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P&G was founded in 1837 in Cincinnati, Ohio by William Procter and James Gamble. Procter, who had emigrated from England, was an established candle maker in Cincinnati. Gamble, an immigrant from Ireland, was an apprentice soap maker in the same city. Fatefully, Procter and Gamble married sisters, Olivia and Elizabeth Norris, and became brothers-in-law. Their father-in-law, Alexander Norris, pointed out that Procter and Gamble were competing against one another for the same raw materials and suggested the pair become business partners (P&G, 2017).

On October 31, 1837, after investing about $3,600 each, Procter and Gamble signed a partnership agreement, formally creating a soap and candle business called the Procter & Gamble Company. The opening of the Procter & Gamble Company was risky; at that time, large numbers of banks were closing their doors and many thought the United States itself could go bankrupt. Also, P&G faced steep competition as there were already 14 other soap and candle makers in Cincinnati in the late 1830s (P&G, 2017).

A few years after the creation of the company, P&G opened their first plant on Central Ave in Cincinnati. According to Procter & Gamble, “the plant offered many advantages, including close proximity to the stockyards where they had easy access to raw materials. Plus, it was adjacent to Cincinnati’s canal, offering cheap water transportation to the widening markets of the upper Midwest” (2017). In 1840, the founders sold some of their personal assets to finance the research and production of a new candle. P&G as a company placed an early emphasis on research and development, as well as the efficient use of capital, specifically manufacturing facilities. In 1841, only four years after starting the company, Gamble obtained P&G’s first patent.

According to P&G (2017), by 1859, the company exceeded $1 million in sales and employed 80 individuals. In 1861, with the threat of the Civil War looming, Gamble and Procter had the foresight to procure an entire boatload of rosin, which is necessary for making soap, from New Orleans. The war began a short time later and not only were the supply routes to New Orleans closed, but the price of rosin jumped from $1 per barrel to $15 per barrel. Because of this foresight, P&G was the only soap maker in the nation capable of producing large amounts of their products. P&G was awarded with multiple government contracts to supply candles and soap to the Union armies, which provided the company with an ample amount of work, allowed the business to succeed in a trying time, and created brand loyalty among the troops and their families.

By 1878, P&G had become a multi-generational family business. Harvey Procter, one of the many sons of the founders to hold important positions with the company, was placed in charge of P&G’s sales and marketing. Harvey Procter is considered the father of P&G branding and advertising, and played a critical role in the branding of P&G products. In 1879, P&G released its Ivory soap, which went on to become the company’s best-selling product. “The branding of Ivory was conceived by Harley Procter who named the product, developed its compelling advertising, and had it tested by third parties to verify his advertising claims” (P&G, 2017). Furthermore, P&G considered the market conditions when deciding on the pricing structure of Ivory soap. P&G purposefully created a soap that could compete in quality with imported European products, but sold Ivory at a price that every consumer could afford. Prior to introducing Ivory, P&G had advertised only on a limited basis. However, Ivory presented the company its first opportunity to mass-market its brand. P&G’s print advertising campaign focused on the fact that Ivory soap was 99.44% pure.

In 1886, P&G began construction on its Ivorydale factory. The Ivorydale plant was an “industrial masterpiece”, incorporating the latest technological advances and designs for safety. In 1890, P&G established an analytical chemistry lab at the factory, which was one of the first product research labs in the country. This was the beginning of a robust Research & Development division at P&G, which started out studying ways to improve the soap-making process. The Research & Development unit would relay its findings to the Process Department, which would develop and implement new manufacturing processes to match the progressing technology (P&G, 2017).

P&G (2017) states that, in 1920, the company was dealing with seasonal sales fluctuations with its wholesalers. Thus, the company was faced with potential employee layoffs. Rather than reduce its staff, P&G displayed its commitment to innovation and decided to begin selling products directly to retailers on the same terms it gave wholesalers. Whereas P&G was initially weighing employee layoffs, the company instead hired about 450 sales staff due to this new strategy. This innovative decision led to P&G’s formal sales organization and stabilized the company’s production.

In 1924, in an effort to increase customer responsiveness, P&G hired Dr. Paul Smelser, an economist from Johns Hopkins University, to collect statistical data on consumers of Ivory soap. Through Dr. Smelser’s work, P&G was able to learn more about its customers’ income, background, and other factors. These actions made P&G the first company to conduct data-based market research with consumers, which allowed the company to understand and anticipate consumer needs, as well as create new products to respond to changing customer desires. P&G later built on its customer focus by establishing the Consumer Relations Department. This department formally responded to letters written to the company by consumers, making P&G one of the first American companies to focus on customers in this way (P&G, 2017).

By the 1930s, roughly 100 years after the start of the company, P&G was performing extremely well and had been purchasing various products and brands to bolster its economic position. P&G had established modern Research & Development divisions, created efficient distribution networks and was actively conducting market research. However, the company recognized that the P&G brand was becoming muddled among all of the brand names of its individual products. Additionally, some of P&G’ s brands were essentially competing with one another in advertising, which was wasting valuable resources (P&G, 2017).

