Procter & Gamble

Procter & Gamble

Type	Public company
Traded as	NYSE: PG Dow Jones Industrial Average Component
Industry	Consumer goods
Founded	1837
Headquarters	Cincinnati, Ohio, U.S.
Area served	Worldwide
Key people	Bob McDonald (Chairman, President and CEO)
Products	See List of Procter & Gamble brands
Revenue	US$ 82.56 billion (FY 2011)[1]
Operating income	US$ 15.818 billion (FY 2011)[1]
Net income	US$ 11.797 billion (FY 2011)[1]
Total assets	US$ 138.354 billion (FY 2011)[1]
Total equity	US$ 68.001 billion (FY 2011)[1]
Employees	127,000 (2010)[1]
Website	P&G - The official homepage

Procter & Gamble (P&G) is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods.^[2]

In 2011, P&G made $82.6 billion dollars in sales. Fortune Magazine ranked P&G at fifth place of the "World's Most Admired Companies" list, which was up from sixth place in 2010.^[3] Procter & Gamble is the only Fortune 500 company to issue C Share common stock.

History

William Procter, a candlemaker, and James Gamble, a soapmaker, immigrated from England and Ireland respectively. They settled in Cincinnati initially and met when they married sisters, Olivia and Elizabeth Norris.^[4] Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born.

In 1858–1859, sales reached $1 million. By this point, approximately 80 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.

In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. William Arnett Procter, William Procter's grandson, began a profit-sharing program for the company's workforce in 1887. By giving the workers a stake in the company, he correctly assumed that they would be less likely to go on strike.

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. 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 Downtown Cincinnati, Ohio

The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Thomas Hedley Co., based in Newcastle upon Tyne, England. Procter & Gamble maintained a strong link to the North East of England after this acquisition. 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 1947. 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 provided a convenient alternative, albeit at the environmental cost of more waste requiring landfilling.

Procter & Gamble acquired a number of other companies that diversified its product line and significantly increased profits. These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals (the makers of Pepto-Bismol), Richardson-Vicks, Noxell (Noxzema), 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 that 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 lower-calorie substitute for fat in cooking potato chips and other snacks that during its development stages is known to have caused anal leakage and gastrointestinal difficulties in humans.

Procter & Gamble has dramatically expanded throughout its history, but its headquarters still remains in Cincinnati.

In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing 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 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.^[5] The companies officially merged on October 1, 2005. Liquid Paper, and Gillette's stationery division, Paper Mate were sold to Newell Rubbermaid. In 2008, P&G branched into the record business with its sponsorship of Tag Records, as an endorsement for TAG Body Spray.^[6]

P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study.^[7] For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another.^[8]

On August 24, 2009, the Ireland-based pharmaceutical company Warner Chilcott announced they had bought P&G's prescription-drug business for $3.1 billion.^[9][10]

Operations

As of July 1, 2011, the company's operations are categorized into two "Global Business Units" with each Global Business Unit divided into "Business Segments" according to the company's 2011 Annual Report. Dimitri Panayotopoulos is Vice Chairman of Global Business Units^[11]

• Beauty segment
• Grooming segment
• Health Care segment
• Snacks & Pet Care segment
• Fabric Care & Home Care segment
• Baby Care & Family Home Care segment

Management and staff

The board of directors of Procter & Gamble currently has eleven members: Robert A. McDonald, Angela Braly, Meg Whitman, Johnathan A. Rodgers, Ernesto Zedillo, Scott Cook, Patricia A. Woertz, Susan D. Desmond-Hellmann, Maggie Wilderotter, W. James McNerney, Jr. and Kenneth Chenault.^[12] In March 2011 Rajat Gupta resigned from the board after an SEC accusation of Galleon Group insider trading.^[13]

In October 2008, P&G was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in Maclean's newsmagazine. Later that month, P&G was also named one of Greater Toronto's Top Employers, which was announced by the Toronto Star newspaper.^[14]

In May 2011 Fortune editor-at-large Patricia Sellers praised P&G's board diversity, as five of the company's eleven current directors are female and have all been on Fortune's annual Most Powerful Women list.^[15]

Procter & Gamble is a member of the U.S. Global Leadership Coalition, a Washington D.C.-based coalition of over 400 major companies and NGOs that advocates for a larger International Affairs Budget, which funds American diplomatic and development efforts abroad.^[16]

On November 19, 2011 the Associated Press and USA Today reported that a company spokesman confirmed Dr. John Smale, former CEO, has died at age 84. ^[17] Online memorial page for Dr. John Smale ^[18]

Brands

Main article: List of Procter & Gamble brands

24 of P&G's brands have more than a billion dollars in net annual sales, according to the 2011 Annual Report.

