Different Brand Advertising Campaign: Case Study of P&G
P&G Brand Advertising Campaign: As prescribed by different researchers and organizations, the cost of doing business is in the recent years is increasing (Amyx 2005; Williams and Page 2009). This is as a result of increasing competition within the market environment, where different businesses are doing everything possible to woo as many customers as possible. As a result of this, consumers of different products are the beneficially since all the extensive researches conducted are geared toward improving the quality of different products; hence, enhance consumer satisfaction. To achieve such objective, while still remaining relevant and competitive, the organizations need to formulate resilient strategies that build on distinctive competencies and provide a lasting competitive advantage.
On the same right, the said strategies ought to be sensitive and dynamic so as to encompass any eminent changes that are inevitable in any competitive market. Among the market strategies that different organizations are engaging in is the different brand advertising campaign. Advertising, as different researchers have claimed plays a key role in determining the success of a given product in the market. In regard to a different brand advertising campaign, the emphasis is on product differentiation, where the company tries to convince their customers, and other potential ones that their products are superior to similar products offered by their competitors. This is specifically done, in a bid to increase sales, command the market share and win new customers for increased profitability. Nevertheless, adopting a different brand advertising campaign is not a smooth ride but there a variety of handles that the marketers need to contend with at different levels. This is even true when a firm is facing competing rivals who also keep strengthening their advertising and product strategies with an aim of dominating the market (Brewster and Palmer 2001).
The study work at hand intends to explore some of the potential problems that a marketer may experience in his/her bid of using a different brand advertising campaign as his/her ultimate marketing strategy. To achieve the intended objective, the study will use P&G as its case study and will explore some of the challenges, and benefits it has achieved by employing the said marketing strategy instead of using the conventional advertising strategy. In addition, the research will propose some of the methods that can be employed to override those problems.
Brief description of P&G
William Procter and James Gamble are credited as the founders of Procter and Gamble (P&G) business that has in the recent past expanded to the international market; both in developed and developing countries. It has been regarded as one of the Fortune 500 American multinational corporations that have established its roots far and beyond its boundaries of Cincinnati where it was first established. The industry is supposedly the American biggest producer of household products and pharmaceutical goods. In particular, company is credited for providing over 250 brands that are grouped into six distinct categories. These groups include laundry and detergents, paper products like toilet papers, beauty care, food and beverages, sanitary towels and health care products.
In addition, the company also makes other products like pet food and PUR water filters and chemicals that are used internally and also by other chemical processing companies. As a way of attracting and retaining new clients, especially female consumers, the P&G also engages in production and sponsoring of Soap Operas that serves to distinguish its brand advertising strategies (A Company History: 1837- Today 2006). In fact, P&G is among business that have been credit with successful business innovations especially on brand management such as Connect and Develop innovation. According to Nielsen Company, P&G business is also among those companies that spend a fortune in advertisements alone. It is said to have had the highest advertising budget of all companies listed in United States by 2007 (Johnson 2012).
Despite all these positive aspects, the company also faces some challenges that demand prompt actions. Among such challenges is the continuous demand for new innovative and brands differentiation. The pressure originates from stiff competition that is posed by other small and larger competing companies. In addition, advancement in technology and new demands for new brands, the company is in a dilemma in deciding which brands to retain and those to discard. For instance, though soap and candle were the main products that the company produced in its initiation stages, candles have become obsolete due to the invention of electric lights among other products that rendered it irrelevant. Attracting, retaining and satisfying the clients are the main challenge that the company contend with all the time.
To handle this challenge effectively, the company has come up with different strategies that are also sensitive to the increasing cost of production in the company. In regard to this fact, as was observed by Jeff Neff of Ad Age, the company had even lost its usual top post in shopper magazine ranking. The failure to retain the top slot went on for three years making shareholders wary. The challenge is thought to have been as a result of effective advertising by its competitors like Unilever (Neff 2013).
In regard to its budget, as per its 2010 annual report indication, P&G is said to be spending cash amounting to over $10 billion in advertisements alone. According to the report, the percentage of Ads as a portion of sales for the said years was approximately 11.3%. This is an increase from the previous years’ where the same ratio was 10.9% and 9.8% in 2010 and 2009 respectively (Johnson 2012). Such increasing figures in advertising is said to have its toll on company’s inability to reward its faithful shareholders effectively (Edwards 2011).
Psychology of advertising
Advertising, since time in memorial, has been used in different circumstances by business to build powerful business force. In definition, as proposed by Brewster & Palmer, 2001, advertising may be referred to the purchased publicity conducted in a pre-planned way to seduce potential clients to act, think or behave as per the advertisers’ desires. According to Robert Hearth, advertisement is a tool that is most effective in persuading any potential and existing consumers to consumer certain products. According to him, companies that use advertising are amongst the most successful ones in the world (Heath 2012).
