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Marketing Management
Report on:

Corporate Customer Relationship


Management for FMCG Industry
Case Study of Procter & Gamble

By:
Junaid Ali Khan
ID: I201322177

Table of Contents
1.1. Defining Corporate CRM..............................................3
1.2. The FMCG Leader: Procter & Gamble...........................3
2.1. Customer Relationship Management (CRM)..................3

2.1.1. Definition of CRM..........................................................4


2.1.2. Literature Focuses.........................................................5

2.2. Corporate CRM...........................................................6


2.2.1.
2.2.2.
2.2.3.
2.2.4.

Macro-Environmental Influences....................................6
Organization Driver CRM and Profitability.....................6
Emerging Needs and Issues of Corporate CRM................7
Difficulties Underlying Corporate CRM............................8

3.1. Industrial Background Fast-Moving Consumer Goods


(FMCG)...........................................................................11
3.2 The Trend of FMCG Industry.......................................12
3.3. Procter & Gamble: An Overview.................................13

3.3.1. Organization Structure................................................13


3.3.2. Product Portfolio.........................................................13

3.4. The Company Philosophy & Strategy..........................14

3.4.1. Purpose, Values and Principles.....................................14


3.4.2 Corporate Strategy ......................................................14

3.5. Present Situation......................................................15


4.Conclusion...................................................................16

1.1. Defining Corporate CRM


CRM vendors are looking to provide highly customized, global CRM
solutions to leading institutions. Following the global trend, CRM
vendors have responded with solutions that focused on converting
customer information in data warehouses into sale arsenal that can
be used in all marketing channels, including the Internet. At the
same time, these solutions automated the complex business rules
and processes
in organizations
and analyzed
customer
segmentation and profitability measurement for organizations
decision making. Such integrated CRM activities is favorable for
modern organizations if hoping to generate more profit from existing
customer information and to prevail over competitors. (Akcura &
Srinivasan, 2005) Cross-branding of cross-category selling are the
integrated actions taken by the corporation to maximize its potential
on customer information and relationship as a whole, instead of
operating the CRM program individually in a single brand or
category. Such CRM activities conducted from in-house
management, and combining brands or product categories under
one corporation will be referred as Corporate CRM throughout this
report.

1.2. The FMCG Leader: Procter & Gamble


Procter & Gamble (P&G), being a globally renowned company, owns
a huge brand portfolio and taking a large portion of market share in
the FMCG industry, is one of the best existing demonstrations to
examine the influential factor of Corporate CRM system in terms of
multinationals in this specific marketplace.
A conglomeration like P&G is a classic example to study
organizational issues, both external and internal. Given the complex
involvement with various stakeholders in the CRM system, e.g. IT,
sales, and marketing, the alignment and arrangement of different
knowledge, terminology, expertise and expectations among
functions, can be very critical and challenging. Starting from the
initial steps of implementation to the full operation of a Corporate
CRM program, every single step needs to be taken into account to
ensure fluent coordination and interrelationship. However, the
enormous challenges from the corporate strategy, installation
process, functionally diverse objectives, and system perspectives
are areas that are important yet not fully investigated. (Meyer and
Kolbe, 2005)
Besides the internal, organizational difficulties, the rising consumer
awareness of marketing medium, along with the competition and
changing market structure in the FMCG industry, mainly raised by
large retailers and supermarkets, all these factors have been
attracting researchers to study in depth and forced those originally
dominated FMCG giants to reexamine their relationship building with
consumers and to build up their own in-house CRM programs in

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order to win in this battle. (Marketing, 2006) All the
aforementioned together led the researcher to investigate P&G as a
case study object within the discipline of Corporate CRM, and its
related issues from various facets.

2.1. Customer Relationship Management


(CRM)
Along with the progressed perception towards relationship
marketing, the interests in customer relationship management also
started to rise in the 1990s. (Ling and Yen, 2001 & Xu et al.,
2002) Organizations, regardless of size, were all thrilled and strived
to adopt CRM systems so as to build up a more effective relationship
with respective customers, to make the most of this interaction, and
ultimately to reflect it on business profitability. (Ngai, 2005)
Agrawal (2003) summarized the marketing evolution of its
culminating towards the CRM as shown in Table 1.

Bauer et al. (2002) supported the progress and addressed that with
the aid and incorporation of Internet and technologies, the
development of IT and IS enabled and simplified the boundaries and
systemized the complexities between companies and their
customers; moreover, it facilitated marketing executive and
knowledge management. Through a better understanding towards
the existing customer, companies were then able to augment
customer value, and thus enlarge the customer pool by retaining
current customers and acquiring new customers.

