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Head & Shoulders enter emerging market: India

The hair care industry in India is continuing to grow rapidly. The compound annual growth rate (CAGR) of the market in the period spanning 2006-2010 was 15.4%. As a result of this, many companies are entering this market. Head and Shoulders entered the Indian market in 1997, followed by the success of its rival product Clear by Unilever. Both products have gone head to head to dominate the Indian anti-dandruff hair care industry. This included harsh marketing, price wars and the introduction of a Social Responsibility program by P&G to win over Indian consumers.

P&G India’s research revealed that lack of education is a cause of great concern amongst the Indian population and they are constantly looking at ways to contribute to this cause. With this in mind P&G launched Shiksha in 2005; which enabled consumers to contribute towards educating underprivileged children through their brand choices. This year Shiksha will build more than 20 schools across the nation to give more children the invaluable gift of education. P&G have used a strong marketing strategy with the introduction of such a program. Consumers will associate the branded products with helping underprivileged children gain an education.  This makes P&G India unique over rival brands and cultivates a positive image of the company.

In addition to this, on February 2012 Chairman CEO of P&G, Bob McDonald told analysts that Procter and Gamble will cut costs totaling more than $10bn over the next five years, including $1bn in external marketing spending. After years of increased spending in marketing, P&G are reducing costs on ad spending which has grown considerably. Since 2010, P&G have increased the amount spent on marketing from $1.8 billion to $9.3 billion in 2012. According to Advertising Age, P&G will not be increasing its ad spending to sales ratio this year after experiencing an increase of more than two points to 11.3% last year.

P&G state that they are changing their strategy with regards to marketing instead of making direct cuts. For example, they will be using lower cost digital marketing channels to reach consumers individually. In the digital space with innovations such as Facebook and Google, many large companies may find that return on investment on advertising when properly designed can be efficient.

P&G have publicly talked about the advantages of more multibrand group marketing initiatives such as its program around the 2012 Summer Olympics that spans 30 brands. Despite these changes, P&G still expect 2012 marketing spending to be roughly in line with that of 2011, and are still passionate about increasing reach, frequency and the effectiveness of advertising impression to consumers.  P&G are opting for a multibrand effort to spread spending effectively and efficiently. Mr. McDonald stated that P&G’s summer Olympic program in January delivered more than 2.5 billion impressions in traditional and social media the first month alone.

These changes aim to streamline P&G to compete amid slow growth in developed markets during economic downturn and to aid aggressive expansion in developing markets. Many conglomerates are seeking to expand into emerging markets due to stronger growth prospects as Europe is struggling with a debt crisis.

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