The same claim is echoed by Krugman’s idea who asserted that TV advertising has a direct influence on individuals even when processed inattentively. This is what is supposedly referred to by a number of individuals as subconscious seduction. Advertisers take advantage of this fact, first, to influence individuals’ mind and secondly, to influence their decision making in regard to certain products. Some psychologist believes that advertisements have both negative effects and positive effect on different individuals of a society. They also believe that the presence of advertisements on available media; whether television, newspapers, magazines, journals, radio and internet among others make all individuals target. They thus believe that advertisements have subliminally stimulated the way different individuals react in different situations (Amoto and Laudati 2001).
Richard Pollay, in his book, The Distorted Mirror: Reflection on the Unintended Consequences of Advertising claim that advertising seem to pop up in every part of the society, include the intimate space of customers’ homes. According to him, advertisements are created to attract attention, cause a change of attitude and influence consumer behavior toward certain ways (Pollay 1986). Nevertheless, some researchers still hold the idea that, though, advertisements has almost direct influence on individuals viewing them, businesses and individual marketers need to formulate their advertisement perfectly so as to inform customers of their products; hence, woo them toward buying (Hansotia and Wang 1997).
According to researchers, customers are highly responsive to advertisements, especially those that are aimed at informing them of new products in the market. Such advertisements are said to carry information persuading the customers to purchase a certain brand of products due to their superiority in quality and customer friendly prices. Depending on the response of the customers on product differentiation message contained in the adverts, firms are said to take appropriate actions; whether to increase or decrease their sizes. In cases where the customers’ responses are deemed positive, firms are said to increase their market size appropriately as they also adjust the prices of their products accordingly (Ferguson 20012).
Possible problems associated with advertising
As describe above, advertising is one of the strongest and most effective tool that businesses can adopt to reach their targeted customers. Nevertheless, in the process of designing, formulating, implementation and monitoring a myriad of potential problems may haunt the business. Such challenges are the center of interest in the succeeding discussion. The problems may include, but not limited to cost implication, consumer attitude, stiff competition from competing businesses, and product differentiation among others.
According to a discussion paper prepared by Kyle Bagwell of University of Columbia, Department of Economics on The Economic Analysis of Advertising, advertising is a sizeable business. According to him, in the year 2003, major companies like General Motors $3.43 billion, Procter and Gamble $3.32 billion and Pfizer $2.84 billion among other companies experienced such greater advertising expenses (Bagwell 2005). The high costs of advertising are to some extent influenced by the stiff competitions that exist in the market. In the case of P&G, though the company was the pioneer of so many products like cleaning detergents, health care products like shampoos and chemicals, a large number of potential competitors like Unilever have come up with similar products. In some instances, such competitors are said to outdo P&G Company in terms of quality of some products. They also do well in reaching out for consumers through their effective advertising and rebranding strategies.
In regard to adopting a different brand advertising campaign like it has been done by P&G, the cost of selling the idea would mean adjusting the advertisement budget upward. In a conventional advertising budget, the cost would be influenced by a number of factors such as the frequency of advertising, competition and clutter, market share of the brand being advertised and the product life cycle stage. In regard to frequency of advertisement, advocating for a different brand would mean that the cost would be relatively higher than that of already established products. The need for increasing the frequency of advertising is to try and ensure that the target consumers are convinced that the target product is superior to the ones being offered in the market (Brewster and Palmer 2001).
A company using a different brand advertising campaign is also expected to bear more financial burden in regard to competition and clutter. Clutter in this case refers to number advertisements that are run in a given media. P&G is expected to incur extra cost since it requires having more clutter than its competitors. In addition, the cost of designing such advertisement would cost them more than that of an already established product that have already been accepted widely and can still dominate the market even without the need for an advert.
Selling a different brand will also require the company to emphasis on the quality of the product it is selling. According to psychologists, consumers are always looking for a product that would not only satisfy them in terms of financial implication, but also one that meet their quality expectation. This will auger well with how well the product has gained ground in terms of market share. In addition, a new brand will demand that the advertisement be of high quality and eye catching and unique. To achieve all these, the company will require engaging experts in its production lines who will ensure that the quality of the product is not compromised. They should also ensure that their packaging line is managed by individuals who are experienced and understand how the markets work. The packaging material should also be appealing and unique so that it can stand-out amid competition. All the above objectives are only achieved if the company’s advertising budget is relative higher than that of the competitor.
