees, and expects their employees to display the same attitude toward management.
• #7: 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.
• #8: 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.
• #10: 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.
• #11: 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.
• #13: 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.
• #14: 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.
• #15: 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.
• #16: 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.
• #17: 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.
• #18: 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).
• #19: 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.
• #20: 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.
• #21: 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.
• #22: 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.
• #23: 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.
• #24: 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.
• #25: 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.
• #26: 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).
• #27: “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.
• #28: 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.
• #29: 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.
• #30: 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.
• #31: Keep stores stocked and keep the signage abundant, to force consumers to take notice of the product.
• #32: 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.
• #33: The action program is set to provide a parameter to work toward. Connecting these objectives to daily, weekly, and annual tasks will bring success.