2.1.1. Definition of CRM


However, even though the widespread and blooming usage of CRM,
there was no universal identification of it. A simple definition by
Payne and Ryals (2001), defined CRM as a concept that includes

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the stages of establishment, development and maintenance of a
long-term relationship between customers and companies which
should benefit not only companies, but both sides. Likewise, Swift
(2001) defined CRM as an approach where companies try to
understand and influence customer behavior through particular and
meaningful communications in order to improve customer retention,
loyalty, and acquisition, to establish customer relationship and
finally to achieve the goal above all, customer profitability. Wilson et
al. (2002) also upheld the idea of a mutually beneficial relationship
is the key output that a successful CRM should provide, and defined
it as the processes and technologies that support the planning,
execution and monitoring of coordinated customer, distributor and
influencer interactions through all channels, resulting in mutually
rewarded relationships with customers.
Similarly to all aforementioned, combining both the viewpoints from
Bauer et al. and Swift, Paravariyar and Sheth (2001) defined CRM
as a comprehensive strategy and process of acquiring, retaining,
and partnering with selective customers to create superior value for
the company and the customer, together with the integration with
functions of marketing, sales, customer service, and supply chain,
CRM became a powerful tool to facilitate company in achieving
better efficiencies and effectiveness and to deliver greater customer
value.
All these definitions highlighted not only the importance of the
communications, maintenance and management of customer
relationships, but more importantly the incorporation of
technologies. In short, CRM can be seen as a set of strategies for
managing those relationships with customers that relate to the
overall process of marketing, sales, service, and support within the
organization; meanwhile, IT and IS should be included within the
operation so as to provide an effective use of customer information
and to integrate cross-functional CRM process; and all together CRM
shall assist the company to meet and satisfy the needs of the
customer and consequently deliver profit for the company. (Ngai,
2005)

2.1.2. Literature Focuses


In order to provide a clear picture of the content of CRM, Ngai
(2005) conducted a thorough investigation of academic research
and literature in the field of CRM from 1992 to 2002. Ngai (2005)
identified and classified a range of articles into various categories
based on the major focuses of those studies. The findings of this
investigation proposed that papers and research of CRM falls into
five broad schools, general CRM, marketing, sales, service and
support, and IT and IS. (Figure 1 and Table 2) Under these main
classifications, Ngai further divided them into 34 sub-categories,
and indicated that the most interested areas been researched lay in
two fields, firstly the CRM management, planning and strategies,

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and secondly the CRM in software, tools, systems, data mining,
knowledge management, and e-commerce.

2.2. Corporate CRM


2.2.1. Macro-Environmental Influences
The need for CRM in general can be found in a research by Mack et
al. (2005), who pointed out two major external forces that make
CRM now a trend and a need in driving organizations to adopt it,
namely the change in the business environment, and the changed
direction of company strategy, i.e. customer orientation as
mentioned in the beginning of this chapter.
With respect to the changing in business environment, Mack et al.
(2005) identified three observed climate-covering viewpoints of
customer, market and management. The first and most obvious
change would be the customers behavior, resulted from overfilled
marketing messages and tools. Clustered marketing messages and
approaches lead to inefficient marketing activities and a seeking of
diversified marketing vehicles. The second macro-environmental
change is the increased complexity of the markets. The rising and
unavoidable trend of globalization leads to an aggressive
competition in terms of goods, services, and most importantly,
costs. In addition, globalization made the barriers and boundaries
between industries indistinct and permeable and so created
opportunities for companies to enter new markets. The last main
stream in change is the concept of value management.
Globalization of the financial markets attracts investors across the
world and forced organizations to develop stronger competitive
advantages so as to provide better services and deliver greater
shareholder value. (Mack et al., 2005) In short, both macroenvironmental changes and the evolution of strategy into customer
orientation are factors for any company to adopt CRM to satisfy
market and customer needs.

