Project Report
On
PROCTOR AND GAMBLE
Procter & Gamble
“Touching and Improving lives”
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TABLE OF CONTENTS: 1. INDUSTRY DETAILS…………………………………………………. .3 2. INTRODUCTION OF Procter & Gamble……………………………… .5 3. HISTORY AND MILESTONES……………………………………… .16 4. PRODUCTS………………………………………………………… ....22 5. MERGER AND ACQUISITION…………………………………… .....23 6. CORPORATE SOCIAL RESPONSIBILITY………………………......24 7. SWOT ANALYSIS OF P & G……………………………………… ....25 8. PORTERS FIVE FORCE MODEL ANALYSIS OF P & G…………...31 9. LIMITATIONS OF PORTERS FIVE FORCE MODEL……………....43 10. FINDINGS………………………………………………………… .......34 11. RECOMMENDATIONS…………………………………………… .…46 12. CONCLUSION………………………………………………………….48 13. BIBLIOGRAPHY…………………………………………………..….. 50
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INDUSTRY DETAILS: [FMCG-FAST MOVING CONSUMER GOODS] THE TERM FMCG REFERS TO THOSE RETAIL GOODS THAT ARE GENERALLY REPLACED OR FULLY USED UP OVER A SHORT PERIOD OF DAYS, WEEKS, OR MONTHS, AND WITHIN ONE YEAR. THIS CONTRASTS WITH DURABLE GOODS OR MAJOR APPLIANCES SUCH AS KITCHEN APPLIANCES, WHICH ARE GENERALLY REPLACED OVER A PERIOD OF SEVERAL YEARS. FAST MOVING CONSUMER GOODS (FMCG) OR CONSUMER PACKAGED GOODS (CPG) ARE PRODUCTS THAT ARE SOLD QUICKLY AT RELATIVELY LOW COST. EXAMPLES INCLUDE NON-DURABLE GOODS SUCH AS SOFT DRINKS, TOILETRIES, GROCERY ITEMS ETC. THOUGH THE ABSOLUTE PROFIT MADE ON FMCG PRODUCTS IS RELATIVELY SMALL, THEY GENERALLY SELL IN LARGE QUANTITIES, SO THE CUMULATIVE PROFIT ON SUCH PRODUCTS CAN BE LARGE. FMCGS HAVE A SHORT SHELF LIFE, EITHER AS A RESULT OF HIGH CONSUMER DEMAND OR BECAUSE THE PRODUCT DETERIORATES RAPIDLY. SOME FMCGS – SUCH AS MEAT, FRUITS AND VEGETABLES, DAIRY PRODUCTS AND BAKED GOODS – ARE HIGHLY PERISHABLE. OTHER GOODS SUCH AS ALCOHOL, TOILETRIES, PRE-PACKAGED FOODS, SOFT DRINKS AND CLEANING PRODUCTS HAVE HIGH TURNOVER RATES. THE FOLLOWING ARE THE TYPICAL CHARACTERISTICS OF FMCGS: FREQUENT PURCHASE LOW PRICE HIGH VOLUMES LOW MARGINS EXTENSIVE DISTRIBUTION NETWORKS HIGH STOCK TURNOVER
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FMCG SCOPE AND COMPANIES:
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and general management. FMCG Companies Worldwide Procter & Gamble Unilever PLC Taj agro international (India) Dabur India Limited Godrej Consumer Products (GCPL) Other Leading FMCG companies Some of the well known FMCG companies are Sara Lee, Nestlé, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc.
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INTRODUCTION OF
Procter & Gamble Co. (P&G) is an American company based in Cincinnati, Ohio that manufactures a wide range of consumer goods. In India Proctor & Gamble have two subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. P&G Hygiene and Health Care Limited is one of India's fastest growing Fast Moving Consumer Goods Companies with a turnover of more than Rs. 500 crores. It has in its portfolio famous brands like Vicks & Whisper. P&G Home Products Limited deals in Fabric Care segment and Hair Care segment. It has in its kitty global brands such as Ariel and Tide in the Fabric Care segment, and Head & Shoulders, Pantene, and Rejoice in the Hair Care segment.
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Business Growth and Divestitures Folgers Sale On June 4, 2008, P&G sold its Folgers coffee unit to J.M. Smucker Co for $2.95 billion. As part of the deal, P&G shareholders will receive a 53.5 percent stake in Smuckers and the company will assume $350 million of Folger's debt .
Gillette Acquisition Procter & Gamble acquired Gillette in 2005 for over $50 billion in its largest acquisition to date. In 2004, the last full year before the acquisition, Gillette generated over $10 billion in sales, about $6 billion of which came from razors and Duracell and Braun products and the remainder sourced from the Oral-B brand, which was moved into the Health & Well-Being segment. A key piece of the acquisition beyond Gillette's product lines was its distribution network and supply chain. Gillette's distribution network and supply chain in emerging markets had been extremely successful for Gillette and, once acquired, has worked to complement P&G's own distribution network.
