| Pub. Date | : March 2022 |
|---|---|
| Product Name | : The IUP Journal of Case Folio |
| Product Type | : Article |
| Product Code | : IJCF010322 |
| Author Name | : Munmun Samantarai and Debapratim Purkayastha |
| Availability | : YES |
| Subject/Domain | : Management |
| Download Format | : PDF Format |
| No. of Pages | : 20 |
The case discusses the strategy of US-based FMCG giant Procter & Gamble (P&G)
during the coronavirus (Covid-19) pandemic in 2020. P&G decided to 'double down'
on marketing as demand for its products soared due to consumers' panic buying amid
lockdown scare in the US. This decision came in just after P&G's third-quarter financial
results revealed a massive surge in sales, the best US sales in decades. The Covid-19
outbreak spread to countries across the world and marked its presence in the US in
January 2020. By March 2020, as the coronavirus transmission rapidly spread across
the country, a national emergency was declared in the US urging people to stay indoors.
Following the emergency announcement, stores across US were f looded by hordes of
shoppers, and shelves were emptied as people were looking to stockpile groceries and
household items to prepare to hunker down in the midst of the growing pandemic.
Apart from staples, sanitizers, and cleaners, the items much on demand were paper
products like tissues, paper towels and tissue paper. With products f lying off the shelves
in no time, grocers had to hire more employees to restock and manage stores. Further,
to address the shortage of essentials, specifically toilet paper, grocers were compelled
to put purchase limits, and leading toilet paper manufacturers had to ramp up
production. Meanwhile, with the surFging sales across all its categories, P&G's saw it
as a huge opportunity to increase brand visibility by reminding consumers of its brands
and make them stay loyal. The FMCG Company decided to boost its advertising plans,
while other companies were withholding their budget for cost saving. The global
economy was likely to fall into recession, and a major shift in consumer buying behavior
was expected. With demand being subdued due to the pandemic, except for select
categories like essentials, it would be interesting to see how successful P&G's double
down strategy would be in brand-building and capturing consumer mind-space.
Our intent is to reach as many people as we can-with as little excess frequency
as possible-with strong messages to help people understand: What is this
product? How does it help you? Why is it better? Why should you buy it? That's
why we're really doubling down on communication and advertising. People need
our products and we want to make sure that it's available for them, so that's
why we're continuing to press ahead.1
- Marc S. Pritchard, Chief Brand Officer, P&G, 2020.
We were expecting more variations in results and guidance due to global coronavirus uncertainty. Instead, P&G seems to be benefitting from the solid, and often predictable, demand of household necessities. 2- John Boylan, Analyst, Edward Jones, in 2020.
In April 2020, US-based Fast Moving Consumer Goods (FMCG) giant Procter & Gamble (P&G), decided to 'double down' its media plans amid the coronavirus pandemic3 (Covid-19).4 While many global brands were holding back on marketing spend, P&G saw it as a huge opportunity to increase brand visibility by reminding consumers of its brands and benefits.5 The multinational firm thus decided to ramp up its advertising plans rather than withholding its budget during the pandemic. Commenting on the move, Jon Moeller (Moeller) Chief Financial Officer, P&G said, "We need to work hard to ensure that we maintain mental and physical availability to the greatest extent possible, so that those consumers return to their beloved and trusted brands - which are ours - as they're more fully available. There's a big upside here in terms of reminding consumers of the benefits that they've experienced with our brands and how they've [met] their family's needs, which is why this is not a time to go off air."6 This announcement came soon after the company reported better-than-expected sales growth for the March-ended third quarter of the fiscal year 2020.7 P&G posted a 6 percent surge in organic sales.8 In addition, it $17.2 billion, a little below analysts' forecast of $17.4 billion.9 It also reported core earnings of $1.17 per share, rising 10 percent year-over-year topping the market analysts' expectation for $1.13 per share.10 The company witnessed a boost in its sales due to the Covid-19 induced panic buying among the consumers. Essential products such as soap and toilet paper especially the demand for Charmin bath tissue and Bounty paper towels helped drive the growth.11 P&G also saw big gains in home care and healthcare categories.