P&G Europe: Ariel Ultra’s

Euro-Brand Strategy

Group 2
Stephane Willaert
James Matthys-Donnadieu
Brian Haeck
Annick Bolland
Rob Roelandts
Ilker Temir
 Production Cycle

Product Cycle in 1970s

•  Distributed R&D
•  Different prices from same
suppliers
•  Manufacturing at multiple sites
•  Multiple formulas for the same
product
 Euro-Branding Timeline

Unsuccessful Some success of

“Pampers Experiment” Euro-Branding

1970 1980 1990

Centralization

“The Compact Challenge”

“Kingdom” of GMs Ariel Ultra
 The New Ariel Ultra

Old Ariel Ariel Ultra

Country specific formulas (with or One formula (without phosphate)

without phosphate)

Various densities Fixed density

Different perfumes in different countries One perfume

A wide range of package sizes and European-wide, much less range of

designs package sizes and designs

Outcome is a “highest common factor” European product

 The Strategy

Convert the market to compact detergent or create a niche?

30%
15%

Pricing

Ariel Powder Ariel Ultra Vizir

(Compact) (Liquid)
 Launching Strategy
The German Launch
•  Launched in May 1989
•  2 kg size compact, fully equivalent to a regular 3 kg
•  Priced between regular detergent and premium liquid
•  Primary focus on environmental friendliness
•  Secondary focus on performance

The French Launch

•  Planned for September 1989
•  3 kg size compact, promoted as roughly equivalent to a regular
5 kg. Same for 5 kg size compact, promoted as equivalent of 8 kg
•  Focus on environmental friendliness

In July 1989, Unilever launched Skip Micro
Skip Micro
Removed fillers from regular
phosphate based Skip
Using a 2.2 = 5 slogan.
Skip Micro 2.2 kg was priced
lower than Skip regular 5 kg
Competitive Preemptive Strike
P&G Competitive
Ariel Ultra
Analysis
New European-wide design Skip Micro has poorer
with higher performance performance than regular Skip
or Ariel
Planned to position 3 kg instead Much larger dose of Skip Micro
of 5 kg regular is required than Ariel Ultra for
an equivalent job
Planned to position Ariel Ultra
in mid-premium (15% extra)
 Unilever’s Strategy

Destroying the Compact Detergents

“Competitor knew that their product was
inferior. So they wanted to induce consumer
to try compact and reject it, thereby, damaging
the valuable segment P&G had hoped for”

First Mover Advantage

“Competitor was buying time, using a quickly developed,
lower quality product to gain first-mover advantage, but
planning to upgrade the formula as quickly as possible”
 What To Do
QUESTIONS:

1.  How should P&G respond to

Unilever’s Skip initiative in France?
2. To what extent this response will
challenge Euro-Brand approach?
3a. What are the benefits of a (unified)
pan-European product/brand?
3b. What are the drawbacks of a (unified) pan-European product/brand?
3c. Which elements of the product/brand benefit most from a pan-European
approach? Which least?
3d. How consistent should Procter and Gamble have sought to be on the
degree of “Europeanness” or “localness”?
3e. How successful was Procter and Gamble in the development process?
 Country Overview

3kg 4kg 5kg

UK Spain France

ETC

Ariel Ultra Eismann Italy

Delivery team

Holland Germany
Higher cost
But ecological
 Pan-European Brand
Advantages

•  Economies of scale
•  Brand consistency and reliability
•  Better control on organization
•  Quicker product development time & time-to-market
•  Coordinated roll-out and product life cycle management
•  Shift R&D focus to innovations and new products
•  Improvements to products after launch is easier
•  Easier benchmarking with competitors
•  Increased customer awareness and recognition
 Pan-European Brand
Disadvantages

•  No possibility of adapting local needs

•  No/Limited possibility of tailor made response
to local competition
•  May lead to frustration at GM level – They are
not in control anymore
•  Potential lack of involvement in local
subsidiaries
•  Inherent problems of matrix organizations
•  Higher product costs due to “highest common factor”
•  Brings challenges to thorough market testing – Increased risk
•  May kill creativity
 Pan-European Brand
Who Benefits

•  R&D
•  Procurement
•  Manufacturing
•  Overhead support functions

Economies of Scale!
Pan-European Brand
Who Doesn’t Benefit

Marketing!
 Europeanness vs Localness

We think P&G should follow a “glocal” strategy, seeking the

optimal local and global balance.

