Gain-ing China
Caitlin Cummins, Will Longhini, Eric Palm, Anja Redzepagic, Jenna Toon
Overall Market Potential and Specific Marketing Objective
Chinese Laundry Care Market
100,500,000 potential users
In 2013, Chinese textile washing products market forecast to have a value of $4.6 billion
97% of households own a washing machine
Liquid detergent sector fastest growing segment, and well placed for even further growth
Target Segment
Target
Women Ages 20-60 Primary domestic caretakers
Own home Home employed to manage
Primary household item decision makers
Responsible for necessary laundry duties
Buyer Behavior
Consumer Shopping
How China Shops How the United States Shops
Brand Loyalists 23% 28% 11% Deal Makers Price Seekers 23% 26% Luxury Innovators 17% 35% 37%
Brand Loyalists Deal Makers Price Seekers Luxury Innovators
Buyer Behavior
No large divide among shopper style preferences favored by Chinese consumer Nearly all Chinese use cold water when doing laundry Common among users to hand-wash items first then use the washer to rinse clothing Liquid detergent has surpassed powder use in Beijing, Shanghai, and Guangzhou
Product Analysis
Gain Product Analysis
Primary focus liquid detergent
Must provide powder detergent alternative
Use of the color red
Joy and good fortune
Careful use of powerful scents
Youthful fruit scents; flower power
Key Competitor Analysis
Key Competitors
Domestic
NICE Group Guangzhou Liby Enterprise Group Co. Ltd.
Global
Unilever China Ltd.
*Account for 40% of the Chinese Laundry Care Industry
Key Competitors
Chinese Laundry Care Market
NICE Group
Guangzhou Liby Enterprise Group Co Ltd Procter & Gamble
Unilever
Guangzhou Liby
Strengths: Wide product portfolio 100 products Active player in innovation Concentrated label 2008 Beijing Olympic sponsor
Weaknesses: Low profit margin
Strengths:
NICE Group Extensive distribution channels in rural areas Concentrated label Entry into Personal Care products gives new growth area
Weaknesses:
Large focus on economy priced products
Unilever China Ltd.
Strengths Economies of scale Weaknesses No nationalism feel Dilution of brand names Hurt collective feeling in Chinese culture
Implementation Objective
Implementation
Utilize growing popularity of mass merchandisers in China
Walmart and Carrefour
Cannot neglect local, independent retailers and convenience stores
Method of Entry
P&G Manufacturing and Distribution
P&G owns 10 plants throughout China
Convert Guangzhou plant to accommodate Gain production New, $130 million regional distribution center in Guangzhou Keep majority of operations in-house and under P&G control
China National Foreign Trade Transportation Corporation
Outsource all logistical functions
Shipping and warehousing
Offer freight forwarding, shipping, storage, marine transportation, and trucking services throughout China
Owned and controlled by Chinese national government
Guaranteed access to market and better protection
Placement Analysis
Placement
Walmart and Carrefour
Over 100 retail outlets each Hypermarket expansion Expanding market share through acquiring small, local, retail shops
Walmarts practice of local sourcing
20,000 partnerships with Chinese suppliers 95% of its merchandise from local sources 99.9% of Chinese associates are Chinese nationals
Price Analysis
Gain Pricing
United States
70 oz. box of Tide $10.99, $.15/oz. 63 oz. box of Gain $8.99, $.14/oz.
China
77 oz. box of Tide $3.50, $.05/oz. Gain - $.05/oz.
$.15/oz. $.14/oz.
X $.05/oz.
= $.053/oz.
Gain Retail Prices
1-liter jug of liquid detergent (33.8 oz.)
$1.71/unit, $.0506/oz.
-liter jug of liquid detergent (16.9 oz.)
$.90/unit, $.0533/oz.
1,000g powder detergent (35.2 oz.)
$1.80/unit, $.0511/oz.
500g powder detergent (17.6 oz.)
$.95/unit, $.054/oz. *Government interaction and incentives have made it less expensive to produce and sell liquid detergent.
Promotion Analysis
Promotion
Continue to brand Gain as
The best smelling laundry out there.
Equating signature scent with clean laundry
Create a positive experience
Initial promotion efforts in urban areas
Beijing, Shanghai, and Guangzhou Consumers have adopted liquid detergent use
Television
CCTV Chinas most watched TV channel 97% of households in target cities own a TV Commercials most effective P&G already recognized as Chinas number one television advertiser
Print
If you have something important to say, say it in print!
P&G is Chinas fourth largest magazine advertiser Print and magazine advertising
Family, Readers, City Beauty, Womens Day and Womens Friend
Retail
In-store promotions Product displays Free trial samples
Trial is crucial in first year of introduction
Advertising
Ad Expense
8 7 6 5 4 3 2 1 0 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Millions
Ad Precentage
Ad Expense
Ad Precent age
Financial Analysis
Net Sales
Millions 45 40 35 30 25 20 15 10 5 0 2012 2013 2014 2015 2016
Cost of Goods Sold
Millions 25 20 15 10 5 0 2012 2013 2014 2015 2016
Transportation Costs
1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2012 2013 2014 2015 2016
Earnings Before Interest and Tax
Millions 6 5 4 3 2 1 0 -1 -2 -3 -4 2012 2013 2014 2015 2016
Pro Forma Income Statement
5 Year Projections
NPV
5 Year Projections
Recommendation
Procter & Gamble should enter Gain into the Chinese market now.
Market is fragmented, but prime for a new, highly specialized, detergent to enter market and command market share.
