Procter & Gamble

Procter & Gamble Co.
Type Public (NYSE: PG)
Founded 1837
Headquarters One Procter & Gamble Plaza, Cincinnati, Ohio, USA 45202
Key people A. G. Lafley, Chairman and CEO
Industry Consumer goods
Revenue ▲ US$83.503[1] billion (2008)
Net income ▲ US$12.075[1] billion (2008)
Employees 138,000
Website www.pg.com

Procter & Gamble Co. (P&G, NYSE: PG) is a Fortune 500, American global corporation based in Cincinnati, Ohio, that manufactures a wide range of consumer goods. As of 2008, P&G is the 23rd largest US company by revenue and 14th largest by profit. It is 10th in Fortune's Most Admired Companies list (as of 2007).[2][3] P&G is credited with many business innovations including brand management, the soap opera, and "Connect & Develop" innovation.

According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising than any other company; the $2.62 billion it spent is almost twice as much as General Motors, the next company on the Nielsen list.[4] P&G was named 2008 Advertiser of the Year by Cannes International Advertising Festival.[5]

Contents

History

William Procter, a candlemaker, and James Gamble, a soapmaker, formed distinct companies. The two men, immigrants from England and Ireland respectively who had settled earlier in Cincinnati, might never have met, had they not married sisters, Olivia and Elizabeth Norris.[6]

Since both their industries used similar resources, the Panic of 1837 caused intense competition between the two and as a result it led to discord with the family. Alexander Norris, their father-in law decided to call a meeting where he convinced his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, a new enterprise was born: Procter & Gamble.

The company prospered during the nineteenth century. In 1859, sales reached one million dollars. By this point, approximately eighty employees worked for Procter & Gamble. During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products. Once the war was over and the men returned home, they continued to purchase the company's products.

In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. In the decades that followed, Procter & Gamble continued to grow and change. The company became known for its progressive work environment in the late nineteenth century. William Arnett Procter, William Procter's grandson, established a profit-sharing program for the company's workforce in 1887. He hoped that by giving the workers a stake in the company, they would be less inclined to go on strike.

Over time, the company began to focus most of its attention on soap, producing more than thirty different types by the 1890s. As electricity became more and more common, there was less need for the candles that Procter & Gamble had made since its inception. Ultimately, the company chose to stop manufacturing candles in 1920.

In the early twentieth century, Procter & Gamble continued to grow. The company began to build factories in other locations in the United States, because the demand for products had outgrown the capacity of the Cincinnati facilities. The company's leaders began to diversify its products as well and, in 1911, began producing Crisco, a shortening made of vegetable oils rather than animal fats. In the early 1900s, Procter & Gamble also became known for its research laboratories, where scientists worked to create new products. Company leadership also pioneered in the area of market research, investigating consumer needs and product appeal. As radio became more popular in the 1920s and 1930s, the company sponsored a number of radio programs. As a result, these shows often became commonly known as "soap operas".

Procter & Gamble headquarters in Cincinnati, Ohio.

Throughout the twentieth century, Procter & Gamble continued to prosper. The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Newcastle upon Tyne-based Thomas Hedley Co. Procter & Gamble maintained a strong link to the North East of England after this acquisition. In addition, numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas. The company introduced "Tide" laundry detergent in 1946 and "Prell" shampoo in 1950. In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as "Crest". Branching out once again in 1957, the company purchased Charmin Paper Mills and began manufacturing toilet paper and other paper products. Once again focusing on laundry, Procter & Gamble began making "Downy" fabric softener in 1960 and "Bounce" fabric softener sheets in 1972. One of the most revolutionary products to come out on the market was the company's "Pampers", first test-marketed in 1961. Prior to this point disposable diapers were not popular, although Johnson & Johnson had developed a product called "Chux". Babies always wore cloth diapers, which were leaky and labor intensive to wash. Pampers simplified the diapering process.

Over the second half of the twentieth century, Procter & Gamble acquired a number of other companies that diversified its product line and increased profits significantly. These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks, Noxell, Shulton's Old Spice, Max Factor, and the Iams Company, among others. In 1994, the company made headlines for big losses resulting from leveraged positions in interest rate derivatives, and subsequently sued Bankers Trust for fraud; this placed their management in the unusual position of testifying in court that they had entered into transactions they were not capable of understanding. In 1996, Procter & Gamble again made headlines when the Food and Drug Administration approved a new product developed by the company, Olestra. Also known by its brand name Olean, Olestra is a substitute for fat in cooking potato chips and other snacks that during its development stages is known to have caused anal leakage and gastro-intestinal difficulties in humans.