P&G hired a marketing executive named Neil McElroy to define and promote the company brand. McElroy created a unique brand management system, which was implemented brand managers that were responsible for various parts of the company’s mission concerning the P&G brand. These actions allowed the company to differentiate itself from its competition by communicating to consumers that P&G owned and produced many of their favorite and trusted products.

According to DeVault (2017), McElroy focused on market segmentation and product differentiation when developing his brand management system. McElroy used market segmentation to allow each P&G brand to be definitively different than other company brands. This market segmentation allowed P&G to target different and distinguishable consumer categories. By segmenting its target market, P&G was able to shape its various brands to appeal to different, specific consumer groups, which is referred to as product differentiation. The result of these focuses was that P&G was able to create specific products for distinct markets, even if the two products were in the same category. For example, P&G produced Ivory soap and Camay soap, but consumers viewed these two soaps differently.

Proctor & Gamble (2017) wrote that, to gain even more competitive advantage through efficiency and customer responsiveness, it established P&G Shopper Research in 1997. P&G Shopper Research was arguably one of the most extensive shopper research processes in the industry. A few years later, P&G opened a different research facility focused solely on what the company calls the “two moments of truth.” These two moments are when a customer chooses a P&G product and when a customer uses the product. The research facility essentially recreated or mimicked a real grocery store and an actual home environment. Then researchers observed and studied consumers to better understand how they shop and how they use household products.

Today, P&G owns a staggering 21 billion-dollar brands and earned more than $65 billion in net sales in 2017. However, P&G is in a bit of a rough spot. The company’s sales peaked in 2012 (at almost $84 billion), but has declined ever since. In addition, P&G has cut down on its product categories; where the company used to offer products in 15 categories, P&G now focuses only on 10. One argument explaining P&G’s modest decline is the shift in consumer priorities; millennial consumers want brands that are emotionally bonding, niche, and customized. P&G, on the other hand, specializes in mass-market products that appeal to older, more established customers. P&G’s CEO, David Taylor, has spoken publicly about the company’s recent struggles, and claims P&G is confident it can return to its peak position (Reingold, 2016).

Sections 2 & 3 – SWOT Analysis

Internal and External Environment of P&G

External environment refers to factors outside an organization that affects its operations (Armstrong et al., 2016). Therefore, P&G’s external environment comprises of outside factors that impact its activities. These factors can either positively or adversely affect the firm. They can either present an opportunity or threat to the enterprise. P&G external environment is complex. The company is not operating in a vacuum; therefore, it is impacted by these factors. For instance, competition is an external factor that can adversely affect the operations of P&G because it cuts into its profitability as well as impact its performance.

Similarly, unfavorable state regulations such as increased taxation present a threat to the organization because it also reduces profits. On the other hand, positive external factors such as availability of emerging markets in India and Africa present P&G with opportunity for exploitation. Besides, the external environment can be well analyzed using SWOT analysis which is a tool that describes the strengths, weaknesses, opportunities, and threats of the company to gain a thorough perspective on a firm and its future. It provides the company with valuable information regarding its internal capabilities (strengths and weaknesses) against external opportunities and threats to remain viable. However, for this study, the focus will be on only the external environment (opportunities and threats).

P&G Strengths

P&G’s Multiple Product Lines

Procter & Gamble is considered one of the best financial and marketing companies in the branding industry. P&G has been critical acclaimed as one of the top branding firms that provides umbrellas for some other top brands in the world. Nonetheless, a company such as P&G has strengths and weaknesses when it comes to the two areas the company specializes in. Lisanti (2014) mentions, “Procter & Gamble boasts a portfolio of 300 brands and ranks as one of the top licensors in the world with an unlimited potential for future growth”. (P.169) P&G is responsible for the success of most of the products the U.S has to offer and they include Crest toothpaste, Charmin tissues, Bounty towels, Tide detergent, Oral B toothbrushes, Febreze and gain just to name a few. These product lines are used on the daily bases across the world.

The success of the product lines, which P&G finances and markets, shows how serious the company takes in licensing new established brands. P&G Co. shows great strengths in their leadership role for brands that become successful in different industries. Lisanti (2014) mentions, “With a corporate focus on innovation, brand building and a keen understanding of consumers, Procter & Gamble has applied its immense market knowledge and research to create a powerful business in licensing that leverages its inherent strengths as a consumer products goods leader”. (P.169) P&G takes pride in the brands they provide their expertise to and not only does the company have the resources to bring profitability to their brands, but they also show strengths in balancing their competitive advantage.

