Assessing P&G marketing plan; the strategic management perspective

The choices made by Procter & Gamble are common decisions made in strategic management. In mid-2016, P&G expressed its intention to increase its spending in advertising. The strategy came on the backdrop of the company making a saving of $250million by reducing non-media marketing costs. These savings were related through revamped agency management system that reduced the agency costs. This meant that the organisation could increase its advertising spending without having to significantly increase its overall marketing budget. This can pass for a good strategy where there is greater focus on reduction of waste and increase in value.

The trade-off between cost and returns is one that has to be made by strategic managers from time to time. Marketing agencies charge considerable fees for their services. They use their expertise in mastery of media platform design and marketing message design to bring out the message that the organisation intends to sell. In many cases, it makes sense for organisations to engage their services as it would take enormous time and resources to develop such capabilities in-house. Besides, marketing agencies have been known to be highly creative and behind many of the most successful branding campaigns around the world. But for large organisations, it could be practical to develop in-house marketing design functions that reduce the amount spent on marketing agencies. This is what has been done at P&G enabling them to save up to $250million annually.

Returns on investment are generally highest where spending is on elements that are capable of producing direct results. However, the organisation needs to carefully review its implementation strategies to be sure that it has made the right decisions. An example of this dilemma can be drawn from the trade-off between agency costs and investing directly into buying media space. Agency costs can be justified on the basis that marketing agents could use their expertise to generate messages that resonate well with the market. Where there is effective message design, the organisation can create messages that go viral and those that are highly effective. But on the other hand, engaging the marketing agency means that millions of dollars are spent in agency fees. The trade-off therefore is in the question: is the value of message design higher than the agency cost?

Procter & Gamble seems to have found a middle ground between reducing agency costs and investing directly in buying media space. This solution is expected to contribute positively to its returns on investment in marketing. Investing in understanding customers is certainly bound to shape their product offers hence improving the consumer experience significantly. This strategic marketing approach has been found to work for other organisations such as Unilever. They have managed to not only review advertising expenses but also ensure that money is put where it matters most. Procter & Gamble’s strategic management strategy appears based on reviewing its expenses of diverting the savings made to where it would have the greatest impact on attracting and maintaining customers.