Critical analysis of P&G’s strategy for market penetration

Procter & Gamble’s new growth strategy is to use a new approach to marketing message design to introduce its products to new customers. It is a marketing tactic that is consistent with its goal of expanding its customer base by attracting first time ever consumers. These would be consumers who are experiencing need for the product for the very first time; hence consuming the category of products for the very first time. The company’s strategy can be critiqued based on its ability to use it to develop attract new customers as opposed to using loyal customers to bring in additional ones through referral....

In marketing theory, word-of-mouth marketing is the most effective form of marketing for the organisation. The reason why this form of marketing is highly effective is because the information sources are trusted. Consumers will generally have a healthy level of mistrust for the organisation and the marketing messages that come from it. This mistrust is founded on the rational expectation that organisations will try to entice the customers to purchase their products. They will do this by exaggerating the positives while glossing over the negatives of the products. The consumer is therefore not in a good position to verify the claims made by the organisation. When another consumer that has used the products before gives a positive recommendation, such a recommendation is highly trusted and is more likely to earn the organisation more customers.

It is a proven fact that organisations with a large pool of loyal customers tend to be more effective in attracting new customers than organisations which focus on aggressively marketing to new markets. The reason for the disparity is the difference in trust in the two types of information sources. By focussing on marketing to new consumers, P&G can be said to be taking a gamble using a strategy that has not traditionally been known to yield results. But their approach could be justified using a number of arguments.

At the moment, P&G does not produce products that have no close alternatives or perfect substitutes in the market. The organisation only enjoys partial loyalty as its customers tend to exhibit polygamous loyalty. This means that the probability that it would raise the level of loyalty to the level that its customers become advocates for its brand is quite low. So, P&G’s strategy of being the first in the industry to serve consumers that are recognising the relevant need for the first time could be well-informed. First time-ever customers that recognise their needs and opt for a product are likely to be attached to the brand that first satisfied their need.

If the organisation can effectively manage its customers so that it is constantly in touch and attending to their needs from the very first purchase, it could reduce the tendency of such customers exhibiting polygamous loyalty. At the very least, it would become the most preferred brand among the few organisations that a customer is loyal to. The P&G strategy could therefore be successful; but success would only be realised if the initial marketing approaches are followed up with a tactful commitment to boost the level of brand loyalty.