P&G Marketing Skills

Procter &Gamble shows great strengths in many areas, especially in their marketing department. P&G, throughout the years has been know for their creative marketing strategies that has brought more success to companies through less promotion but more advertising. Ailawadi, Lehmann & Nelsin (2001) mentions, “Procter and Gamble’s value pricing strategy to examine consumer and competitive response and to trace how this response ultimately affects market share. Starting in 1991-92, P&G instituted major reductions in promotion and increases in advertising in an effort to reduce operating costs and strengthen brand loyalty” (P.44). P&G, shows how advertising their products makes it more appealing to their customers which helps in various ways such as, fulfilling the customers needs and wants, the packaging attracts the customers to purchase and also with the efficiency in quality P&G increases profitability.

Nonetheless, P&G continues to tap in to new markets to enhance the success of their brands. Rosenzweig (2018) mentions, Febreze has partnered with former NFL wide receiver, and 6-time Pro-Bowler, Terrell Owens, to encourage folks to get their homes ready for game time. Owens will be hitting the field in Minneapolis in the days ahead of the Super Bowl to spread the word about the man whose “BleepDontStink” and remind everyone that while he isn’t coming to their Super Bowl parties this year, Febreze will be on hand to ensure that their homes smell fresh, from the first coin toss to the final whistle” (Rosenzweig 2018). The company’s idea to use athletes in a popular sport is great marketing and attracts customers. A great marketing skill P&G displays is collaboration with a National Football League superstar athlete Terrell Owens. The company uses one the best events in sports to advertise their Febreze air freshener brand during the super bowl, using Terrell Owens as the spokes person to advertise keeping home bathroom refreshed and clean. The genius in this marketing skill is the amount families watching game. This creates not only profitability for the company but success and exposure for the brand.

P&G Research and Development

P&G has been known for their affiliation with branding in a number of industries both on a Local and global scale. One of the P&G strengths is it research and development skills in finding specific products and innovating them into popular brands. P&G believes innovation and how it can only gain more profitability as well as serve the consumers. The strategy for research and development stems from their use in collaborations with external outlets that can lead them to the next big product. Huston and Sakkab (2006) mentions, “In “connect and develop,” P&G collaborates with suppliers, competitors, scientists, entrepreneurs and others (connect) to systematically search the world for technologies, packages and products that P&G can improve, scale up and market (develop) on it own or in partnership with other companies”. (Huston and Sakkab, 2006) P&G’s, connect and develop strategy becomes very useful for finding brands who create products that will satisfy various markets of consumers.

P&G Distribution

P&G showcases an additional strength in the distribution area that covers a large number of locations. The United States has been going through a great deal of tragedies dealing with hurricanes that are destroying parts of the world. Puerto Rico has been tackled by hurricane Maria where it destroyed the water system and caused families to live in unfortunate ruin. P&G’s distribution team formulates a plan to send a large number of their products that can help the natives of Puerto Rico with purified water, shampoo, soap and baby pampers. The effort put forth by P&G increased their reputation and also shows how efficient they are considering customer needs.

P&G Weaknesses

P&G’S Organizational Structure

P&G’s organizational structure is considered one of the company’s weaknesses due to having a large number of brands. Although, P&G’s marketing and financial responsibility to their brands results in success, the problem that rises is decision making. The reputation of the decision making at P&G is know to be slow and also one sided. Nonetheless, P&G known to be an older and traditional company reframes from changing the organizational structure, this may become a problem for the long and could most likely jeopardize their competitive advantage.

P&G’s Lack of Organic Growth

P&G, known for their remarkable marketing strategies for all the brands the company represents. Although, marketing is a great strength of P&G Co., this can also affect the company’s organic growth. The lack of innovation from the company causes a decrease in customers. Ng and Chen (2015) mention, “Organic sales, a closely followed metric that strips out currency moves and acquisitions and divestments, were flat in the latest quarter and increased just 1% in the past year, compared with 3% growth a year earlier”. (Ng and Chen 2015) The interesting thing about the companies decrease in organic growth is, the rival companies are taking advantage of P&G’s refusal to make the innovational changes, which can maintain the companies competitive advantage. The leadership at P&G must realize that without the innovative efforts of change the customers who were loyal to their brands will look to buy from their rivals.

P&G’s Loss of Brands

P&G has been going through some major brand losses due to their large portfolio. While, the company represents over 400 brands, this causes them to lose track of their competitors and the arising new markets. D’Souza (2014) mentions, “P&G said it would have fewer but larger distribution centers in North America and would focus on strengthening its presence in emerging markets, or what Lafley called the company’s “engines of growth”. (D’Souza 2014) The company that was once on top of the brand marketing industry is now focused on making changes and downsizing their brand list. P&G, suffered mostly from investing more into the brands that gained the most profitability. Nonetheless, the sustainability of having a large portfolio causes P&G to lose brands.

P&G and Competitors

P&G, over 300 brands in their portfolio and more than 90% are worth billions of dollars. Nonetheless, P&G must also pay close attention to their competitor’s actions. One, their competitors become rivals because they choose to replicate what strategies and products P&G establishes. The rival companies not only replicate but they innovate their products that increase profitability and cause customers to switch brands. Overall, this may cause loss in profitability for not only P&G but may cause their brands reputation to fall. P&G must be aware of their competitors in order to continue increase in profitability and to continue having a competitive advantage.

