Institute of Rural Management Anand

Course Name: Marketing Management (MMT) Programme: PGDM-RM42 and FPM-RM20

Date: 30.1.22 Term – II Roll No.______________________

Mid Term Examination (Open Book)

Duration of Exam: _1_Hrs _30_Min Weightage: _20_ percent Total Marks: __30__

Instructions:

a) Read the questions carefully, before answering.

I. Procter & Gamble Co. is betting the world’s consumers will remain undeterred by higher prices
on household staples from Pampers diapers to Gillette razors.

The Cincinnati-based consumer-products company said sales increased 6% in the quarter ended
Dec. 31 compared with a year earlier, fuelled in part by the company’s largest average price
increases since the spring of 2019.

Executives on Wednesday said its price increases will continue throughout 2022, and predicted
higher profitability and improved margins in coming quarters even as labor, freight and raw-
materials costs continue to balloon due to the global supply-chain turmoil.

“The consumer is very resilient and very focused on these categories of clean home and health and
hygiene," P&G finance chief Andre Schulten said in an interview.

Pricing on average rose 3% in the latest quarter, P&G said, and price increases accounted for half
of the company’s revenue growth in the period. Higher volumes accounted for the other half. P&G
reported revenue of $21 billion for the quarter.

The added revenue helped offset soaring prices for raw materials, labor and transportation of
goods, as supply-chain woes continue to weigh on almost every industry.

On Wednesday, executives said there is no relief in sight from higher costs for labor, transportation
of goods and raw materials such as fuel, resin and pulp. “The flexibility that we’ve talked about
that our supply people have generated doesn’t come for free," said Mr. Schulten, the CFO. “When
we need to shift to alternate materials, when we need to shift to alternate suppliers, all our sources
of materials geographically, that comes at a premium."

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P&G, which has posted more consistent sales gains than rivals throughout the pandemic, raised its
revenue forecast for the fiscal year ending June 30, even as the company said costs will be higher
than previously projected. P&G said it expects to commit $2.8 billion more to commodity, freight
and foreign-exchange costs this fiscal year. The figure is about $500 million more than it forecast
last quarter. Its earnings estimates remained unchanged.

Mr. Schulten said that in addition to absorbing higher prices, consumers also are switching to
pricier, higher-end products, such as trading liquid laundry detergent for costlier single-dose pods.

A broad range of consumer-products companies, including P&G rivals Unilever PLC and
Kimberly-Clark Corp., have implemented price increases to offset higher costs amid snags in the
global supply chain.

The recent rise in Covid-19 cases due to the fast-spreading Omicron variant didn’t spur the kind
of hoarding behavior that led to shortages of toilet paper, cleaners and other products during
previous surges, he said.1

Answer the questions 1 to 3 based on the above article about Proctor & Gamble:

1. Drawing from Porter’s Five Forces model, comment briefly on bargaining power of P&G’s
suppliers, in relation to the context. What facts presented in the article support your
comment? (3)

2. How do you think P&G is placed with respect to competition among its peers (intra
industry rivalry)? Support your answer from facts you find in the article. (4)

3. Which of Porter’s generic strategy do you think P&G largely adopts? Why do you think
so? (3)

4. Assume you are a small player, operating in a specific and small geography, marketing
personal health/hygiene and home care products. Your business has been equally affected
by the supply chain disruptions due to the pandemic. However, your overheads are lower
than P&G’s, and your brands are among the top 10 in terms of consumer awareness in the
geography where you operate. How would you respond to P&G’s action of increasing the
prices of its brands in home care and personal hygiene category? (5)

1
Excerpted from: [Link]
[Link]

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II. With the coronavirus pandemic bringing a fundamental shift in the relationship between
consumers and appliances as people spend more time at home, the consumer durables industry is
expected to witness sustained growth over the next few years, according to Whirlpool of India.
The 'work from anywhere' culture is expected to be the 'new norm' in the post-pandemic world,
the company said there will be a greater emphasis on making the home comfortable and productive,
leading to a focus on the role of home appliances to enable the same.

Acknowledging that home appliances have moved from a passive space to an active one,
Whirlpool of India Managing Director Vishal Bhola said, "They are no longer seen as luxuries or
discretionary spend but as basic necessities to ensure the safety and comfort of the family."

"With stay at home and work from home becoming the new normal, there is a greater
acknowledgment of the role played by home appliances in the life of the consumer. This combined
with low penetration levels, improving infrastructure and an upwardly mobile middle class will
lead to sustained growth over the next few years," he added.

There were a few clear patterns that emerged like a preference for higher capacity refrigerators in
line with the need to store more and reduce trips to the supermarkets and an increased need for
sanitization of clothes leading to consumers looking for washing machines with in-built heaters
which can effectively remove germs, the annual report of the company added.

"With some of the lowest appliance penetration even amongst emerging markets of the world, the
Indian market is expected to grow rapidly," it added.

However, on the outlook for the immediate future, Bhola said, "2021-22 will continue to be a test
for many companies with an uncertain environment posing unforeseen challenges." Reiterating
that the risk and challenges from the COVID-19 pandemic continue to grow at an accelerating
rate, the company said: "The full economic fallouts are difficult to assess as the country is still
dealing with COVID-19." 2

Answer the following questions

5. What macro factors do you think are affecting consumer choices? (2)

6. Do you think changing consumer preferences are a fad or a durable trend? Support your
answer with logic from the article. (4)

7. It is estimated that the consumer durables market in India is of size INR 2 lakh crore, which
is expected to grow at 20% in the coming year. The industry consists of electrical
appliances and white goods. The electrical appliances category accounts for 35% of the
consumer durables market, but in the coming year, it is expected to grow at double the rate.

2
[Link]
witness-sustained-growth-over-next-few-years-whirlpool-india/articleshow/[Link]

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 Assume that Whirlpool of India operates only in white goods, and wish to grow at least at
25% in the coming year. There are two ways to go about this – add electrical appliances to
your portfolio, or continue to aggressively sell white goods.

7 (a). Which option of the above will you choose and why? (4)

7 (b). Depending on your answer above in 7 (a), which kind of a strategy do you think

you are adopting based on markets and products? (2)

7 (c). What will be the size of the consumer durables market next year, if the industry

actually grows at 20% in terms of revenue? (1)

8. What are the characteristic of dogs in BCG Matrix? (1)

9. Hallmark segments its greeting card market into sub-branded lines. A few such lines are
humorous Shoebox, encouragement cards, recordable storybooks, Hallmark Business
Expressions. Which of the following marketing strategy is followed by Hallmark? (1)
a) Concentrated marketing
b) Differentiated marketing
c) Micro marketing
d) Undifferentiated marketing

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