2.2.2. Organization Driver CRM and Profitability


An early and influential research done by Reichheld and Sasser in
1990 revealed the phenomenal impacts regarding customer
retention and company profitability acceleration. Research also
indicated that the longer the customer relationship lasts, the greater
its profitability becomes. (Reinartz et al., 2005) Many other
researchers also supported the cause and effect of CRM and
profitability augmentation. (Storbacka et al., 1994 and Yeung
and Ennew, 2000) All these researchers and experiments
advocated and further confirmed customer orientation and the
implementation of customer relationships are indeed important for a
companys success. (Meyer and Kolbe, 2005)
Another recent report conducted by Telephony 2005 disclosed
evidences that companies that create satisfied, loyal customers
have more repeat business, lower customer-acquisition costs and
stronger brand value; and all of which translates into better financial
performance. (McElligott, 2005) In other words, the concept and
technology of CRM are more than just defining who the targeted
customer is; providing quality service and analyzing customer
loyalty, preferences and profitability are as well essential
dimensions that should not be ignored. Cockburns (2000) study in
telecom industry, published in Harvard Business Review, revealed
that an increase of 5% in customer loyalty could raise profits by
over 50 percent. Similarly, another recent study also in the telecom
business by ICL highlighted a research result that by retaining the
top ten percent of customers can generate additional revenue and
profit for organizations. (Agrawal, 2003)
Recognizing the importance and the trends of customer orientation
nowadays, CRM is now considered as one of the preconditions for
the realization of profitability by both academics and companies.
(Agrawal, 2003) Considering all the facets CRM covered, Meyer
and Kolbe (2005) widened the definition and utilization of CRM and
brought it into organizational level, proposed that CRM can be seen
as a multi-faceted, comprehensive phenomenon which includes
strategic aspects, customer-oriented processes and organizational
changes through projects as well as performance measurement.
That is to say, the cutting-age CRM now should embed customeroriented concept organizational-wide to support the strategy of
customizing specific products and services to individual customers.
(Shi and Yip, 2007; Wilson et al., 2002 and Payne and Ryals,
2001)

2.2.3. Emerging Needs and Issues of Corporate CRM


Good customer relationships are at the heart of business success.
Much has been written about how to implement a CRM program for
a single line of business with clear reporting lines; however, CRM
programs become complicated in large organizations that have
multiple business units and competing objectives.(Joseph
Camaratta, the vice president of global customer relationship

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management for Siemens Medical Solutions, Marketing Management
2005)
The problem Camaratta mentioned addressed not only the issue
facing Siemens but by many other large organizations as well. Along
with the continuously heating up CRM system installation in
organizations, related issues also started to float up the surface.
Companies started to realize that having different functions or
brandsoperating individual CRM programs based on each divisions
equity and objectives can cause serious internal problems e.g.
functional conflict, competition and inefficient usage of customer
information, and damage company profitability as a whole
significantly. (Camaratta, 2005)
Goldman (2004) too expressed the same opinion in Customer
Intelligence towards the collaboration problem of CRM, indicating
that many companies which adopted CRM in a rush or developed an
insufficient CRM program that did not link to the overall corporate
goals and objectives, eventually led to internal chaos or program
failure. Goldman suggested that a successful CRM program should
comprise an insight into customer demands and set it as the heart
of CRM agenda, a clear proposition and strategic approach that
copes with the company goals and on top of all, an enterprise-wide
management to coordinate customer relationships as organization
assets rather than divisional data. (Goldman, 2004)
Yu (2001) reinforces the notion that CRM has to be taken to the
upper organizational level instead of marketing and/or customerservice initiatives in order to succeed. A Corporate CRM can benefit
in a number of ways, including synthesize multiple channels and
marketing vehicles including e-mail, call centers, retail shops and
sales representatives to support and gather all sorts of customer
interactions and information, as well as to improve entire
organization operation e.g. customer-oriented product design, better
financial forecasts, and more effective supply-chain management. In
short, well-coordinated Corporate CRM, i.e. harmonization in
corporate culture, system process and technology improvement, is
the key to achieve program continuity and business profitability in
the long-term. (Yu, 2001) All the commentaries, from both
academics and practitioners, indicate that Corporate CRM can be
seen as the solution for CRM system/programs to succeed in the
long term and especially in multinationals or organizations that
possess multiple brands. Here refers Buttles (2004, p. 40) figure
of CRM value chain to depict a comprehensive framework of
Corporate CRM.

