Procter and Gamble

9-599-050

REV: DECEMBER 12, 2001

DAVID ARNOLD

Procter & Gamble: Always Russia

In May 1998, Annick Desmecht, brand manager for the Feminine Protection Category, Procter & Gamble Russia, was discussing future strategy with the company’s senior management team in Moscow. The flagship brand Always had grown rapidly since its Russian launch in October 1995, and the latest audit figures showed it achieving market leadership in early 1998. The meeting included Stassi Anastassov, general manager for a number of categories including feminine protection (“FemPro”), and Laurent Philippe, vice president and general manager in charge of the Russian subsidiary of Procter & Gamble (P&G). Three particular issues animated the discussion. The first was to the price level of the Always brand, and specifically whether it should continue to be priced at the same price level as Western Europe, and whether there existed an opportunity in Russia for a mid-priced brand. Anastassov reflected that . . . in many other emerging markets, P&G management decided to compete against lowerpriced local brands, using the lower end of our portfolio positioned at prices below those in developed countries. In Russia, however, we decided to introduce our best technology at premium prices, in line with those prevailing in developed markets, and as a result we have built a premium business. The meeting debated whether this position might inhibit continued rapid growth beyond the more affluent customer groups. The second issue for discussion was the sustainability of the different marketing strategies being followed in Russia and neighboring Eastern European countries, and whether it was important for the Russian team to consider this in formulating its own plans. A particular focus of attention was the more developed Polish market, where aggressive low-price competition had resulted in price points well below those prevailing in Russia. The third issue was the question of whether to extend the...