In some instances, companies, including P&G are bound to rebrand their products in the form of product differentiation. This will mean that even an existing product, which has undergone such changes, would look as new product. To convince the existing consumers and also the potential consumers that the products are the same or relatively better will call for serious and extensive campaign. In order to reach all the clients, the company would not trust only one form of media, but would opt for a number of them that would be accessible by the target clients. For instance, in a bid to remain relevant and competitive in the sale of women product, P&G is said to be producing and supporting some soap operas both in TV and Radio. This means that its advertisement budget is higher than that of its competitors. With increased advertising budget together with other running expenses that companies incur in their bid remain competitive and attract to both customers and potential and existing investors, the company may fail to meet its long-term objectives.
For instance, it is said that P&G had in some years failed to provide substantial returns to its shareholders due to increasing cost of production and running costs. Here, with a quick glance at the 2012 P&G annual report, the company’s net earnings reduced from $ 15,495 to $13, 292 despite an increase in net sale to $83, 680 from $81,104 in the year 2011 and 2012 respectively. This led to a decrease of $ 0.73 in net earnings per common share from continuing operations (P&G 2012; Johnson 2012). The increase in sales may be attributed to the progressive and active advertisement, but this lead to increased operation costs that have lead to reduction in net earnings. With the company failing to satisfy its shareholders, some are bound to withdraw their support while others may invest in competing companies. Such a move would be detrimental to the company and its products.
Consumer attitude and perception
Psychologically, individuals are said to react with a lag of diverse period in terms of changing their decision due to changes in certain issues (Gujarati 2007). In regard to the question at hand, individuals would also be cautious to jumping into buying new or rebranded products due to the natural nature of human being of the fear of unknown. In addition, as expressed in the previous section, customers are subjective to seduction borne in different advertisements. In cheer realization that other competing companies are as well striving toward winning more consumers, such companies are bound to benefit more when a company decide to go beyond the usual products. In addition, some researchers have argued that, the relevance and importance of a certain ad would be determined highly with how the consumer has interacted with ads In cases where the consumer do not have access to the ad, it would mean that they would be blind to the product being targeted (Rubin 1981). On the same note, the different brand advertising campaign may not encompass enough information to change the decision of the clients as Fernandez and Rosen (2000) found out in his research on goal-oriented consumer’s response.
Effect of competition on advertisement
According to economists, companies come up with advertisements for various reasons that are all directed to customers. On the same note, economists believe that marketers and advertisers retain ultimate right to decide on the content of advertisements, and customers have no option but to take the information carried by the ads. For this reason, consumers do not all the time openly accept the information. Instead, they are said to interpret advertisements differently. Therefore, adopting a different brand advertising campaign is bound to experience more challenges than the conventional way. In addition, since advertisements are bound to affect pricing of different products before consumers are fully persuaded that the different products are superior and selling at fair prices, the company may experience low growth as consumers opt to buy from their competitors (Kirmani 1990). Similar assertion are echoed by Sutton (1991) who said that though advertising is bound to improve customer perception toward a certain brand; hence, creating some barrier to entry, it is bound to increase competition; thus, forcing some firms to reduce their expenditure to avoid the ultimate effects of fierce price competition.
Economists, to some extent, agree that advertising is majorly adopted by monopolistic firms, to gain product differentiation and achieve market control. With product differentiation objective achieved, the firm is as well said to have gained some ground in controlling the market. In the study’s case scenario, P&G Company is not a monopolistic but is surrounded by able rivals and even potential entrant. For this reason, convincing the customers that their products are superior would mean increasing its advertisement clutters; adopt alternative campaign strategies among other ways. Different brand advertising campaign may also, instead of increasing awareness of the product increase the demand for a rival company’s product at the expense of the marketer.
On the same right, such advertising strategy would reversely lead to a decline in consumer value especially in developed market due to increased commodity prices to counter the extra financial experiences trigger by the ads. For instance, P&G sponsored the US Olympic Team and had an advert dubbed ‘Thank you Mom’. Inasmuch as the ad had gained popularity in the US, P&G Company may have not scored properly due to the high cost of running the advert. According to a report released by the company in 2012, the ‘Thank you Mom’ advertisement required the company to think globally. This would involve formulating a communication objective that would cut across board; hence, requiring an expansive and expensive plan to articulate (P&G 2012).
One of the key pillars toward a successful advertisement campaign is price differentiation. Firms and companies that have successfully managed to persuade their customers that their products are overly different from others in terms of quality, outcomes and costs are said to have been rewarded with unequivocal market share and dominance. In regard to product differentiation, a firm opting to conduct a different brand advertisement campaign is bound to employ either the horizontal or vertical differentiation. In definition, horizontal differentiation consumers are said to differ in what they prefer in a product. That is; the characteristics like color, taste, and sources bestowed on a given product. On the other hand, in regard to vertical differentiation, the emphasis is on product characteristics that make consumer go for quality. Therefore, a problem of ensuring that the products under scrutiny in different brand advertising campaign are purely different from other may arise.