2.2.4. Difficulties Underlying Corporate CRM


Based on the illustration above, CRM can be seen as a logical and
theoretical answer that the business should be customer-oriented in
more than one way. (Agrawal, 2003) CRM can be structured in a
way as to contribute to organizations and business performance
from four perspectives. Firstly, CRM contributed as an up-to-date
response to the emerging climate of unprecedented customer
churn, waning brand loyalty and lower profitability (Agrawal,
2003). Secondly, CRM represents the action of an organization
being customer-oriented. Thirdly, installing CRM into a business
means the organization has to engage with information technology,
and the more the customer data, the heavier the IT usage is. Finally,
CRM is one of the most effective ways to deliver value to the
customers and at the same time to increase profitability for the
organizations. That is to say, the execution of CRM being effective or
not, can make a considerable impact on the success or the failure of
the company. (Agrawal, 2003) An effective CRM strategy needs to
be customized for the respective business and will vary from one
business to another and also from one segment to another
(Peterson, 1999).
It has already been proved and documented in numerous occasions
that CRM is better in keeping existing customers, which is cheaper
than acquiring new customers. Yet despite the benefit mentioned
from academic research and studies, from an organizations
perspective, it is essential to discuss the barriers and difficulties
companies might face when installing and operating a CRM system
in reality. Especially for multinationals that possess multiple brands,
it is relatively critical for them to implement Corporate CRM and
operate individual brand CRM at the same time. Following further
addresses Corporate CRM from four dimensions to pinpoint the

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systematic and organizational issues that underlie Corporate CRM
system.
Besides coping with the customer relationship and its continuity as
mentioned above, companies still have to consider the associated
issues from various phases. For instance, for a multinational with
multiple brands, the main problem is to create synergy for all brands
instead of letting each brand works on its own. However, Corporate
CRM has its difficulties to overcome. Problems might occur from the
process of integration, for instance while collaborating all the brands
in one organization, the work of cannibalization, or from keeping
individual brands CRMwhile establishing a coherent Corporate CRM
at the same time. On the other hand, despite the internal operation,
customer reaction should also be considered, for example how to
collect data and explain the new system without confusing
customers from their original understanding of each brand.
The supporting condition in Buttles (2004) CRM value chain
demonstrated the perspectives Corporate CRM needs to include in
accordance with company strategy and lead to final profitability,
namely the leadership and organizational culture, customer data
and IT installation, human resource and the actual execution
process. A diplomatic implementation is built upon an adherent
cooperation between all the supporting conditions and the core CRM
strategy. Each condition stands a crucial position and can influence
the primary stages of the CRM value chain significantly. Further
elaboration of each element is presented as following. (Buttle,
2004, p.42)
Leadership and Organizational Culture
Leadership and organizational culture can affect the outcome of
CRM strategies profoundly in many aspects. Leadership is relatively
crucial in Corporate CRM given its initiative position on government
and examination of CRM process, and decision making for strategic
goals and objectives. As to organizational culture in terms of
Corporate CRM, is to extensively engage with organizational-wide
value and reflect it on formal company system norms, as well as
informal internal symbols, rituals, business patterns and employee
behaviours. (Buttle, 2004, p. 45)
Mack et al. (2005) indicated three major reasons that can cause a
CRM project to fail. Firstly would be the lack of objective targets,
which can lead to false measure and lose of central control. It is
essential to set out the quantification and definition of measurement
categories in the beginning of CRM implementation. Failing to
establish a clear goal, definition and according quantification before
launching a CRM project can be a major source of problems in the
long-run. In addition, it is also important to avoid a too technical
project focus on the CRM project. While the project in progress, it is
equally crucial for other departments to participate, e.g. sales
department for customer information updates, finance department
for budget update. A customer-oriented alignment between
functions covering by a corporate synergy should be built as an

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enterprise-wide mindset to ensure a successful CRM. The last critical
success factor proposed by Mack et al. is the commitment of top
management, i.e. the enforcement of CRM project under cohort
corporate strategy. (Mack et al., 2005) Buttle (2004) summarized
the general considerations among leadership, formal organizational
system, and internal relationships for organizations to initial an
inspection on Corporate CRM.
IT System and Database Management
IT system and Database management in Corporate CRM comprises
the acquisition, storage, maintenance, enhancement, and most
importantly the distribution and sharing of data across the
enterprise. Specific data capture and organizing activities include:
- Identify of existing and potential customer and targeted
market segments individually.
- Establish a financial system of historical costs and revenue
link to each segments or individuals.
- Analyse existing customer data to predict future value and
costs of this particular data pool, and apply the same action
on analyses of potential customer data.
- Distribute a thorough estimation on entire customer data on
gross margin, sales, and revenue. (Mack et al., 2005 and
Buttle, 2004, p.47)
Moreover, of concern to internal relationships, data ownership is
another notable problem in large organizations. It can be observed
from the attitude of stating our data or your data between
departments in one organization, when customer data should
actually be seen as companys data. It is understandable that
between different functions and brands, in order to keep their own
scores and credits, data sharing and management can be very tricky
and difficult, and sometimes even become more of a battle but less
of a synergy within the one organization that they all serve. It is
crucial for top management to establish the notion of enterprisewide data and to straighten the strategic priority amongst all
employees to achieve efficient and effective CRM and greater
profitability for the entire organization. (Reid and OBrien, 2005)
Employee Competences
Human resources, or employee competences, are also an essential
factor to successful Corporate CRM. In order to smoothly implement
and maintain CRM programme, especially considering the nature of
CRM is IT related, updated training on respective skills and
knowledge are required to keep CRM programme perform under the
up-to-date market trend and information technology. Well-trained
skills and knowledge can provide more accurate customer
segmentation, data interpretation, as well as on-time system
redesign and adjustment. (Buttle, 2004, p. 51)