P&G Opportunities

In the SWOT analysis, opportunities comprise the external factors that positively impact the operations of a company. These elements can be in the present or future environment. P&G experiences various external market opportunities including the following;

Emerging Markets

According to Sako (2015), the emerging markets in Asia and Africa present significant market for P&G consumer products. The incomes of these markets are rapidly rising which increases their demand potential for P&G products. Also, the increasing populations in Asia such as China and Africa also present marketing opportunities to P&G. Forbes (2016) stated that this kind of business is usually driven by household income growth, population growth, and household formation demographic factors, therefore, the increasing incomes and population in emerging markets present significant markets to P&G products. The growing disposable incomes of these individuals increase the sales volume of the company, thus its profitability.

Advancing Technology

The rate at which technology is advancing is high, therefore presenting numerous opportunities to P&G. For instance, the growth of the internet offers both digital marketing and e-commerce opportunities. Today, many nations have integrated digital platforms, and many individuals have also access to the internet, thus presenting marketing opportunities to P&G. Through the internet, the company can reach many people across the globe while creating awareness of their brands. Platforms such as Facebook and Twitter are just examples of online platforms that present substantial marketing opportunities to P&G because they can advertise as well as engage with their customers. About thirteen billion people are subscribed to social media which provides the firm with significant chances to effectively reach these people. The growth of e-commerce technology also presents an opportunity for the company to provide their products to its customers conveniently. Research indicates that by 2050, many nations across the world will embrace technology and e-commerce will be the primary marketplace for many companies. Therefore, this advancement is likely to enhance the competitiveness of P&G.

Future Growth Plans

Currently, P&G is drafting a clear growth plan. The firm has reorganized its operations in India into one headquarters from the previous three. In fact, P&G is integrating reorganization strategy in all countries as well. As such, the company is intending to reorganize its portfolio worldwide to 30% by 2020. Also, P&G is constructing production facilities in about eighteen developing nations to enhance its network (Campos, 2013). Presently, P&G serves about four billion people across the globe and these growth strategies are expected to increase the number of consumers by one billion and reach 7 billion by 2020.

Formation of partnership with NGOs

Today, consumers do not only prefer dealing with organizations that produce high-quality products, but also those that appropriately respond to their social needs (Faw, 2014). Therefore, P&G can take this opportunity by partnering with non-governmental organizations such as REDCROSS that tends to address the social needs of the society. This strategy can improve P&G corporate image as well as brand equity. As a result, it assists in building loyal and active customer base which will increase the sales volume as well as the profitability of the firm.

Increasing Global Population

The populations across the world are growing on a daily basis, therefore presenting marketing opportunities to P&G. Currently, there are about 7.6 billion people in the world, and this figure will increase to 10 billion by 2050. This population increase means that demand for P&G products will also increase, thus positively impacting its profitability and performance. Nations like China, India, Russia, Indonesia, and Nigeria experience high population growth rate, therefore will be a significant market source for P&G consumer products.

P&G Threats

Threats comprise of external elements that adversely impact the operations of a company. In as much as P&G Company enjoys particular opportunities from the external environment, it as well faces various threats that negatively affect its competitiveness. The following includes the risks of P&G;

Competition

Currently, P&G Company faces stiff competition from Colgate-Palmolive, Unilever, Inter Parfums Inc., and Elizabeth Arden who also deal with consumer goods (Wright, 2014). These firms are engaging in different product lines through innovative approaches, therefore presenting a significant threat to the profitability of P&G. Additionally; the consumer product business is a kind of business that can be easily copied by industry rivals. In fact, it attracts many individuals and corporations to invest in this type of business. Therefore, due to this simplicity, P&G is expected to face high industry rivalry from various market entrants who will be interested in doing the same line of business.

Unfavorable Regulatory Environment

Studies have shown that particular consumer protection groups are raising concerns regarding the presence of chemical contents in cosmetics. Recent research has indicated that about 30% of cosmetic products contain carcinogenic. Therefore, as a result of pressure from the public, the United States under the Food and Drug Administration (FDA) is anticipated to formulate tough rules on the quality of cosmetic products. Such regulations will result in increased product development expenses as well as the delay in launching new products. Additionally, the European Commission has also imposed various stringent laws regarding the chemical content of cosmetics which will also make product development expensive as the company tries to adhere to these regulations.

Counterfeit Goods

Trade of pass-off and fake products adversely affect the performance and growth of consumer product firms such as G&P. Pass-off products include those items that resemble the original ones mainly through trademark’s misspelling. Although counterfeits are treated as copyright and trademark infringement, fake or duplicate products are legally recognized as company products. This is a significant threat to G&P because these products end up confusing consumers. According to Bian & Veloutsou (2017), about 10% to 30% of packaged food, toiletries, and cosmetic are counterfeit. Therefore, products such as soaps, detergents, and cosmetics are usually affected by pass-offs and counterfeiting. This situation tends to adversely impact the firm’s revenues as well as the brand since these products are unsafe. Additionally, it also affects the consumer confidence because the fake products do to provide the desired satisfaction promised by the brand.

