Emerging Markets At the beginning of the millennium

Targeting Emerging Markets At the beginning of the millennium, Procter & Gamble was the world’s largest consumer goods company, specializing in household products and personal care. Among its well known brands are Tide detergent, Crest toothpaste, Olay skin care, Pantene shampoo and Pampers disposable diapers. However, with 6 billion consumers worldwide, the company was focused only on the richest 1 billion. Less than a quarter of company sales came from emerging markets, and those sales were mainly to the wealthier segments of those societies. All that changed when a new CEO decided that P&G would seriously target developing countries and transitional economies. After all, it was estimated that each week 40,000 Asians used a washing machine for the first time. Long known for its product innovation in the United States, P&G designated 30 percent of its research and development funds to the needs of these lower-income markets. Its engi- neers sought new ways to make products more cheaply, and P&G researchers visited homes in develop- ing countries to better understand consumer needs. P&G’s acquisition of the Gillette Company was also seen as a way to expand more quickly into emerging markets. The acquisition was P&G’s largest to date. After just six years, company sales in emerging markets reached 50 percent of total sales. China was a market of particular interest to P&G. In just 20 years the company had established an extensive distribution system and had seen sales rise to $2.5 billion. China had become P&G’s second largest market, and P&G had become China’s largest consumer goods company.