Overview of Consumer Retail: Two Elements of FMCG Industry from the Perspective of Procter & Gamble

This month's column, our courses are all about a big field, that is, retail and consumption. We talked about the history of the retail industry, including some of the most representative companies: Wal-Mart and Costco, and extended to McDonald's and Starbucks, two very classic chain restaurants. I believe that in this month, you should have a basic framework for what the whole retail and consumer industries look like.

So in the next week, I'd like to borrow a few companies to make a summary and consolidate the knowledge points of retail and consumer industries we talked about before. This week, we will systematically talk about the cases of five companies, including some companies that you are not so familiar with, but are very novel and symbolic. After this week's review, response and new extension, I believe it is hard for you to forget all kinds of industry trends, company strategies and theoretical knowledge you talked about in the previous quarter.

Today and tomorrow, our theme is: Procter & Gamble. Procter & Gamble may be a company you used to feel familiar with, but its face seems to be more and more blurred in the past two years. Through P&G's explanation, we can re-examine what happened in the fields of consumption and retail in recent years from another angle.

When you mention Procter & Gamble, your impression should be the most successful company in the field of consumer goods. It was founded in 1837 and has a history of 180 years. At first, Procter & Gamble was just a small workshop to make candles in Cincinnati, Ohio, USA. By 20 16, P&G has become a global consumer goods giant with an annual income of $670 billion, a profit of $ 10 billion and more than 10 million employees. You should have heard of many brands owned by P&G, such as Rejoice, Pan Ting, Olay, Head & Shoulders, Crest, Shufujia, Pampers, Tide, Bilang, Gillette, Olay, SK-II and so on. This list may be very long.

However, in the past ten years, P&G has had a hard time.

For example, in terms of sales, P&G's sales in 2008 was $77 billion, and it reached $84 billion in 20 13. In 20 16, this figure was only $65 billion, which was 23% lower than that in 20 13.

In terms of profit, P&G's profit in 2009 was still $6,543.8+03.4 billion, and then it fluctuated greatly. In 2065.438+05, it even fell to $7 billion, leaving only half. It was not until 2065.438+06-2065.438+07 that it began to rise to more than $65.438+00 billion.

As for the stock price, I also attached a picture to the manuscript. In the past ten years, two stock indexes that can be used to measure the market trend-Dow Jones index and Standard & Poor's 500 index, are common in S&; The P500 index rose by 59% and 62% respectively, while the share price of P&G only rose by 29%. That is to say, the performance of P&G was far lower than that of the broader market.

As you know in the last column, large companies have to make various adjustments in products, marketing and personnel during the painful transition period and turbulent period. In the 2 1 century, the CEO of P&G has changed four times, and the top management is very frequent. All these data and phenomena show that this once brilliant consumer goods giant has reached another critical moment in the company's 180-year history.

P&G's Road to Success

So what changes have taken place in the whole world, which makes P&G struggle so hard? Today, let's take a look at what makes P&G so successful.

Procter & gamble's industry, the exact name is fast-moving consumer goods industry. The full name means "fast moving consumer goods". The so-called fast-moving consumer goods refer to goods with relatively high consumption frequency, relatively fast consumption speed, usually low unit price and wide demand, including shampoo, toothpaste, washing powder and shaver that we are familiar with. Generally speaking, fast-moving consumer goods are durable consumer goods, that is, goods with long service life and large one-time investment. Such as household appliances, furniture, cars and so on.

Based on the characteristics of high consumption frequency, low unit price and wide demand, FMCG has three very important characteristics in sales:

Convenient. Because the investment in purchasing FMCG is very small and the decision-making is very light, consumers generally buy it nearby.

Visibility. When consumers buy, they are more easily influenced by the environment or the atmosphere of the store. Consumption decisions are more emotional.

Low loyalty. Generally speaking, consumers are not loyal to this small product. Even like the new and hate the old, and often take the initiative to change brands. And unlike digital products, these products can constantly upgrade new technologies and add various functions. These products are so homogeneous that consumers can easily switch to other brands.

Finally, these characteristics lead to the two most important competition modes in FMCG industry:

Brand marketing.

For FMCG, consumers are light in decision-making, low in loyalty and sensitive to purchase, so merchants will bombard consumers with various advertising and marketing methods, so that they will form a brand impression and generate a certain degree of brand loyalty, which will continue to affect the subsequent second and third purchases. Only by implanting our own products and brands into consumers' minds can we have sustained success.

Sales channels.

Because the unit price of FMCG is low, it is generally convenient to buy and most people will need it, so it is very important to establish a broad sales network. Especially in China, which has a vast territory and rich natural resources, supermarkets, department stores, convenience stores and even street commissary are the most important partners of FMCG. No matter how well the brand and marketing are done, they need to be translated into real sales and income.