In regard to P&G, as documented in its 2012 annual report, its main objectives is to have brands with strong equities in the minds of consumers, those that retailers are demanding and those that are platforms for innovation. Achieving such objectives is not a significant challenge to P&G since it has financial, technological and manpower strength. Nevertheless, the same notion is sure in its rival competitors’ agenda. The only sure way to ensure that its product retain their reputation is to ensure total differentiation, which in part is supported by effective and extensive advertisement (Barroso and Llobet 2011).
In this right, Roberts and Lattin (1991) found out consumers reaction toward consuming a certain brand is more influenced by their choice sets later than their awareness sets. According to them, the consumers’ awareness is highly influenced by such things like advertisements while the choice set is determined by the consumers purchasing decisions. Therefore, a firm that is determined to employ a different brand advertisement strategy should emphasis on influencing both awareness and choice set factors, something that may be problematic to balance and achieve as (Goeree 2008) found out.
Shon Ferguson (2012), in his study on Endogenous product differentiation, market size and price stated that consumer love for diversified brands leads them to becoming more sensitive to product differentiation efforts by different firms; hence, uncontrollable increase of differentiated products in the larger market. In respect to this, he argued that expansion of market base by firms through product differentiation and advertisement may eventually lead to higher prices of such products. If this does happen, consumers are then said to divert their attentions to other similar commodities that are offered at lower prices. This is because, with polarized market, consumers have a wide variety of commodities that they can choose from; hence, the notion of consumer loyalty does not hold (Ferguson 20012).
This is true even to the case of P&G Company that, though having been among the market pioneer is competing with so many other late entrants. In addition, as some researchers have argued, so much concentration on the need for price differentiation would eventually lead to a compromise in terms of prices or quality (P&G 2012). Therefore, the most appropriate advice that researchers have offered is for firms to remain cognizant of the consumers’ need and marshal toward satisfying them by and large.
Grossman and Shapiro while investigating the effect of informative advertising realized that advertising help the elasticity of demand faced by each participating firm. According to them, the lower the cost of advertising, the more the advertisement clutter will increase and the better informed the consumer will become (Amoto and Laudati 2001). In such instances, where the customers are well informed, and more firms are engaged in advertisements, a firm that spend more money in advertisements is bound to suffer since advertising in a market where consumers have full knowledge of the market does not necessary mean increasing your customers.
To avoid the potential problems that are associated with different brand advertising campaign effectively, marketers would need to take a number strategic measure. First, as it has extensively been discussed in the previous section, the marketers should constrain their budgets in such a way that they adhere to the company’s objective. This can be done by ensuring that the advertisements are perfectly formulated to reach the target group effectively while at the same time, minimizing the cost of running those adverts in different media.
In regard to consumer perception and attitude, the adverts should carry exceptionally, convincing and persuasive messages that reflect, if possible, the actual reality of the brand being advertised. This would auger well since customers who have had the potential to purchase the product can pass the same information to them that are aware of the brand but have not made a positive choice of purchasing them. In addition, this would give the company a competing edge against its potential rivals and potential entrants.
The company should also formulate its advertisement with cheer realization that the advert can have an anti-competing outcome, where it promotes the products of the competing firms. The company should also have its shareholders and investors in mind; hence, it would continually receive financial and other forms of supports even in times of turmoil.
P&G Company, like many other large and small companies, engages in intensive advertisement in a bid to weather down any potential competition. In fact, Procter and Gamble is said to be the leading company in terms of advertisement. This is true even with the fact that it is always in the top three of the most profitable multinational company. The need for regular advertising, where it is reported to collaborate with other firms and sponsor is said to emanate from the need to inform its customers regularly of its superior brands that have dominated the market. In a bid to advertise, like any other companies, it faces challenges that drag down its objectives.
Among the advertising strategies that a company adopts, different brand advertising campaign is one that can lead to greater success in reaching customers. Nevertheless, there are a myriad of challenges that are attached to the strategy as discussed in the previous section. In particular, the campaign would be more expensive than the conventional methods employed by many companies. It requires maximum time to convince the customers that truly, the brand the company is selling is superior and better than the similar ones in the market. Again, the customers may not be fully convinced; hence, though having the awareness of the product may opt to consume those offered by competitors. The strategy is also said, sometime, to work against the company where it indirectly promotes the products of its competitors. Therefore, as much as the company would love to use this strategy, it should be wary of the challenges; hence, plan appropriately. The advert should be formulated in such a way that all the unnecessary costs are avoided while at the same time, targeting to reach all the potential customers.
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