System Procedure

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Procedure is the last supporting condition for Corporate CRM. A
desirable CRM process should be efficient on the cost and effective
on customer value creation. Buttle divided CRM process into two
categories, vertical and horizontal processes. Vertical process is the
activities located within individual business function while horizontal
process represents the cross-functional activities involving e.g.
sales, finance, marketing, and product development divisions, which
is also the highlight of Corporate CRM. (Buttle, 2004, p.52)
Among all the aforementioned essentials of Corporate CRM in terms
of the supporting conditions, to succeed from all the associate
issues, discipline and integration are the key notice points of
Corporate CRM. Likewise, Shaw and Reed (1999) summarized four
key requirements an organization needs to accomplish in order to
successfully build up a CRM system:
- Acquisition and continuous knowledge updates regarding
customer needs, motivations, and behaviors over the lifetime
of the relationship.
- Applying and learning from customer knowledge to
continuously improve business performance.
- Implementation of appropriate systems to facilitate customer
knowledge acquisition, information sharing, and the
measurement of CRM effectiveness and business
performance.
- Integration of multiple functions, e.g. sales, marketing, and
service executives and activities to synergize and achieve a
mutual and beneficial goal between the company and
customers.
Companies that manage customer relationships effectively and
successfully are most likely the ones that took integrated
management approaches between multiple functions, e.g.
marketing, market research, information technology, and financial
accounting. (Morris, 1994)

3.1. Industrial Background Fast-Moving


Consumer Goods (FMCG)
Fast Moving Consumer Goods (FMCG), also known as Consumer
Packaged Goods (CPG), are products that have a quick turnover and
relatively low cost. A wide rage of frequently purchased
commodities for instance toiletries, soap, cosmetics, teeth cleaning
products, shaving products and detergents, as well as other nondurables such as glassware, bulbs, batteries, paper products and
plastic goods are all listed within the category of FMCG. (UN
Statistic Division, 2007) Although the net profit generated from
FMCG products is comparatively lower than other high turnover
consumer durables industries e.g. motor vehicles or furniture, they
are however normally sold in considerable quantities and therefore
the accumulative profit on such products are often magnificent.
FMCG manufacturers are often under-represented considering to the
large product portfolio they possessed, mostly because they believe

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advertising on respective brands would reach a wider profile of
consumers more effectively than promotion a single corporation.
(Keynote Report, 2001)
Besides the marketers and manufacturers of FMCG, such commodity
is related with a variety of markets and industries, for instance
retail/wholesale and the supply of raw materials. According to ISIC
(International Standard Industrial Classification), the retail market of
FMCGs (except motor vehicles and motorcycles) includes businesses
in pharmaceutical and medical goods, cosmetic, toilet articles, food,
beverages and tobacco in the form of either specialized or nonspecialized stores, as well as the form of sales via kiosk or mail
order. (UN Statistic Division, 2007) The suppliers of raw material
for FMCG involve even a wider rage of sectors e.g. meat, fish, fruit
and vegetables, dairy products, grain mill products, starches,
alcohols etc. and all the related or processed products.
Apart from diversity and variety, another attribute of FMCG is the
insensitiveness to economic fluctuation, given the nature of the
products that are used on a daily basis to satisfy fundamental
needs, also the price differences are less dramatic thus are more
acceptable to consumers. Multinationals and conglomerates such as
food and beverage giants Mars, Coca-Cola, Pepsi, Carlsberg, Nestl
and Sara Lee, as well as Kleenex, Unilever, Procter & Gamble,
Kimberly-Clark, Colgate-Palmolive and General Mills are the key
players in this particular industry. (Datamonitor, 2007)

3.2 The Trend of FMCG Industry


Retail World (2007) indicated that the FMCG industry have brought
forth intensive actions on launching new products in recent years.
According to the Mintel New Products Database, there were nearly
182,000 new products introduced around the globe in 2006, which
stands for 17% in overall new launched products. This outstanding
figure makes FMCG industry a beacon of what is to come in the
marketplace. (Retail World, 2007)
Marsland (2005) pointed out following upcoming courses in FMCG:
1. The return to basics and health living- people are conscious of
what they put in their bodies and health is one thing they will pay
for.
2. Focusing on spending - lines are being consolidated! For those
products that compete with cheap imports the only way to compete
is shrink and focus.
3. Packaging becomes an imperative differentiator in a very
cluttered market.
4. More competition on price - quality is one thing, but consumers
will not pay more.
5. Although consumer spending is up and people are buoyant,
nobody knows how long the party will last so people are keeping
some in reserve.