Leadership Brands

• Ace is a brand of laundry detergent/liquid available in numerous forms and scents.
• Always is a brand of feminine care products.
• Ariel is a brand of laundry detergent/liquid available in numerous forms and scents.
• Bold is a brand of laundry detergent/liquid.
• Bounce is a brand of laundry products sold in the United States and Canada.
• Bounty is a brand of paper towel sold in the United States and Canada.
• Braun is a small-appliances manufacturer specializing in electric shavers, epilators, hair care appliances and blenders.
• Cascade is a brand of dishwashing products.
• CoverGirl is a brand of women's cosmetics.
• Crest/Oral B is a brand of toothpaste and teeth whitening products.
• Dash is a brand of laundry detergent/liquid.
• Dawn/Fairy is a brand of dishwashing detergent.^[19]
• Dolce & Gabanna is a brand of fine fragrances.
• Downy/Lenor is a brand of fabric softener.
• Duracell is a brand of batteries and flashlights.
• Eukanuba is a brand of pet food.
• Febreze/Ambi Pur is a brand of air fresheners.
• Fixodent is a brand of air denture adhesives.
• Fusion is a brand of men's wet shave razors and is the quickest P&G brand to have reached $1 billion in annual sales.
• Gain is a brand of laundry detergent, fabric softeners and liquid dish soap.
• Gillette is a brand of safety razor and male grooming products.
• Head & Shoulders is a brand of anti-dandruff shampoo and conditioners.
• Herbal Essences is a brand of shampoo and conditioners.
• Hugo Boss is a brand of fine fragrances.
• Iams is a brand of pet food.
• Luvs is a brand of baby diapers.
• Mach3 is a brand of safety razor and male grooming products.
• Max Factor is a brand of women's cosmetics.
• Mister Clean is a brand of multi-purpose cleaner, and spray sold in the United States and Great Britain.
• Olay is a brand of women's skin care products.
• Old Spice is a brand of men's grooming products.
• Oral-B is a brand of toothbrush, and oral care products.
• Pampers is a brand of disposable diaper and other baby care products.
• Pantene is a brand of hair care products (conditioners/styling aids).
• Prestobarba/Blue is a brand of safety razor and male grooming products.
• Prilosec is an over the counter drug.
• Puffs is a brand of tissues.
• Rejoice/Pert is a brand of hair care products (conditioners/styling aids).
• Safeguard is a brand of soaps.
• Secret is a female anti-perspirant brand.
• SK-II is a brand of women's skin care products.
• Swiffer is a brand of house-cleaning products.
• Tampax is a brand of feminine care products.
• Tide is a brand of laundry detergent.
• Venus is a brand female hair removal products.
• Vicks is an over the counter medication.
• Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color).

Most of these brands, including Bounty, Crest, and Tide, are global products available on several continents. Procter & Gamble products are available in North America, Latin America, Europe, the Middle East, Africa, Asia, Australia and New Zealand.

Manufacturing operations are based in the following regions:

United States Canada Mexico Latin America

Europe China (31 wholly owned factories) and other parts of Asia Africa Australia

Productions

The P&G production logo used from early 1986 to 2007.

Procter & Gamble produced and sponsored the first radio soap operas in the 1930s (Procter & Gamble's being known for detergents - soaps - was probably the genesis of the term "soap opera")^{[citation needed]}. When the medium switched to television in the 1950s and 1960s, most of the new serials were sponsored and produced by the company. The serial The Young and the Restless is currently broadcast on CBS and is still partially sponsored by Procter & Gamble. When As the World Turns left the air on September 17, 2010, The Young and the Restless, became the only soap left that is partially sponsored by Procter & Gamble.

