The Developing World of Procter & Gamble

http://money.cnn.com/video/news/2011/01/06/n_proctor_and_gamble_two_dollar_a_day_consumer.fortune/

Rejoice was a shampoo I used as a kid. I didn’t like it, preferring the more fragrant Pantene. A recent article on Fortune.com about Procter and Gamble, the manufacturer of Pantene, mentioned a Chinese woman who uses Rejoice and rinses her hair in a small basin containing three cups of water. When I lived in the Philippines, we would fill a small pail with water to use for bathing. A dipper was necessary to take water out of the pail to rinse our body and hair. In the bathroom, we would always have a big container or dram on the side, filled with clean water to the brim.

We weren’t poor, and in fact, I considered our family upper middle class. Many times I would use imported shampoos that family and friends had brought from different parts of the world, from Australia, Saudi Arabia, or the States. My peers and classmates had the same experience as I did, as do a lot of middle class Filipinos.

We had maids when I was growing up, and the shampoos they used were Rejoice and Pantene too, but with a fundamental difference: they only bought sachets of them, 6-12, never bottles. They would buy these at sari-sari store, literally meaning variety store, a makeshift store that is part of a house located in a residential community, which are quite popular in the Philippines.

But I don’t think they would buy Rejoice. They would buy Sunsilk or Palmolive, brands owned by Unilever and Colgate-Palmolive, respectively. Ever since then, P&G products has always catered to the middle to upper classes. A majority of people in the Philippines still are poor, and the same can be said about Asia as a whole, and it’s an interesting business issue– should you focus on the small population with disposable income, or should you capitalize on a vast majority who can seldom afford your product? Build a cheaper product and offer it to the poor masses, but that is a complicated issue and harder to execute successfully. But something that is also very important to consider is that if this product is created and delivered to a lower-income population, it would be close to impossible for someone in the middle to higher income classes to buy these products– products can have a connotation as a poor man’s product and this perception is strong in the developing world that products that are viewed like so are avoided.

The Forbes article quoted a Procter researcher saying that poor people are concerned with beauty too, not just with the utility and price of a product. Aligned with that idea, I remember that our maids were more concerned about their looks–particularly their hair, because hair is very important– as shown in the frequency they would comb their hair when they weren’t busy with cleaning or babysitting.

In the developing world, especially in in regions like Asia and Latin America where it’s humid throughout the year, there is definitely a need for household and beauty care products for hygiene. I grew up not being able to imagine a bathe-less day. I didn’t know anyone who didn’t shower everyday. When I learn that my mom or sister had a quick shower without washing their hair as to prevent it from overdrying, I still cringe because the non-negotiable idea that hair should be washed everyday is ingrained in me. Maybe even more than beauty, people in the developing world are concerned about hygiene, no matter what economic status.

What P&G needs to define first is the segmentation of the market, since it is not so clear-cut as it is in a country like the States. How do you categorize someone who has enough money to go to private schools, but who still washes his clothes without a washing machine, with only his bare arms? Where does an older woman fit, who doesn’t have any sort of income on her own because she lives with her daughter and her family, prefers only high-end care products, and bathes with care as to not consume plenty of water that would incur a high water bill? How about a stay-at-home mother of two who depends on her husband’s overseas income but is responsible for budgeting American dollars for the household, in a house where her extended family lives?

P&G and other companies who are courting the developing world need to be careful about defining their target consumers especially in a complex, developing market.

It’s a test in creativity and innovation, and succeeding will not only make them profitable, but may also improve the lives of consumers, even through something as simple as shampoo and even how little the means they have.

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