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In addition to the projection above, in terms of external


environment, Mintel Global Trend-spotters have predicted 10 latest
trends that will affect the FMCG industry the most:
1. Products incorporated with indigenous resources
2. Ethically and socially responsible products
3. Environmental friendly packaging
4. Anti-artifact beauty
5. LOHAS and simple life philosophy
6. High-tech driven packaging, promotion, and consumer tracking
7. e-Marketing
8. The prevailing teenager spirits
9. Demand for healthy breakfast(Retail World, 2006)
However, despite being a pioneer in many aspects, FMCG
companies failed to catch up with the trend of online/internet media
advertising. A recent Financial Times report indicated that the
representative of fast-moving consumer goods companies, namely
Unilever, LOreal and Procter & Gambles, are all still continuously
spending heavily rom their budgets on traditional media channels,
the commercial television, but not making much effort on the
prosperous online marketing sector. (Carlos Grande, 2007)

3.3. Procter & Gamble: An Overview

The Procter & Gamble Company (P&G), headquartered in Cincinnati


Ohio, is the largest consumer goods Production Company in the
world with over 138,000 employees produces and markets more
than 300 brands, including 22 billion-dollars worth of brands in more
than 180 countries.
Geographically, the company operates across the Americas, Europe,
the Middle East and Africa (EMEA) region, and Asia. The company is
engaged in producing beauty, health, home fabric, baby, family and
personal care products. The companys product portfolio also
includes pet health products, snacks and beverages such as coffee.
Its products are primarily sold through non-specialized retail stores
e.g. mass merchandisers, grocery stores, and other specialized
stores e.g. drug stores and membership club stores.
Financially, the most recent record of FY2006 showed that the
organization is operating in good shape. The company revenue was
recorded at $68,222 million, a 20.2% increase over 2005; the
operating profit was $13,249 million, a 26.6% increase over the past
year; and the net profit was $8,684 million, a 25.4% increase over
2005. (Datamonitor, 2007)

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3.3.1. Organization Structure


Effective since July 1, 2007, the company is organized into three
business units: Beauty & Health, Household care and Gillette GBU
(Global Business Unit). Parallel with the three business units, the
operation part is defined as a global operations group, which
consists of the market development organization (MDO) and global
business services (GBS). These business units are divided into
respective reportable segments listed below.
o Beauty & Health Beauty and Health Care
o Household Care Baby Care and Family Care segment, Fabric
Care and Home Care segment and Snacks, Coffee and Pet
Care
o Gillette GBU Blades and Razors, Duracell and Braun
(Datamonitor, 2007 and pg.com, 2007)

3.3.2. Product Portfolio


P&G is now recognized as the organization which has one of the
largest and strongest portfolios of trusted brands across a number
of product categories, including snacks, toiletries, hair care, baby
care, oral care and detergent products. (pg.com, 2007) Its famous
and top selling brands include Pampers, Tide, Ariel, Always, Pantene,
Bounty, Folgers, Pringles, Charmin, Downy, Iams, Olay, Actonel and
Crest, which are used by 150 million consumers globally. (Keynote
Report, 2003)

3.4. The Company Philosophy & Strategy


3.4.1. Purpose, Values and Principles
The purpose of P&G was addressed on its company website,
manifested that the company goal is to provide branded products
and services of superior quality and value that improve the lives of
the world's consumers (pg.com, 2007) and further through
delivering value and profit creation, leadership sales, to prosper all
surrounding parties including employees, shareholders and the
communities.
The essential element of P&G is its people and the values by which
we live. (pg.com, 2007) Like all the other organizations, P&G sees
human resource as one of their most important assets and is
striving to attract and recruit high caliber workers globally. In order
to do so, P&G is proud of its organizational reward and promotion
system.
The fundamental principles of P&G is to create a mutual and
beneficial development to both individual employees and the
business performance, and through the inseparable bond, together
with the mindset of work-life balanced, to ultimately create an ideal
organization and working environment that deliver a win-win
solution for both side. The key principles are listed as below.
- We Show Respect for All Individuals