Increasing Costs of Raw Materials

The costs of raw materials keep on rising each day due to the increasing market players and fewer suppliers, therefore posing a significant threat to P&G Company. Increase costs of raw materials tend to increase the cost of production which cuts into the profitability of the firm.

Section 4 – Evaluation of the SWOT Analysis

Looking at the SWOT analysis carried out in the section previous it is apparent that P&G face many challenges going forward and have some opportunities open to them. In this section, we will analyze the SWOT that has been carried out and see where P&G can turn some of their weaknesses into strengths and some of their threats into opportunities. Below I will analyze each section of the SWOT and see what needs to be worked on.

Strengths

From looking at the SWOT analysis we can see that P&G have a very strong brand and multiple product lines. This is great, however there are also opportunities for this to become a weakness if not handled correctly. As stated previously in the case study P&G are oftentimes marketing products against products in their own portfolio. This is obviously a waste of time and resources and is not benefiting anyone but their competitors. As P&G grow their product lines they must be careful not to lose sight and get carried away with the promotion of their products, especially when they are competing in the same market as their own products.

P&G have an interesting strategy in terms of marketing. They focus more so on advertising than on promotion. This results in strengthening their brand loyalty and makes their products more appealing to new customers. P&G also focus on game time advertisements, this is a great way to get their brand out there to families watching the game and it gives them great exposure. However, advertising during sporting events can be extremely pricey, especially during the super bowl so P&G must be careful not to overspend on advertising.

Another big strength that P&G have over their competitors is their ability to use their competitive advantage in the market to their full capability. This is highlighted by their research and development program called “connect and develop” which searches the world for technologies that P&G can use to their advantage. Innovation is what keeps customers excited and makes them come back for more. More innovation will lead to more strategic thinking within the company and allow P&G to further boost their strong position as market leaders.

P&G are also well known for their distribution channels as they showcased during the recent hurricanes in Puerto Rico. Not only does this show how good they are at meeting consumer needs it also was a great move for them in terms of public relations. By providing clean purified water, shampoo, soap and baby diapers they highlighted their compassion and got a lot of free advertising. Consumers are much more ethical now than in the past and to know they are purchasing goods from an ethical company will strengthen their base and attract new customers.

Weaknesses

One of the weaknesses identified in the SWOT analysis is the organizational structure of P&G. They do have some strengths in terms of their marketing efforts and everything noted prior, however decision making can be slow. Perhaps P&G should consider their decision-making process and see how the chain of command is working and where they can cut some of the barriers to communication. With P&G’s extensive product lines across all markets they are in a very strong position, that is if they can move towards a more decentralized organizational structure and leave some of the decision making to managers throughout the company. This alleviates some of the stress for top management and allows them to focus their time elsewhere. This also gives more power to more employees within the organization which will in turn lead to higher employee satisfaction, therefore leading to lower turnover and higher profits for the company.

The SWOT analysis also identified a lack of organic growth within the company, which is leading to competitors taking advantage of the lack of innovation. As stated in the strengths section of this analysis P&G are known for their “connect and develop” program. They should be using this innovation that clearly exists within their company to grow the company from within. Whenever they find their latest product they should be working on developing this before competitors can get their hands on it. Organic growth is easily achievable in a highly innovative environment, the company just had to pursue it.

Another key issue identified in the SWOT analysis was the fact that P&G focus so heavily on some products and do not put enough time into their other product lines. This can be a huge problem when you diversify into too many markets, especially with the organization in its present centralized organizational structure. There must be more power given to managers of each brand and each product so they can do as they see fit, as high-level management clearly are not putting enough time into some products as they should be.

Opportunities

One factor identified by the SWOT analysis is emerging markets. As Asia and Africa continue to grow there is now more than ever a huge market expansion opportunity. Due to globalization, the world market is now a much smaller place, and with countries like China doing so well on the world stage consumers in these countries now have much more disposable income. This is a huge opportunity for P&G as they can now sell more than ever in these international markets. Higher sales in these countries results in higher profits for the company.

Another opportunity identified in the SWOT analysis is the internet. The internet has changed the way we do business forever, and will continue to do so soon. The shift from brick and mortar stores to e-commerce is phenomenal and this will only continue. P&G should consider hiring young, funny and responsive social media teams. Millennials react well to interaction online with companies, especially if they can come up with a witty response on Facebook or on twitter. If P&G can show they are a fun company and are willing to laugh, they will attract a much younger generation of customers.

The future growth plans of the company were also identified as one of the key opportunities for P&G. Building on the point made earlier about Globalization, P&G have realized that expanding operations into other countries such as India is a solid investment. They can benefit from much lower labor costs and lower costs of production. However, since the recent administration took over it looks like American companies will be heading back to the USA soon due to a tax being imposed on imported goods if the President’s plans go ahead. Under “America First” P&G could face some problems for not manufacturing in the USA.