These past serials were produced by Procter & Gamble:

Another World As the World Turns The Brighter Day The Catlins The Edge of Night The First Hundred Years            From These Roots

Guiding Light Lovers and Friends / For Richer, for Poorer Our Private World Search for Tomorrow Somerset Texas Young Doctor Malone

Procter & Gamble also was the first company to produce and sponsor a prime-time show, a 1965 spinoff 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 thirteen 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 premiere 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. It also produces the People's Choice Awards.

In addition to self-produced items, Procter & Gamble also supports many Spanish-language novellas through advertising on networks such as Univision, Telemundo, Telefutura, and Azteca America. Procter & Gamble was one of the first mainstream advertisers on Spanish-language TV during the mid-1980s.^{[citation needed]}

In 2008, P&G expanded into music sponsorship when it joined Island Def Jam to create Tag Records, named after a body spray that P&G acquired from Gillette. In April 2010, after the cancellation of As the World Turns, PGP announced they were officially phasing out of the soap industry, and expanding into more family appropriate programming.^[20][21]

Procter & Gamble (P&G) also given a $100,000 contract to the winners of Cycle 1 through 3 of Canada's Next Top Model, making Andrea Muizelaar, Rebecca Hardy and Meaghan Waller won the prize.

Animal Testing

On June 30, 1999 Procter & Gamble announced that it would be limiting its animal testing practices to its food and drug products which represents roughly 80% of its product portfolio^[22].

Procter & Gamble has invested more than $275 million to the development of alternative testing methods^[23].

Controversies

Logo controversy

P&G's former logo originated in 1851 as a crude cross that barge workers on the Ohio River painted on cases of P&G star candles to identify them. P&G later changed this symbol into a trademark that showed a man in the moon overlooking 13 stars, said to commemorate the original 13 colonies.^[24]

Former P&G logo

The company received unwanted media publicity in the 1980s when rumors spread that the moon-and-stars logo was a satanic symbol. The accusation was 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 12 stars." P&G's logo consisted of a man's face on the moon surrounded by 13 stars, and some claimed that the logo was a mockery of the heavenly symbol alluded to in the aforementioned verse, thus construing the logo to be satanic. Where the flowing beard meets the surrounding circle, three curls were said to be a mirror image of the number 666, or the reflected number of the beast. At the top and bottom, the hair curls in on itself, and was said to be the two horns like those of a ram that represented 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 unsuccessfully sued Amway from 1995 to 2003 over rumors forwarded through a company voicemail system in 1995. In 2007 the company successfully sued individual Amway distributors for reviving and propagating the false rumors.^[25]

The moon-and-stars logo was discontinued in 1985 as a result of the controversy.^[26]

Price fixing controversy

In April 2011, P&G was fined 211.2m euros by the European Commission for establishing a price fixing cartel in Europe along with Unilever, who was fined 104m euros, and Henkel. Though the fine was set higher at first, it was discounted by 10% after P&G and Unilever admitted running the cartel. As the provider of the tip-off leading to investigations, Henkel was not fined.^[27]

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 & Gamble.^[28] The Rely tampon was so super-absorbent that one by itself could in fact hold one woman's entire menstrual period flow. 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 used by Procter & Gamble 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 & 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.^[29]

Other products

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.^[30]

In October 2007, a class action lawsuit was filed in the State of Georgia alleging that many users of Crest Pro-Health mouthwash, with the active ingredient Cetylpyridinium chloride, suffered stained teeth and loss of their sense of taste as a result.^[31] Procter & Gamble contends that these side effects occur in only three percent of users.^[31] The suit seeks to include disclosure warning users of these side effects on product packaging.