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- The Interests of the Company and the Individual Are
Inseparable
-

We Are Strategically Focused in Our Work


Innovation Is the Cornerstone of Our Success
We Are Externally Focused
We Value Personal Mastery
We Seek to Be the Best
Mutual Interdependency Is a Way of Life

3.4.2 Corporate Strategy


The competitive advantage that enables P&G to be at the leading
market position lies in the effective brand management; in other
words, how P&G strategically minimize the cannibalization between
homogeneously similar brands within the corporation. In its 2007
Annual Report, P&G explicitly pointed out the core strengths and
strategies are five points, the customer understanding and brand
building, innovation, go-to-market capability and the economy of
scale, and the combination of all strengths creates the competitive
advantage of the company. (P&G Annual Report, 2007)

Customer Understanding and Brand Building


P&G well-leveraged its adequate customer knowledge and
understanding to complement its brand building and as a
result P&G now owns over 20 brands with annual sales over
$1 billion, a leading position in oral care, and dominant market
shares of 24%, 36% and 33% in the hair care, feminine care
and fabric care market respectively. Moreover, the acquisition
of Gillette push forwards P&G to hold leading position in the
blades and razors market with approximately 72% market
share. (Datamonitor, 2007) Through organized CRM system
and data management, clearly identified brand equity,
detailed marketing plan, P&G successfully targeted customer
in respective market segments and thereon build up consumer
trust and loyalty. (P&G Annual Report, 2007)

Product Innovation
Innovation is P&Gs lifeblood, quoted from the companys
2007 annual report. The statement is backed up by its wellknown laboratory in new product innovation and development
in its divers segments, e.g. beauty segment including
cosmetics, deodorants, feminine care products, hair care,
personal cleansing and skin care products. The company gets
greater productivity from its investment on R&D through
continuously refining the system and process with the idea of
innovation so as to make sure the result is robust, reliable.
Innovating how we innovate explicitly express the spirit of
innovation defined in P&G. The continual improvement
enables P&G to enhance its company capability and to deliver

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organic growth consistently. (P&G Annual Report, 2007
and Datamonitor, 2007)

Go-To-Market Capability and Economy of Scale


Another competitive advantage of P&G is the go-to-market
capability, which refers to the capability of building a
consumer relationship, efficient supply-chain and the
organizational structure. The three elements together enable
P&G to react effectively with respect to both global scale and
local market demands. In addition to the acquisition of
Gillette, the enhanced product portfolio subsequently
strengthens this capability even further.
The last competitive advantage to mention here is the cost
advantage from scale leverage, which leads to greater value
creation for consumers, retail customers, and shareholders. By
making the most of P&Gs knowledge scale in FMCG market
and consumer, R&D, as well as marketing, the company was
able to deliver superior results in several prospects, e.g.
purchasing materials and media at best-in-class costs, and
savings on office supply. (P&G Annual Report, 2007)

3.5. Present Situation


FMCG market is characterized by its intense competition, the
clustered brands in almost all market sectors, and the aggressive
merger and acquisition between conglomerates. P&G competes
against some of the best companies in the world which are
possessed with coordinate brands and capabilities, A. G. Lafley, the
CEO and the Chairman of the Board, acknowledged in the annual
report 2007, that Unilever currently undergoing restructuring and
has enough marketing potential to pose a significant threat to P&G
in most of its markets. Other strong competitors in the market
including Amway and Unilever in household product, AVON, L'Oreal
S.A., Shiseido, and Estee Lauder in toiletry and hair care products,
Colgate-Palmolive Company in oral care market, Reckitt Benckiser,
Kimberly-Clark and S.C. Johnson & Son in detergent segment, Sara
Lee, Mars, Nestle S.A. in food and beverage sector. In addition to
conglomerates in manufacturing industry, P&G is up against threats
come from large format retailers which develop retailer brands and
product lines that contest directly with manufacturers brands; also,
some rivals should not be under-estimated, are the rising local
manufacturers which provide low price products, and the
discounters worldwide. (Datamonitor, 2007)
Taking LOreal for example to draw a picture on what P&G is facing
in the fiercely competitive skin care and hair care markets. Procter &
Gamble, being one of the largest manufacturers of hair care
products, owns the market leading brands e.g. Pantene and Clairol
Herbal Essences, specialized shampoo, Head & Shoulders, and the
prominent hair styling brand Wella. The major competitors in hair
care product segment is L'Oral, which owns a foothold of around