In fact, to put it simply, the above things are essentially: first of all, in so many choices, you should be able to remind consumers of your products; Second, think about it, and let them buy it. The essence of FMCG industry is as simple as that.

Of course, we know that the simpler the truth, the harder it is to do it well. The brand marketing and sales channels mentioned above are also the best places for giant companies like Procter & Gamble.

Brand marketing of P&G

The marketing of Procter & Gamble and FMCG has become a huge science. If you want to study, you will find countless details and cases. But from a big perspective, P&G is very good at two aspects:

First of all, find the concept and positioning that best suits your brand and products.

For example, if you want to sell a bar of soap, P&G will name it "ivory soap". It will apply for a patent first, then hire a famous chemist from a famous university to analyze the chemical composition of "Ivory Soap", and then choose the most convincing and attractive data to convince consumers that "Ivory Soap" is the best-this marketing method is not the latest product advertisement of P&G, but it was launched by P&G at 1879. This product and marketing concept has been integrated into P&G's DNA from the beginning.

In addition, P&G is also very good at manufacturing product concepts. For example, the softness of "Rejoice", the dandruff removal of "Head & Shoulders", the nutrition of "Pan Ting" and the professional hairdressing of "Sassoon" ... At the same time, their concepts are constantly strengthened by advertisements, such as "shampoo and hair care at one time, making hair elegant and supple", "dandruff goes away without a trace, making hair more outstanding" and so on. These positioning have highlighted the efficacy and characteristics of different brands. And in the end, no matter which brand you buy, it's all Procter & Gamble, which is also the benefit of multi-brand strategy.

After finding the most suitable concept and positioning for its own brand and products, another thing P&G is good at is constantly touching customers' thoughts and minds with overwhelming perennial advertising strategies.

We mentioned a concept in the last column "From Chain Store to the Birth of Supermarket", that is, around the 1940s, TV and TV advertisements began to enter the family. The birth of TV, a new media, is of great help to large enterprises in building national brands. Because of television, advertisements can reach thousands of households in Qian Qian, which enables companies like Procter & Gamble to establish national brands. National brands are very suitable for large-scale supermarket sales, because large supermarkets cover a wide area, the consumption background is complex and the demand is difficult to predict. Unlike small shops on the street, they can be very localized and customized, so national brands can better meet the general needs of everyone at this time. And TV marketing is exactly what P&G has been good at for decades.

Moreover, Procter & Gamble's advertisements are often carried out all the year round. General brands will advertise before the market introduction period or the peak sales season, but almost every day we can see P&G products advertised on TV. This also allows consumers to further identify with P&G's products, and has become a fixed consumer group of P&G, making continuous contributions to P&G's income.

This is P&G's strong point in brand marketing, and another important ability that keeps P&G standing for many years is that it has established sales channels for so many years. These channel networks are like capillaries, which penetrate everywhere consumers appear.

Distribution channels of P&G

Similarly, P&G's distribution channel system is also a grand subject that has been repeatedly studied by many people. Let's do the simplest and most critical combing:

First of all, the breadth and depth of P&G distribution system is very strong. Internally divided into distributors, wholesalers, major retailers and large chain stores, there are also first-,second-,third-and even more distributors. It can be said that you can find P&G products in Carrefour, Wal-Mart, RT Mart and other large supermarkets, as well as street shops in third, fourth and fifth tier cities, which is the ability of P&G's entire sales channel network.

In addition, P&G has a very close relationship with suppliers. As we said before, Wal-Mart has a very deep cooperation with suppliers. In fact, P&G is a typical example. In the cooperation with Wal-Mart, P&G has developed many advanced systems, such as continuous replenishment system, information management system, customer relationship system and supply chain forecasting system. If you take a bottle of shampoo from Wal-Mart, the POS cashier system will send the recorded transaction data directly to P&G's back-office system. In this way, P&G can grasp all kinds of data in real time, so as to arrange production, promotion, logistics and so on.

In the end, this extensive, in-depth and closely connected channel network allows all kinds of brands under P&G to reach consumers in every corner. This has also made P&G a great success in the world and China. As we said, when you can remind consumers of you every time they need to buy something, and you can still be found, it will be difficult for you to succeed.

However, as we said at the beginning, P&G has encountered some troubles in the past ten years. So, why do these means that make P&G successful suddenly fail? In the Internet age, how did the changes in the retail and consumer industries disintegrate the advantages that P&G once had? We will answer this key question in the next column.

Today, I leave you with a question to ponder: In recent years, has the number of people around you using P&G products increased or decreased? What do you think is the reason for this change? Welcome to share your findings and analysis in the message area.