Notes

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1. ^ ^{a b c d e f} "2011 Earnings Report, The Procter & Gamble Company". The Procter & Gamble Company. http://www.pg.com/en_US/downloads/investors/annual_reports/2011/PG_2011_AnnualReport.pdf. 
2. ^ "Procter & Gamble board meets amid CEO reports." Associated Press at Boston Herald. Tuesday June 9, 2009. Retrieved on November 17, 2009.
3. ^ P&G Ranks 5th Overall, 1st in Our Industry and a "Green Star" Among Fortune Magazine's World's Most Admired Companies | Procter & Gamble
4. ^ Dyer, Davis; Frederick Dalzell, Rowena Olegario (may 2004). Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. Harvard Business School Press. ISBN 1591391474. 
5. ^ Wherrity, Constance (February 21, 2006). "Dial Agrees to Buy P&G Deodorant Brands". Pierce Mattie Public Relations New York blog. http://www.piercemattie.com/blogs/2006/02/dial_agrees_to_buy_pg_deodoran.html. Retrieved September 6, 2006. 
6. ^ "P&G Must Proceed With Caution" Marketing Doctor Blog. July 10, 2008.
7. ^ (2008-06-06). “How To Learn From GE and P&G When The World Is About To Change,” Marketing Doctor Blog.
8. ^ Horstman, Barry M (October 11, 2005). "John G. Hankus: He rebuilt P&G – and city, too". The Cincinnati Post (E. W. Scripps Company). Archived from the original on April 5, 2005. http://web.archive.org/web/20050405123913/http://www.cincypost.com/living/1999/smale101199.html. 
9. ^ Warner Chilcott to pay $3.1 for P&G's drug business, WSJ
10. ^ "Our History". Procter & Gamble. Retrieved June 17, 2010.
11. ^ http://www.pg.com/en_US/company/purpose_people/executive_team/dimitri_panayotopoulos.shtml
12. ^ http://www.pg.com/en_US/company/global_structure_operations/governance/board_composition.shtml
13. ^ http://www.pg.com/en_US/news_views/blog_posts/2011/mar/rajat_gupta.shtml
14. ^ "Reasons for Selection, 2009 Canada's Top 100 Employers Competition". http://www.eluta.ca/top-employer-procter-%26-gamble. 
15. ^ . http://postcards.blogs.fortune.cnn.com/2011/05/05/pg-rates-an-a-for-board-diversity/. 
16. ^ U.S. Global Leadership Coalition, Global Trust members
17. ^ . http://www.usatoday.com/money/companies/story/2011-11-19/john-smale-death/51311848/1. 
18. ^ . http://www.findagrave.com/cgi-bin/fg.cgi?page=gr&GRid=80698500. 
19. ^ Dawn
20. ^ (2008-07-07). “It’s American Brandstand: Marketers Underwrite Performers ,” New York Times
21. ^ (2008-07-10). “P&G Must Proceed With Cautions,” Marketing Doctor Blog.
22. ^ "P.& G. to End Animal Tests For Most Consumer Goods". New York Times. 1999. http://www.nytimes.com/1999/07/01/business/p-g-to-end-animal-tests-for-most-consumer-goods.html. 
23. ^ "Animal Welfare and Alternatives". http://www.pg.com/en_US/sustainability/point_of_view/animal_welfare.shtml. 
24. ^ Procter and Gamble v. Amway, 242 F.3d 539 (5th Cir. 2001)
25. ^ "Procter & Gamble Awarded $19.25 million in Satanism Lawsuit". Fox News. March 20, 2007. http://www.foxnews.com/story/0,2933,259877,00.html. 
26. ^ Witt, Howard (April 25, 1985). "Corporate news: Procter symbol succumbs to devilish rumor". Chicago Tribune. http://pqasb.pqarchiver.com/chicagotribune/access/762134992.html?dids=762134992:762134992&FMT=ABS&FMTS=ABS:AI&type=historic&date=Apr+25%2C+1985&author=&pub=Chicago+Tribune&desc=Corporate+news&pqatl=google. 
27. ^ "Unilever and Procter & Gamble in price fixing fine". BBC News. April 13, 2011. http://www.bbc.co.uk/news/business-13064928. 
28. ^ Mikkelson, Barbara and David. Tampax Pearl, Snopes.com. 2005 December 31
29. ^ Mcpherson, Marianne. Sexual Anatomy, Reproduction, and the Menstrual Cycle 2005 March.
30. ^ Collated Media Reports
31. ^ ^{a b} http://web2.customwebexpress.com/bellbrig2/UserFiles/File/Crest%20Complaint.pdf

External links

• Official website