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15% market share in the hair care market, with brands that include
Garnier Fructis and LOreal Professional. (Keynote Report, 2003)
Apart from the hair care market, skin care products are another
highly competitive segment of Procter & Gamble. Amongst all skin
care brands, Olay is the bestselling facial skin care brand in the nonmedicated market, but closely followed by Plenitude, Ambre Solaire
and Beiersdorf's Nivea Sun from L'Oral. Moreover, P&G and LOreal
also struggled in the prestige skin care product market, e.g. SKII
against Lancome and Shu Uemura.
Despite the competition and a few unsuccessful investments, P&G
generally performed well in the past decade, with a growth of sales
from $39 billion to $76 billion, 23 billion-dollar brands in their
portfolio and many other outstanding performances, it is now one of
the 10 most valuable companies in the U.S. (P&G Annual Report,
2007 and Datamonitor, 2007) Given the success in product
innovation, brand management and customer understanding, the
actions of P&G are always under scrutiny by researchers and
competitors alike. The strategy of customer relationship
management is no exception; P&Gs successful pioneered Corporate
CRM programs in the U.S and Mexico have become one of the key
contests with its rivals.

4.Conclusion
The ability of companies to create and maintain mutually valuable
relationships can create an important, sustainable competitive
advantage. (Mack et al., 2005) In the case of Corporate CRM, a
cross-category strategy demands synergy between all brands and
functions within the company, is exactly the ability a company can
leverage to retain existing customers, acquire new customers, and
provide a continuous stream of profits over the lifetime of a
customer. The success of Corporate CRM lies in the harmonization of
cross-functional cooperation.
The contingent character of Corporate CRM requires a higher level
of organizational skill than reliance on tactics that manipulate
product attributes, price or promotion to create loyal customers.
(Mack et al., 2005) Moreover, CRM activities must contribute to
the company or business units performance, e.g. better response
rate in media of higher sales result, to eventually deliver tangible
numbers on ROI and total profits; otherwise the waste would not
only be from investments but also from the cost of deployment and
changing of organizational structures. (Meyer and Kolbe, 2005)
These viewpoints thereon supported by the case study of P&G
through in-depth interview with IT, Marketing and Sales Managers.
The case study analysis proved that the factors summarized from
previous studies and researches are actual issues that modern
organizations are facing today. Further evaluation of CRM process
examined the Corporate CRM program of P&G from four main
elements, the continuous customer knowledge acquirement, the
application and non-stop learning of customer knowledge for

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business improvement, the appropriate system implementation in
assisting customer knowledge acquisition, information sharing, and
performance measurement, and finally the integration of multiple
functions.
The operation of CRM involves several key ingredients; it is the
strategic use of multiple elements of information, processes,
technology, and people, to manage the customers relationship with
the company across the whole customer life cycle. (Kincaid,
2003) In the case of P&G, people, or employees can be the key
factors amongst all others for the company to succeed. As seen
from the interview, the lack of common view on Corporate CRM in
various aspects can cause serious damage to the company in the
long run. In order to achieve synergy at full capacity, and establish a
solid groundwork for long-term CRM, employee training and
expertise fostering should be the priority to deploy Corporate CRM
program so all the related functions would know what, why, how the
program works and when they should act. The major benefit is the
clear definition of CRM to all employees, the first step of integrated
CRM, so that unclear or conflict objectives will not happen to
jeopardize the process. Besides, if the company goal of Corporate
CRM is aligned, there will not be leadership and data management
issues occurring, since every party knows which function will be the
leader of the program and understand that the data should be an
enterprise-wide asset instead of individual function property. In
addition, training, in relation to the concerns the IT manager
mentioned in system process barriers, if the responsible Marketing
Manager does not possess the required knowledge to utilize
customer data, it will then create a situation of having a handful of
data and no actual effect and improvement in market
communication. Marketing managers should also be trained to
understand how the system operates and all the rational behind so
as to execute the programme accommodating actual market
condition. In short, expertise and cross-functional training can
create coherent understanding and motivation for employees to
stride forward in the same pace.
P&G is famous for its effective Brand Management for its wide range
of product portfolio, and its continuous improvement in consumer
research, where the company attempted to gain the most
understanding of consumers, and further anticipate and respond to
consumer needs and wants as accurate as possible. Based on the
insights of consumers and market needs the company can design
marketing plans and create advertising innovations that will
approach consumers more effectively and efficiently than the rest.
(Datamonitor, 2007) It is only reasonable for P&G to go further by
designing a well-cooperated Corporate CRM throughout the
company to make the most of the splendid consumer data, is the
task top management needs to figure out.

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