Procter & Gamble has expanded dramatically throughout its history, but its headquarters still remains in Cincinnati. {Source, Ohio History Central.}

In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing the Anglo-Dutch Unilever into second place. This added brands such as Gillette razors, Duracell, Braun, and Oral-B to their stable. The acquisition was approved by the European Union and the Federal Trade Commission, with conditions to a spinoff of certain overlapping brands. P&G has agreed to sell its SpinBrush battery-operated electric toothbrush business to Church & Dwight. It also divested Gillette's oral-care toothpaste line, Rembrandt. The deodorant brands Right Guard, Soft & Dri, and Dry Idea were sold to Dial Corporation.[7] The companies officially merged October 1, 2005.

P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study. For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another.[8]

Operations

Effective July 1, 2007, the company's operations are categorized into 3 "Global Business Units" with each Global Business Unit divided into "Business Segments," according to the company's June 2007 earnings release.

Management and staff

Current members of the board of directors of Procter & Gamble are: Norman Augustine, Bruce Byrnes, Scott D. Cook, Joseph Gorman, A.G. Lafley, Charles R. Lee, Lynn M. Martin, W. James McNerney, Jr., Johnathan Rodgers, John F. Smith, Jr., Ralph Snyderman, Richard Dearlove, Margaret Whitman, and Brian Bowns. Norman Augustine will be retiring from the Board following the Company's October 2007 meeting[9].

In 2007, the P&G's Canadian division was named one of Canada's Top 100 Employers, as published in Maclean's magazine, the only consumer products company to receive this honor.[10]

Procter & Gamble brands

Main article: List of Procter & Gamble brands

23 of P&G's brands have more than a billion dollars in net annual sales and another 18 have sales between $500 million and $1 billion.

Billion dollar brands

Manufacturing

Procter & Gamble manufactures its products across the globe. Manufacturing operations are based in the following geographies

Productions

Procter & Gamble produced and sponsored the first radio opera soap operas in the 1930s (Procter and Gamble's being known for detergents (soaps) was probably the genesis of the term "soap opera"). When the medium switched to television in the 1950s and 1960s, most of the new serials were sponsored and produced by the company. Two of their serials, As the World Turns and Guiding Light, are still on the air today and are produced by TeleNext Media, Inc for Procter & Gamble. The serial The Young and the Restless also is regularly sponsored by products from Procter & Gamble, as well as other daytime serials.

Past serials produced by Procter & Gamble include:

According to the CLG Wiki[11], the 1986 logo premiered during these dates:

A new Procter & Gamble Productions logo with new accompanying music debuted on August 6, 2007 after the serials As the World Turns and Guiding Light. The logo appeared some weeks back on the CBS website after the web-streamed episodes. It was used until June 30, 2008, after Procter & Gamble Productions was sold to TeleNext Media, Inc.

Procter & Gamble also was the first company to produce and sponsor a prime-time show, a 1965 spin-off of the daytime soap opera As the World Turns called Our Private World. PGP also produced Shirley, a prime-time NBC series starring Shirley Jones, in 1979; it lasted 13 episodes. They also produced TBS' first original comedy series, Down to Earth, which ran from 1984 to 1987 (110 episodes were produced). They also distributed the syndicated comedy series Throb. Procter & Gamble Productions originally co-produced Dawson's Creek with Sony Pictures Television but withdrew before the series premier due to early press reviews. It also produced the 1991 TV movie A Triumph of the Heart: The Ricky Bell Story, which was co-produced by The Landsburg Company.

In addition to self-produced items, Procter and Gamble also supports many Spanish-language novelas through advertising on Univision, Telemundo, Telefutura, Azteca and many more channels. Procter & Gamble was the one of the first mainstream advertisers on Spanish-language TV during the mid-eighties.

