MARKETING ASSIGNMENT: GILLETTE CASE 1. Analyze Gillette’s planning and control systems These two management tools provide the company with the necessary information to run the different SBU’s from a marketing point of view. They are complementary to a such extent that they need each other to be meaningful. The planning system is focused on the creation of marketing strategies and marketing actions to develop the brands, based on information gathered a priori. Based on it, the company organises a yearly meeting to discuss “potential changes in marketing plans for the next year”.
The main resource of data used are the fact books, written “using information from four sources: the sales/marketing meeting, Marketing Research Division, outside marketing research and brand management”. As we can see the level of complexity is high, and so is the effort needed to evaluate the amount of information. Having performed this evaluation brand managers develop the marketing plans according to the results. The main function of these plans is “to develop an accurate forecast for the brand’s annual volume of sales”.
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Finally, and also based on these plans as well as on the division’s overall expected profit contribution, long-range ones for the next five years are developed. These strategic business plans, by category and division, also help to classify brands into four different groups, quite similar to the ones by the BCG. These groups, though not generally agreed to be a perfect reference, affect the planning and execution of each brand, depending on the one each is. The control system is based on the reports developed, to know whether the plans are working and also to create next year’s. There are several reports.
Probably the main one is the Daily Sales Report, to know the daily evolution of activities. It compares the scheduled sales with the actual division sales, also paying attention to the promotion cycle, that is, the periods of the year when promotions are launched. There is a Monthly Sales Forecast too, showing the “results by month for the year to date and estimates by month for the remainder of the year”. These two reports “provide information on factory sales”, “for customer information” the company relies “on both internal reports and reports by outside market research houses”.
Coming from outside are the reports by Nielsen and the ones by SAMI. Examples of in-house reports on customers are the Merchandise Flow, focused on “the amount of product in the trade pipeline monthly over a three-year period”, and the National Consumer Study, both performed by the MRD. Using these reports managers can check the evolution of the planned figures, as well as determine changes both on the run and for the next year. Therefore, we see that planning and control are fully interdependable. 2. Was there anything in Gillette’s planning and control systems that made it harder / easier for Right Guard and White Rain to succeed / fail?
The case of Right Guard can be misleading. Though the forecasts were not accomplished the brand stabilized its sales, ending with the tendency to fall they had, and providing the company with a reasonable level of profits. If we analyze the effects of the planning and control systems we could say that they had a positive effect. They helped save the brand by stopping the continuous decrease in sales (due to new market requirements and new regulations on CFC’s), mainly thanks to the changes in the product and the packaging tested before the launch.
Therefore, following a structured marketing plan was a good action as it allowed the brand to create a strategy according to the goal, that was, to relaunch the brand and make it a build brand de nouveau. Though facing actions from competitors that increased the difficulty of the environment, they still went along, and the future forecasts were better than before the relaunching. Summing up, even if rigid and formal, the planning system proved to be effective to a certain extent, specially the marketing plan performed-as the key part of a strategy that was totally necessary.
However, the company could consider improving the long-term analysis, as it seems like they give a lot of importance to short-term results, which can often lead to deceptive impressions that negatively affect the future performance. When it comes to White Rain its launch is defined as a success, but again perceptions are misleading. Though being true that it exceeded the initial forecasts, the selling prices did not provide strong margins, and because of that the brand did not generate income for the company.
The opportunisitic informal marketing plan to launch it was only focused on the expectations on sales, not on the marketing contribution (like Right Guard). Therefore, they achieved the results but it is not clear that we can consider that a success. We could then say that the lack of planning and, specially, of concrete expectations, made it easier for it to achieve the targets and be considered successful, but in the end White Rain ended up being a (sooner or later) Withdraw brand. That should make managers realise that both the excess of planning but also the lack of it are not adequate to run brands in a competitive environment. . How well does the planning and control system cope with new products? For new products a balance needs to be found. A certain extent of planning is necessary, to be able to forecast realistic objectives and understand the market in which we are going to compete. However, it might be the case that a certain level of opportunistic behavior is positive, in situations in which not being fast enough can lead to losing the opportunity. In the Gillette case the planning system can be considered too formal for a launching, because of what has just been mentioned.
It is probably because of that they decided to avoid it and launch White Rain the sooner the better. Therefore, I would say that their planning processes are better oriented for already exisiting products. When it comes to the control system it is probably not that important at the moment the product is launched, but it definitely needs to be once it is already in the market. If we fail to evaluate the performance we can end up thinking that we have achieved the objectives, when in fact we have not. What is worse, we could be losing money, so we need to remember that increasing share at whatever the price is not generally recommendable.