Sale of Pharmaceutical Unit In 2009 P&G sold its pharmaceutical unit to Warner Chilcott Plc for $3.1 billion in cash. The company expects to book a 43 cent per share earnings boost in Q2 of fiscal 2010 as a result of the sale. The deal allows P&G to focus on its personal care, beauty, and household product divisions. In 2006, the company started winding down its discover-phase pharmaceutical products in favor of licensing late-stage compounds, and announced in 2008 it would exit the drug industry entirely.
Online Sales In January 2010, the company announced it would pursue its own online retail store to sell its consumer products to US end-users, putting it in direct competition with major retailers in reaching consumers. P&G CEO Bob McDonald said the company could increase its online sales "substantially" over the next few years. In fiscal 2009, P&G's existing online sales accounted for $500 million, or 0.6% of 6
total revenue. The company plans a full scale launch in spring 2010 after a pilot test with 5000 consumers.
Different product price points provide some insulation against recession: Household staples are somewhat protected from the US recession and global economic downturn. However, in a recession consumers often turn to cheaper private label or store brands instead of "brand name" products from P&G. To combat private label encroachment, P&G offers at least two product forms in many product categories. For example, the company has seen increases sales in Luvs from Pampers diapers and an increase in Gain detergent sales from Tide. In addition, P&G offers "Basic" versions of its Charmin toilet paper and Bounty paper towels. The company's broad offerings, combined with the necessity of household items, provide a degree of insulation against recession.
Retail Consolidation The rise of a handful of powerful low-priced retailers has negatively impacted consumer products companies. A handful of big retailers have captured a large share of the market. For example, from 1999 to 2004, the top 10 food retailers in the US increased their share of food retail sales from 53.4% to 58.9%. These large retailers have shifted the balance of power within the supply chain. For example, the company's largest customer, Wal-Mart, accounted for 15% of net sales in 2006, 2007, and 2008. Wal-Mart has exerted its power over other suppliers to their detriment in the past, such as forcing record companies to produce clean-label CDs and pulling adult magazines. A decision by Wal-Mart not to sell a particular P&G consumer product would prevent P&G from reaching its entire target market. In addition, many retailers have pushed their own higher margin private label brands in competition with P&G.
Rise of Private Labels In the past decade, P&G has faced stiff competition from private label brands or "store brands" of large retailers such as Wal-Mart, Target, and supermarket chains. Private label products often sell at lower price points and earn higher margins because the retailers can control the cost of their production. For example, WalMart offers 5,500 products through its "Great Value" brand, which has increasingly sold as consumers feel the recession squeeze on their disposable income. From 7
2003 to 2008, sales of Target's private label products rose an average of 15% annually. Large retailers are close to the consumers, have the point of sale data on consumer behavior and are in better position to understand consumer behavior. These strengths contribute to better private label product development, which directly compete with P&G products. Retailers also promote their own brands as they earn higher margins on them. P&G has addressed this issue by continuously investing in Research & Development and introducing new products as well as offering different versions of its own products at different price points.
Developing Markets P&G has a well-established market presence in developed countries such as the United States and Western Europe and is looking to its presence in emerging markets. In fiscal 2009, 32% of total net sales came from developing nations, a figure that has increased steadily from 2002 when sales in developing nations accounted for only about 20% of total revenue (approximately $8 billion). ] CEO Bob McDonald said in 2010 that he wants P&G to grow sales in China and India to reach 1 billion more customers by 2014. In September 2010, PG announced it would bring its Wella hair color products to India, leading an aggressive push for product expansion. Some expect the company to bring its Crest or Oral-B toothpaste to the Indian market next. In China and Russia, P&G's market share has been consistently increasing in the past five years as Procter & Gamble has put an increased emphasis on establishing its products in those markets. In 2008, the company's distribution network reached 800 million people in China and 80% of the population in Russia. P&G has created products designed specifically to target developing nations. For example, in many countries consumers wash clothing by hand with limited amounts of water. In response, P&G has launched Downy Single Rinse in Mexico, China, Philippines, and 9 other countries. While the average Mexican spends about $20 a year on P&G products, Chinese per-capita spending is only about $3 and India per-capita spending $1. Increasing sales in China and India to the levels in Mexico would add $40 billion in sales to the company's overall revenue.