As mentioned in the previous section under strengths P&G have created a strong brand image through their actions. They have delivered on their promises and they truly seem to be an ethical company. By forming partnerships with NGO’s such as Red Cross they are showing they care about people. P&G should do everything they can to make it known what they do for those in need. As mentioned before they should consider a new social media strategist and put the word out there what they are doing for the community. This will lead to more customers due to their ethical practices and it will make employees feel proud to work for an ethical company.

Threats

Due to low barriers to entry in the consumer product industry P&G face high levels of competition. The market is extremely saturated, when there are too many players on the market this leads to price-wars for competing goods. It is important for P&G not to get sucked into this kind of competition as the only person who wins is the end consumer. P&G have done a good job at diversifying their portfolio but they must ensure they keep the quality and integrity of their goods intact instead of lowering quality to offer products at a cheaper price.

One huge threat to P&G is the unfavorable regulatory environment. There has been a big shift in recent years away from all chemicals in cosmetics. Customers now want organic and carcinogenic free products; this market is no longer a niche and consumers are now more aware than ever what goes into their products. Thankfully for P&G they have a strong marketing position and can follow this trend and get out the word that they are now as chemical free as possible. This may be costly in the long-run but it will be worth it in terms of customers created in the process.

Another huge threat to the integrity of the P&G brand is the threat of counterfeit goods. As stated previous as much as 10-30% of packaged food, toiletries and cosmetics are counterfeit. This may lead to a customer purchasing one of P&G’s products and getting a counterfeit item, which would obviously be of inferior quality. This could hurt P&G brands very easily so it is important that P&G follow every measure to ensure they cannot be imitated easily.

The last weakness that was identified in the SWOT analysis was the increasing cost of raw materials. P&G should attempt to use their economies of scale to their full advantage to get the best price on their raw materials. As mentioned in the beginning of this case review P&G once foreseen a huge rise in the price of their raw materials essential to making their soap and bought a lot of it in time. They should seek to get back to that way of thinking and making sure they have the best suppliers for their goods at the best price.

Analysis of the Business Level Strategy

Introduction

Business Level Strategies refer to the detail actions by organizations to provide the value of the customers and gain a competitive advantage by utilizing the proficiencies, resources, and services market. Normally, the approaches are concerned with a firm’s positioning in the market relative to the rivals as well as the five generic forces of competition. Since it is customer-focused, it addresses issues of who is serviced, the needs to be met, as well as the how the organization needs to meet these needs.

Procter and Gamble have done an excellent job with their business level strategies, in fact they would not be where they are today without them. In this section we will research what it is that makes P&G so successful at what they do. This paper aims at evaluating the Business Level Strategies used in Procter & Gamble Company.

Differentiation

Procter & Gamble uses the strategy to have unique market and products. This helps the company to stand out in the market through the production of quality and satisfactory products that meet the needs of the target customers. As a result, the entity earns patrons’ loyalty in that they will always be willing to buy the products over those of the rivals. Still, under the differentiation, the company utilizes the generic competitive strategy to maintain increased investment in research and development to ensure high quality and value of the products as it influences decisions related to management, marketing, research, and innovation.

To support the differentiation technique, P&G uses a supportive marketing mix that ensures that the company remains unique and competitive in the market. Regarding the product, the enterprise has been able to produce a wide variety of consumer goods targeting customers from various segments. Besides beverages and food, it also produces beauty, grooming, and healthcare, feminine, and baby segments (Logan et al.). Each of these segments determines strategies adopted by the company to ensure their needs are fully met. The production of a varied and a wide range of products ensures both the growth and the expansion of the organization.

Regarding the place, P&G has established several outlets worldwide to enhance the accessibility of the products by the customers. Retailers have direct contact with the patrons in the market. As well, it uses the distributors who deliver the goods in wholesale to the sellers as well as the P&G shops. The availability of goods from different sites increases the ability of the company to reach its target customers and meet their unmet needs. The differentiation of the company on promotion gives it an advantage over the rivals as well. Advertising is the major promotion strategy for the company as a communication tactic to the customer. Nevertheless, the entity also uses the other methods including personal selling, public relations like sponsorship, direct marketing, as well as the sales promotion.

Lastly, the company is well-distinguished in its pricing strategies to ensure the maximization of revenues and profits. The strategies are adjusted in accordance with the condition of the customers in the market. The market-oriented pricing is used to match the strategy used by the competitors. The product bundle pricing technique is used to price products according to the set prices of the various product categories. Finally, the company uses the premium pricing method to set high prices for the goods that they consider premium thus maintaining the value of the products in the market.

Intensive Growth Strategies

These are the strategies that affect the growth and the expansion of a company in addressing the consumer needs in the market. Marketing penetration is the major method which aims at increasing the share of the company in the market. P&G uses marketing campaigns to raise the awareness of a low-performing product to increase its sales (Smithson, 2017). Also, it negotiates with its retailers to expand their profit margin and in return display the company’s products in prominent places where they can easily be located by the target customers. Additionally, the firm also expanded its shares through the acquisition of other companies in the market.

