Pert Plus - a P&g Company Product Analysis

Executive Summary

Procter & Gamble Inc. (P&G), a wholly owned subsidiary of its U.S.-based multinational company, is known for its position as a leading manufacturer and marketer of consumer and industrial products. As P&G prepare for a national launch of the Pert Plus product, they must decide on a marketing plan, regular pricing, feature pricing, as well as trade acceptance due to this being a re-launch of the Pert product.

The company objective of P&G is to achieve a 6% share objective and a steady growth pattern for two years after their introduction. The total Canadian market share for hair care products was $479 million in 1998 after considering an annual increase in sales from 1986.  Pert Plus' market share was 6.7%, or $32 million. Pert Plus is a product of the Crossover Category and considers the Finesse brand to be their major direct competitor.

There are 6 alternatives for P&G to consider:

1. Enter Pert Plus into the market at a parity price point. (Status Quo).

2. Enter Pert Plus into the market on a 15% premium pricing over Finesse.

3. Offer Pert Plus with a premium pricing strategy coupled with trade price promotions strategically planned throughout the year.

4. Offer rebates on stock of Pert that are already on merchant’s shelves.

5. Buy-back the trade’s existing Pert Products when launching the new Pert Plus line

6. Offer Pert Plus at a price slightly below competition

Alternatives #3 and #4 are recommended because offering the product at a premium price will replace the lost business and provide opportunity growth. Alternative #1 is not recommended because the parity price will generate a loss for the company due to its lower contribution margin.

Problem Statement

As P&G prepare for a national launch of the Pert Plus product, they must decide on a marketing plan, regular pricing, feature pricing, as well as trade acceptance due to this being a re-launch of the Pert product. Is the Canadian market that similar to the United States market when it comes to beauty products?

P&G is in the process of launching their new breakthrough Shampoo formula, Pert Plus, into the Canadian market. The product manager, Marie Donini, needs to decide on the product pricing strategy that will help it penetrate and gain market share of the Canadian hair care market as quickly as possible. They also need to decide on how to manage the unsold inventory of their previous product, "Pert" and the incentive plan for the retailers to gain access to additional shelf space.

Company Background and Objectives

P&G is known for its position as a leading manufacturer and marketer of consumer and industrial products, including Tide, Ivory, Bounce, Mr. Clean, Crest, Head & Shoulders, Oil of Olay, Crisco, Pampers, and Noxzema. P&G employs approximately 3,300 employees across Canada, with 22.73% working out of the Toronto corporate headquarters. Pert was launched nationally in Canada in September 1981, and in the U.S. in 1979, after unsatisfying share objectives and growth patterns, a positioning change was implemented in 1983 with changes in advertising to a unisex market and package graphics. However, by August 1987, brand share had dropped to less than one percent. In February 1987, the new Pert Plus brand, which combined the cleaning properties of a shampoo and conditioning combination resulted in market share of 6.7%, which was a 60% increase over the initial forecast of 4.2%, P&G planned to take this nationally in the U.S by late 1987.