Controversies

Logo controversy

The company received unwanted media publicity in the 1980s when an urban legend spread that their previous corporate logo was a Satanic symbol. The accusation is based on a particular passage in the Bible, specifically Revelation 12:1, which states: "And there appeared a great wonder in heaven; a woman clothed with the sun, and the moon under her feet, and upon her head a crown of twelve stars." Since P&G's logo consists of a man's face on a moon surrounded by thirteen stars, some have claimed that the logo is a mockery of the heavenly symbol alluded to in the aforementioned verse, and hence the logo is Satanic. Where the beard meets the surrounding circle, a mirror image of the number 666 can be seen when viewed from inside the logo, and this has been interpreted as the reflected number of the beast, again linked to Satanism. Also, there are two horns like a lamb that are said to represent the false prophet. These interpretations have been denied by company officials, and no evidence linking the company to the Church of Satan or any other occult organization has ever been presented. The company has sued and attempted to sue a number of companies and individuals who have spread rumors of this type, in some instances because they sell competitive products and have spread such rumors for the purpose of tarnishing P&G's image to increase sales of their own brands.[12]

As stated in one of the resulting lawsuits, the logo originated in 1851 as the symbol for their Star brand of candles. It was later altered to show the man in the moon overlooking 13 stars, which were meant to commemorate the original 13 colonies.[13]

An example of one such rumor was the fabricated account that the president of P&G had appeared on a Saturday edition of The Phil Donahue Show. He declared that he was a Satanist and that the company's logo was Satanic. This rumor circulated despite the facts that the company's president has never made such a statement in public, had never appeared on Phil Donahue's show, and that Donahue's show never ran on Saturdays. Later variations of this rumor replaced the Donahue show with Geraldo Rivera's show.[14]

However, the continuous media coverage prompted P&G to adopt an entirely new logo consisting of just the letters P&G. In television commercials in Hong Kong and China, the former P&G logo still appears at the end of each commercial, and up until 2004, it appeared at the end of each commercial in Japan.

The original logo still appears on Procter and Gamble stock certificates as of this date, and also at the entrance of some P&G facilities.

A Dilbert strip pokes fun at this controversy. In the strip, The Pointy-Haired Boss asks "Phil, the Prince of Insufficient Light" what he does for money. Phil responds, "Corporate sponsorship. Procter and Gamble pays me to stay away from them."

Toxic shock syndrome and tampons

Toxic shock syndrome (TSS) is a disease caused by strains of the bacteria Staphylococcus aureus. Most people have these bacteria living in their bodies as harmless commensals in places such as the nose, skin, and vagina. The disease can strike anyone, not only women, but the disease is often associated with tampons. In 1980, 814 menstrual-related TSS cases were reported; 38 deaths resulted from the disease. The majority of women in these cases were documented as using super-absorbent synthetic tampons, particularly the Rely tampon created by Procter and Gamble.[15] The Rely tampon was so super-absorbent that one by itself could in fact hold one woman's entire menstrual period. Unlike other tampons made of cotton and rayon, Rely used carboxymethylcellulose and compressed beads of polyester for absorption. The materials used in Rely were causing an increase in the thickness of fluid inside the vagina, resulting in more toxins being released.

The slogan Procter and Gamble used for the product was "Rely. It even absorbs the worry."

In the summer of 1980 the Centers for Disease Control released a report explaining how these bacterial mechanisms were leading to TSS. They also stated that the Rely tampon was associated with TSS more than any other brand of tampon. In September 1980, Procter and Gamble voluntarily recalled its Rely brand of tampons from the market and agreed to provide for a program to notify consumers. Since the 1980s, reported cases of TSS have dramatically decreased[16].

Research

In December 2005 the Pharmaceutical division of P&G was involved in a dispute over research involving its osteoporosis drug Actonel. The case was discussed in the media (Collated Media Reports), and more recently on a blog Scientific Misconduct Blog.

Environmental record

Researchers at the University of Massachusetts Amherst have identified Procter & Gamble as the 52nd-largest corporate producer of air pollution in the United States, with roughly 350,000 pounds of toxic chemicals released annually into the air.[17] Major pollutants indicated by the study include manganese compounds, sulfuric acid, epichlorohydrin, and bromine.[18]

In 2007 Procter & Gamble pledged to reduce their carbon emissions, mainly through reduction in packaging along with cut-backs in water and energy use. The stated emission reduction goal was 10% by 2012.[19]

Procter & Gamble is one of the founding members of Carbon Disclosure Project's Supply Chain Leadership Council. Procter & Gamble is one of twelve global companies on the council who's first course of action is to distribute a survey to suppliers on the topic of greenhouse gas emissions and climate change.Since the first phase of the project more corporations have joined the effort. The council's overall goal is to encourage reductions in emissions down the supply chain.[20]

