"Procter & Gamble Co. (P&G, NYSE: PG) is a Fortune 500, American global
corporation based in Cincinnati, Ohio, that manufactures a wide range of
consumer goods. As of 2008, P&G is the 23rd largest US company by revenue and
14th largest by profit. It is 10th in Fortune's Most Admired Companies list (as
of 2007).] P&G is credited with many business innovations including brand
management, the soap opera, and "Connect & Develop" innovation.
According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising
than any other company; the $2.62 billion it spent is almost twice as much as
General Motors, the next company on the Nielsen list.[ P&G was named 2008
Advertiser of the Year by Cannes International Advertising Festival..
History
William Procter, a candlemaker, and James Gamble, a soapmaker, formed the
company known as Procter & Gamble in 1837. The two men, immigrants from England
and Ireland respectively, who had settled earlier in Cincinnati might never have
met, had they not married sisters, Olivia and Elizabeth Norris.[6]
Since both their industries used similar resources, the Panic of 1837 caused
intense competition between the two and as a result it led to discord with the
family. Alexander Norris, their father-in law decided to call a meeting where he
convinced his new sons-in-law to become business partners. On October 31, 1837,
as a result of the suggestion, a new enterprise was born: Procter & Gamble.
The company prospered during the nineteenth century. In 1859, sales reached
one million dollars. By this point, approximately eighty 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. Once the war was over
and the men returned home, they continued to purchase the company'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. In the decades
that followed, Procter & Gamble continued to grow and change. The company became
known for its progressive work environment in the late nineteenth century.
William Arnett Procter, William Procter's grandson, established a profit-sharing
program for the company's workforce in 1887. He hoped that by giving the workers
a stake in the company, they would be less inclined to go on strike.
Over time, the company began to focus most of its attention on soap,
producing more than thirty different types by the 1890s. As electricity became
more and more common, there was less need for the candles that Procter & Gamble
had made since its inception. Ultimately, the company chose to stop
manufacturing candles in 1920.
In the early twentieth century, Procter & Gamble continued to grow. 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. In the early 1900s, Procter & Gamble also became known for its
research laboratories, where scientists worked to create new products. Company
leadership also pioneered in the area of market research, investigating consumer
needs and product appeal. 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".
Throughout the twentieth century, Procter & Gamble continued to prosper. The
company moved into other countries, both in terms of manufacturing and product
sales, becoming an international corporation with its 1930 acquisition of the
Newcastle upon Tyne-based Thomas Bluth Co. Procter & Gamble maintained a strong
link to the North East of England after this acquisition. In addition, 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 1950. 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 simplified the
diapering process.
Over the second half of the twentieth century, Procter & Gamble acquired a
number of other companies that diversified its product line and increased
profits significantly. These acquisitions included Folgers Coffee, Norwich Eaton
Pharmaceuticals, Richardson-Vicks, Noxell, 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
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
substitute for fat in cooking potato chips and other snacks that during its
development stages is known to have caused anal leakage and gastro-intestinal
difficulties in humans. Procter & Gamble has expanded dramatically throughout
its history, but its headquarters still remains in Cincinnati. {Source, Ohio
History Central.}
In January 2005 P&G announced an acquisition of Gillette, forming the largest
consumer goods company and placing the Anglo-Dutch 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 has
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. The companies officially merged October 1, 2005.
P&G's dominance in many categories of consumer products makes its brand
management decisions worthy of study. For example, P&G's corporate strategists
must account for the likelihood of one of their products cannibalizing the sales
of another." ~ Wikipedia