Case Study About Procter and Gamble Company
The introduction of new product would take about one year plus two [ear if test market was needed. So three years indicated that the profit return would be a long-term investment.
Increase Marketing Expenditures on Existing Brands * Since the market has been static with the OLD category, Wright might avoid increasing the capital investment and reduce investment risk. * Wright could expand the overall profits by capturing larger market shares using extra advertising ND promotion techniques.
Cons: * There was lack of data supporting the increase in marketing expenditures on existing brands could produce the desired market share increase. * For some segments such as price brands, increasing advertising and promotion would not Increase sales and market snare I t the price didn’t decrement accordingly . This was especially true in the depressed state of economy.
Recommendations: ere recommendation was to go with the combined feature of having both long-term and short-term investment. Introduction of a new product such as H-80 appeared to e a too costly investment.
In such a depressed state of economy, it was not a smart decision to invest $80 million for the new product. Out of $80 million, $60 million was only used to cover the cost of the first year, not to mention incremental cost for the next few years. The product would require 3 years in order to be introduced to the market.
Using the cost/benefit analysis, I think the first option of new brand introduction was too risky. We could combine option 2 (product improvement) as a long-term investment with the option 3 (increase marketing expenditure on existing rand) as the short-term investment.
Combining these two options could increase the sales volume with very minimum capital investment. In return, it meant less risk for Procter ; Gamble. The timeshare with one long-term investment and one short-term investment allowed Procter ; Gamble the time, resources, and capital to focus on two endeavors straightening more efficient plans to tackle the Charging and competitive market.
Especially the case also indicated that increased marketing expenditures could be approved almost immediately if the plan was financially attractive.