PG Ariel Ultra EuroBrand Strategy

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
Competitive Preemptive Strike
In July 1989, Unilever launched Skip Micro
P&G Competitive
Skip Micro Ariel Ultra
Analysis
Removed fillers from regular New European-wide design Skip Micro has poorer
phosphate based Skip with higher performance performance than regular Skip
or Ariel
Using a 2.2 = 5 slogan. 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
Skip Micro 2.2 kg was priced Planned to position Ariel Ultra

lower than Skip regular 5 kg 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
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
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

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P&G Europe: Ariel Ultra’s

Product Cycle in 1970s

Unsuccessful Some success of

1970 1980 1990

“The Compact Challenge”

Old Ariel Ariel Ultra

Country specific formulas (with or One formula (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

Outcome is a “highest common factor” European product

Convert the market to compact detergent or create a niche?

Ariel Powder Ariel Ultra Vizir

The French Launch

Skip Micro 2.2 kg was priced Planned to position Ariel Ultra

Destroying the Compact Detergents

First Mover Advantage

1. How should P&G respond to

3kg 4kg 5kg

Ariel Ultra Eismann Italy

• No possibility of adapting local needs

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

Key aspects in this optimal balance:

We think that P&G was successful.

• Demonstrated high level ownership

• Emphasize quality equivalence with Ariel standard

• Emphasize key propositions: Compactness and environment friendliness

• The environmental theme stays the same

Overall, there is no change in value proposition!

• Phosphate legally allowed => non phosphate is too expensive

• Phosphate legally banned => ok with non-phosphate

• In favour of “one formula” concept

• No further comments found.

• Phosphate legally banned => ok with non-phosphate

• Phosphate legally allowed => non phosphate is too expensive

• Want to launch pan-European by September1989

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1.  How should P&G respond to

•  No possibility of adapting local needs

•  Demonstrated high level ownership

•  Emphasize quality equivalence with Ariel standard

•  Emphasize key propositions: Compactness and environment friendliness

•  The environmental theme stays the same

•  Phosphate legally allowed => non phosphate is too expensive

•  Phosphate legally banned => ok with non-phosphate

•  In favour of “one formula” concept

•  No further comments found.

•  Phosphate legally banned => ok with non-phosphate

•  Phosphate legally allowed => non phosphate is too expensive

•  Want to launch pan-European by September1989