Product Development

P&G uses its production ability to improve growth. Through the intensive growth strategy, the company designs and produces goods that are capable of attracting the potential customers in the market. With the company’s ability to produce quality products, customers remain satisfied with the company’s services thus increasing the loyalty of the company. The strategy is still used to ensure the continuation of the market growth as the production of new products leads to increased market share. Nonetheless, the competitiveness of the entity has greatly contributed in its current position and the capability to beat the competitors. The differentiation stills play a critical role in determining the kind of product to develop based on its standards and value to both the company and the customers.

The development is a used as a supporting strategy which contributes to the P&G’s growth through entries into new markets with new products. As a result, the enterprise earns new revenue from the enterprise. The objective of this tactic is to improve its status in the consumer goods production. With the production of diverse goods and for a different market segment, diversification. In addition, the acquisition is also an alternative to for expounding

Evaluation of the Strategies

From the three strategies suggested by Michael Potter, P&G chose to utilize the differentiation. The tactic is quite helpful in establishing a place in the market as well as giving the clients a reason choose the firm’s products over those of the competitors. The enterprise has been able to use its strength to gain a competitive advantage in the market. For example, great marketing skills, as well as the research and development that enable the organization to establish new needs thus the development of new and appropriate products. Besides, with the emerging trends and the development of technology in the consumer goods industry have led to increased marketing through online platforms. As a result, the enterprise is on the right track to ensure that it not only maintains its position but also continue to triumph over its rivals.

Strategy Risks

Among the factors that are likely to make the P&G Company lag behind in the market are as follows. First, the enterprise operates on a slow and one-sided organizational structure. The firm experiences challenges in its attempt to change the rigid structure and align it with the changing business environment. In addition, the company tends to develop new product lines that have resulted in the loss of the brand. A large number of product lines makes the business have divided attention. As a result, the company has lost track of the rivalry in the market thus giving the competitors who focus on a specific product a competitive advantage over P&G.

Market Segmentation

Market segmentation is one of P&G’s key assets in the industry. “Market segmentation is the way a company decides to classify its customers, based on important differences in their needs or preferences, to gain a competitive advantage.” (Jones et al, 2015)

P&G were very successful in dividing their customers who have similar needs and wants for the products and then designing suitable products for that market segment. P&G know their customer base and they design products suitable for each, for example their washing powder line. Some customers may buy washing powder for its inexpensive price, others may buy some for how good it makes their clothes smell which is something P&G noticed in their market research and they then developed several different powders to fulfill the needs of each market segment.

P&G utilizes their market segmentation very well and it has gained them a very strong competitive advantage in the fabric care market amongst many other markets. Recognizing market trends and developing strategies and products to meet those needs has been one of P&G’s key assets and has allowed them to be in the strong competitive advantage they are in today.

P&G Competitive Positioning

Through looking at P&G’s broad portfolio of products and brands it appears that they are pursuing a broad differentiator strategy. They have developed their business strategy over time to better differentiate their products from competitors and lower their cost structure simultaneously. They are not cost leaders as they have several different brands all which serve a different segment of the market. However, if customers want a cheaper product they can find one in their current range of products.

P&G own both tide and Gain detergents which have quite a significant difference in price when customers are looking at the store which is great because regardless of which one they chose P&G are still making money. However, they are also competing against themselves which is not good. P&G have used their distinctive competencies to increase their product range, and they are always searching for new market segments to enter to increase market share and their profits.

P&G Strategies to Deter New Entrants

From looking at P&G’s product line in each market segment it would appear they are pursuing a product proliferation strategy. “Product proliferation can be defined as the strategy of “filling the niches,” or catering to the needs of customers in all market segments to deter entry by competitors.” (Hill et al, 2015)

From looking at their laundry detergent line alone it is apparent that this is the strategy P&G are pursuing. In the maturity stages most companies move to increase their market share by producing a wide range of products targeted at different market segments. To reduce the threat of entry, P&G have ensured they are offering a product targeted at every segment in the market. This creates a huge barrier to entry to potential new entrants in that market. New entrants to the market will find it extremely difficult to break into the industry and establish a “beachhead” when there are no obvious groups of customers who are not having their needs met.

This is a strong position for P&G to be in as they now do not have to worry about new entrants in the market and they are dominating the markets they currently operate in.

Recommendations

Considering the threats above, P&G needs to consider the reorganization of the current structure and allow new methods of leadership to push the company forward. With a new administration, the company will remain updated on the trending issues thus adjusting to the changing marketing environment. Additionally, it should contemplate on establishing better production strategies. It should produce only the products it can manage and remain updated about the progress and steps made by its rivals. As a result, it will be possible for the company to keep all the products competitive over those of the competitors.