Procter & Gamble has for several years funded a recycling school in the slums of Cairo, Egypt. Many of the people in the village of Manshiyet Nasser collect garbage and have done so for decades. Procter & Gamble along with UNESCO has started the Mokattam Non-Formal Education Project. The project teaches the people of the village how to properly recycle plastic and also the business and economics of recycling.[21]

Animal testing

P&G conducts research using animals to demonstrate safety or efficiency of their raw materials and products.[22] This has led to a worldwide campaign to raise public awareness and to stop P&G being involved in animal testing. The campaign is led by Uncaged Campaigns in the UK and Stop Animal Exploitation Now in the USA.[23] In 2002 P&G was recognized by the Humane Society of the United States for "advancing alternatives to animal testing".[24]

References

  1. ↑ 1.0 1.1 PG.com - Fundamentals - Snapshot
  2. ↑ CNN Fortune ranking
  3. ↑ America's Most Admired Companies 2007: Top 20 - FORTUNE
  4. ↑ The Nielsen Company Issues Top Ten U.S. Lists For 2007, from the Nielsen Company website
  5. ↑ Cannes
  6. ↑ Dyer, Davis; Frederick Dalzell, Rowena Olegario (2004). Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. Harvard Business School Press. ISBN 1591391474. 
  7. ↑ Wherrity, Constance (2006-02-21). "Dial Agrees to Buy P&G Deodorant Brands", Pierce Mattie Public Relations New York blog. Retrieved on 2006-09-06. 
  8. ↑ Horstman, Barry M (2005-10-11). "John G. Hankus: He rebuilt P&G - and city, too", The Cincinnati Post, E. W. Scripps Company. Archived from the original on 2005-04-05. 
  9. ↑ 2007 Annual report, pg 71
  10. ↑ "Reasons for Selection, 2007 Canada's Top 100 Employers".
  11. ↑ Procter & Gamble Productions - CLG Wiki.
  12. ↑ Trademark of the Beast by David Emery, June 10, 1998
  13. ↑ Procter and Gamble v. Amway 242 F.3d 539
  14. ↑ Trademark of the Devil by Barbara Mikkelson, snopes
  15. ↑ Mikkelson, Barbara and David. 2005 December 31 http://www.snopes.com/medical/toxins/tampax.asp
  16. ↑ Mcpherson, Marianne. 2005 March. http://www.ourbodiesourselves.org/book/companion.asp?id=13&compID=38
  17. ↑ Political Economy Research Institute Toxic 100 (Study released May 11, 2006) retrieved 15 August 2007
  18. ↑ Toxics Release Inventory courtesy rtknet.org
  19. ↑ "Business Network" Accessed May 13, 2008
  20. ↑ "CDP, Supply Chains, Emissions and Climate Change" "Triple Pundit" May 1, 2008. Accessed May 13, 2008
  21. ↑ "In Cairo Slum, the Poor Spark Environmental Change" "NPR" April 27, 2008. Accessed May 13, 2008
  22. ↑ Finding Alternatives for Product Safety testing, P&G publication 2005:
  23. ↑ Procter and Gamble: Global Boycott P&G Day of Action
  24. ↑ hsus.org

External links

Criticism

Procter & Gamble Co.
Corporate Directors:
Norman Augustine · Bruce Byrnes · R. Kerry Clark · Scott D. Cook · Joseph T. Gorman · A. G. Lafley · Charles R. Lee · Lynn M. Martin · W. James McNerney, Jr. · Jonathan Rodgers · John F. Smith, Jr. · Ralph Snyderman · Robert Storey · Margaret Whitman · Ernesto Zedillo
Brands:
Always · Ariel · Art of Shaving · Aussie · Bounty · Braun · Camay · Charmin · Cheer · Clairol · CoverGirl · Crest · Downy · Dreft · Duracell · Eukanuba · Fairy · Febreze · Folgers · Gillette · Head & Shoulders · Herbal Essences · Iams · Ivory · Joy · Luvs · Max Factor · Metamucil · Mr. Clean · Nice 'n Easy · Noxzema · Olay · Old Spice · Oral-B · Pampers · Pantene · Pringles · Puffs · Pur · SK-II · Swiffer · Tampax · Tempo · Tide · Vicks · Wella · Zest
Annual Revenue: $83.5 billion USD (▲10% FY 2008) · Employees: 138,000 · Stock Symbol: NYSE: PG · Website: www.pg.com
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