Key aspects in this optimal balance:

•  Europe-wide common product features and aspects
•  Products with a potential for “Europeanization”
•  Trends in legislations and being proactive
(i.e. phosphate)
•  Cost/Benefit analyses of “non-Europeanizable”
products
 Success of Development

We think that P&G was successful.

•  Demonstrated high level ownership

•  Cross functional project team
•  Early involvement (=commitment) of subsidiary marketing departments
•  Keeping stakeholders informed (GMs via marketing)
•  Country visits Meyers and Murray
•  Premium pricing vs replacement of existing product
 How Should P&G Respond?
We think P&G should do the following:

•  Emphasize quality equivalence with Ariel standard

•  Emphasize the environmental theme – differentiator
•  Allow 2 kg boxes in French market (available in Germany)
•  2 kg of Ariel Ultra is still 24% cheaper than 5 kg of Ariel standard
without changing 15% premium pricing

Overall Strategy:

•  Emphasize key propositions: Compactness and environment friendliness

•  Emphasize quality equivalence
•  Do not point out premium pricing
 Our Conclusion

No effect on Euro-Branding:

•  The environmental theme stays the same

•  2 kg packaging already exists in Germany and can be “Europeanized”
•  Pricing policy unchanged

Overall, there is no change in value proposition!

Questions
 Annex
French GM Notes

•  Phosphate legally allowed => non phosphate is too expensive

•  Preference for Flanker strategy to get premium product to boost margin and take
market share
•  France prefers large packages (don’t like the “one packaging for Europe” strategy)
•  Test market feb 89; launch planned sept89
•  Pitch: ecologically against LeChat (Henkel)
•  July 89: UniLever launches Skip Micro (2.2 = 5)

General
• Distrust Euro-Brand strategy because it ignores regional differences in buying
behaviour
• If ETC strategy fails, results and responsibilities will show up in regional bottom line
 Annex
German GM Notes

•  Phosphate legally banned => ok with non-phosphate

•  Launch may 89
•  Focus “environmental” against Henkel

General
•  Distrust Euro-Brand strategy because it ignores regional differences in buying
behaviour
•  If ETC strategy fails, results and responsibilities will show up in regional bottom line
 Annex
European President Notes

•  In favour of “one formula” concept

•  No further comments found.

•  But:
-  Likely to support one formula and one package if this is creating value
(reducing costs, increasing sales, taking market share or all)
-  Likely to prefer balanced matrix power distribution to political strongholds
 Annex
Italian GM Notes

•  Phosphate legally banned => ok with non-phosphate

General
•  Distrust Euro-Brand strategy because it ignores regional differences in buying
behaviour
•  If ETC strategy fails, results and responsibilities will show up in regional
bottom line
 Annex
Spanish / Portugese GM Notes

•  Phosphate legally allowed => non phosphate is too expensive

General
•  Distrust Euro-Brand strategy because it ignores regional differences in buying
behaviour
•  If ETC strategy fails, results and responsibilities will show up in regional
bottom line
 Annex
Headquarters Notes

No comments found

But:
- Likely to support one formula and one package if this is creating value
(reducing costs, increasing sales, taking market share or all)
- Likely to prefer balanced matrix power distribution to political strongholds
 Annex
Ariel Ultra Delivery Team Notes

•  Want to launch pan-European by September1989

•  Time pressure => only one formula can be developed
•  Would prefer unified formula and packaging as this reduces complexity and
speeds up the rollout