Analysis of the Corporate Level Strategy

P&G pursues a diversification strategy, which encompasses a company’s decision to enter one or more new industries to take advantage of its existing distinctive competencies and business model. P&G pursues a diversification strategy because it enables the entire company, as well as its individual brands, to perform value-chain activities at a lower cost, in a way that allows for differentiation, or in a way that manages industry rivalry better. Above all, P&G utilizes a diversification strategy to increase profitability (Hill & Jones, 2013, p. 341).

In that vein, P&G attempts to increase profitability by pursuing a multibusiness model based on diversification. P&G accomplishes this strategy when it transfers competencies between brands in different industries, shares resources between brands to achieve synergy or economies of scope, uses product bundling, utilizes general organizational competencies that increases the performance of all the company’s brands, and allows for restructuring when necessary (Hill & Jones, 2013, p. 342).

Transferring Competencies

P&G spends more money on advertising, about 11% of its annual sales, than any other company in the world (R&P Research, 2017). Through P&G’s experience, the company has developed a distinctive competency in advertising. When P&G acquires another company to its portfolio, particularly one that has lacked a strong marketing campaign, P&G can immediately put the full weight of its advertising prowess behind the new product.

Sharing Resources

A diversified company such as P&G can benefit financially when two or more business units that operate in different industries can share resources and capabilities. This sharing of resources results in economies of scope, which is defined by Hill and Jones (2013) as “the synergies that arise when one or more of a diversified company’s business units are able to lower costs or increase differentiation because they can more effectively pool, share, and utilize expensive resources or capabilities” (p. 345).

One example of P&G sharing resources and capabilities is the relationship between its paper towel, toilet paper, and disposable diaper brands. Each product requires absorbency, the essential attribute, so P&G can share the research and development costs to improve absorbency across all three individual businesses. In this same example, these three types of products are all sold to the same retailers, which means a single sales force can represent all three brands. Consequently, the sales costs are spread across the three product lines as well (Hill and Jones, 2013, p. 345).

Using Product Bundling

Companies attempt to provide customers with new products that are related or connected to their existing products to increase product differentiation. By doing so, a company can satisfy customers’ needs for a complete package of related products. One example of product bundling by P&G is the entire Gillette product line, which revolves around men’s shaving razors. While Gillette is constantly innovating to offer the latest shaving technology, the brand has also developed many other products related to shaving. These other product offerings include shaving creams, pre-shave exfoliating gel, and post-shave lotion. Also, Gillette offers other products in the personal hygiene category, such as electric trimmers, deodorants, and body washes. P&G’s goal with Gillette is to provide male customers with many of their needed hygiene-related products in a single brand.

Using General Organizational Competencies

P&G is a large company with several general organizational competencies. Hill and Jones (2013) define general organizational competencies as “competencies that result from the skills of a company’s top managers that help every business unit within a company perform at a higher level than it could if it operated as a separate or independent company” (p. 347). An excellent example of an organizational competency displayed by P&G is their marketing and advertising prowess.

Around ten years ago, P&G was resistant to online advertising and was suffering for it. Market data at the time indicated that young consumers had recently begun spending more time online than watching television. P&G, of course, has long been known as one of the most thorough and innovative advertising companies in the United States. However, P&G apparently did not recognize that consumers’ preferences for consuming entertainment were shifting from TV to the internet. In fact, P&G reportedly only spent 2% of its U.S. advertising budget online (Byron, 2008).

Because marketing and advertising are one of P&G’s organizational competencies, this failure to advertise online did not persist. P&G used its marketing and advertising organizational design skills to create the functional competencies that give the company its competitive advantage. Organizational design skills, according to Hill and Jones (2013), describe “the ability of the managers of a company to create a structure, culture, and control systems that motivate and coordinate employees to perform at a high level” (p. 348).

In P&G’s case, Jim Stengel, the company’s global marketing officer, was worried that online searches for P&G products weren’t directing customers to the company’s website. According to Byron (2008), Stengel’s solution was to meet with Tim Armstrong, who ran Google’s ad sales in the U.S. to discuss P&G’s opportunity to improve its online presence. Stengel and Armstrong decided to swap employees; that is, allow employees of each company to spend time with the other strategically. This swap permitted P&G to receive feedback from Google on its marketing strategy, such as the suggestion that P&G invite well-known bloggers to review their products.

This creative solution created a culture in the P&G advertising division of forward-thinking, innovative marketing and reinforced the fact that the company was willing to take extreme measures to cultivate and grow its organizational competencies.

Restructuring

Sometimes companies need to exit industries to increase their profitability. “Restructuring is the process of reorganizing and divesting business units and exiting industries to refocus upon a company’s core business and rebuild its distinctive competencies” (Hill & Jones, 2013, p. 370).

In the last three years, P&G has been moving away from expansion of its product portfolio and toward a brand consolidation strategy. In 2015, P&G decided to divest 100 underperforming, non-core brands to focus solely on 70 brands in only ten business categories (R&P Research, 2017).

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