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Research & Development focuses both inside and outside the company In 2009, P&G spent approximately $2.04 billion on Research & Development, nearly $1 billion more than its closest competitor, Unilever. The two most important factors in P&G's innovation process are its practice of consumer demand research and its "Connect and Develop" R&D structure. First, when entering new markets, P&G sets up in-home visits with consumers in order to fully understand the needs and desires consumers have for household and personal products. This way, P&G gets directly to its customers and is able to cater to their needs. P&G also incorporates consumers' input into the R&D process through its "Connect and Develop" initiative. Through "Connect and Develop" P&G has an online interface set up where people can submit product ideas and provide input on topics that P&G places on the web-portal. P&G staff then sort through the ideas and work with the most promising ones. This process is not responsible for all of the R&D that P&G does, but approximately 42% of new products in the last several years were influenced by or originated from "Connect and Develop." Early returns on new products released in 2009 are encouraging. Tide Stain Release, a stain-removing detergent released in July 2009, has garnered 10% market share in the US as of November 2009. The Bounce Dryer Bar, an automatic laundry freshener released in August 2009, has captured 7% of the North American fabric sheet market as of November 2009. Commodity Prices
A diversified consumer products manufacturer, P&G depends heavily on a wide basket of global commodities for manufacturing its goods. Higher commodity costs subtracted 0.5% from gross margin growth.Nearly half of the company's cost of goods is directly related to commodity goods. The company has increased prices due to higher costs of oil and other raw materials. P&G instituted broad price adjustments in Q1 2010 to close widening price gaps in several businesses, including North American laundry, tissue, and towel, and several Eastern European
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markets. Analysts believe pricing adjustments are largely behind P&G as of Q2 2010, with an impact on about 10% of P&G's products. P&G Home Products Limited was incorporated as 100% subsidiary of The Procter & Gamble Company, USA in 1993 and it launched launches Ariel Super Soaker. In the same year Procter & Gamble India divested the Detergents business to Procter & Gamble Home Products. In 1995, Procter & Gamble Home Products entered the Hair care Category with the launch of Pantene Pro-V shampoo. Procter & Gamble Home Products launches Head & Shoulders shampoo. In 2000, Procter & Gamble Home Products introduced Tide Detergent Powder - the largest selling detergent in the world. Procter & Gamble Home Products Limited launched Pampers - world's number one selling diaper brand. Today, Proctor & Gamble is the second largest FMCG Company in India after Hindustan Lever Limited.
PROCTOR PLAZA IN CINCINNATI [USA].
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MISSION AND VISION OF Proctor & Gamble's (P&G) Mission and Vision Statement
VISION of P&G “To be a leading consumer goods company and to improve the lives of world consumers by providing valuable and innovative products”. Ten years ago Procter and gamble started the journey to improve the lives of Pakistani consumers by providing them with world famous quality brands. P&G want to be an outstanding organization with a passion for winning that would felt by everyone everyday; in the office, in the field every where P&G vision is to lead business growth by proactively identifying opportunities and positively contributing to volume growth.
We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.
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VALUES AND PRINICPLES OF
P&G is its people and the values by which we live. We attract and recruit the finest people in the world. We build our organization from within, promoting and rewarding people without regard to any difference unrelated to performance. We act on the conviction that the men and women of Procter & Gamble will always be our most important asset.
LEADERSHIP:
We are all leaders in our area of responsibility, with a deep commitment to deliver leadership results. We have a clear vision of where we are going. We focus our resources to achieve leadership objectives and strategies. 12
We develop the capability to deliver our strategies and eliminate organizational barriers.
OWNERSHIP:
We accept personal accountability to meet our business needs, improve our systems, and help others improve their effectiveness. We all act like owners, treating the Company's assets as our own and behaving with the Company's long-term success in mind .
INTEGRITY
We always try to do the right thing. We are honest and straightforward with each other. We operate within the letter and spirit of the law. We uphold the values and principles of P&G in every action and decision. We are data-based and intellectually honest in advocating proposals, including recognizing risks.
PASSION FOR WINNING
We are determined to be the best at doing what matters most. We have a healthy dissatisfaction with the status quo. We have a compelling desire to improve and to win in the marketplace.
TRUST
We respect our P&G colleagues, customers, and consumers, and treat them as we want to be treated. We have confidence in each other's capabilities and intentions. We believe that people work best when there is a foundation of trust. 13
We Show Respect for All Individuals
We believe that all individuals can and want to contribute to their fullest potential. We value differences. We inspire and enable people to achieve high expectations, standards, and challenging goals. We are honest with people about their performance.
The Interests of the Company and the Individual Are Inseparable
We believe that doing what is right for the business with integrity will lead to mutual success for both the Company and the individual. Our quest for mutual success ties us together. We encourage stock ownership and ownership behavior.
We Are Strategically Focused in Our Work
We operate against clearly articulated and aligned objectives and strategies. We only do work and only ask for work that adds value to the business. We simplify, standardize, and streamline our current work whenever possiblE
We Value Personal Mastery
We believe it is the responsibility of all individuals to continually develop themselves and others. 14
We encourage and expect outstanding technical mastery and executional excellence.
We Seek to Be the Best
We strive to be the best in all areas of strategic importance to the Company. We benchmark our performance rigorously versus the very best internally and externally. We learn from both our successes and our failures.
Innovation Is the Cornerstone of Our Success
We place great value on big, new consumer innovations. We challenge convention and reinvent the way we do business to better win in the marketplace .
Mutual Interdependency Is a Way of Life
We work together with confidence and trust across business units, functions, categories, and geographies. We take pride in results from reapplying others' ideas. We build superior relationships with all the parties who contribute to fulfilling our Corporate Purpose, including our customers, suppliers, universities, and governments .
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HISTORY OF
Procter & Gamble Co. (P&G) is an American company based in Cincinnati, Ohio that manufactures a wide range of consumer goods. In India Proctor & Gamble has two subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. Procter & Gamble's relationship with India started in 1951 when Vicks Product Inc. India, a branch of Vicks Product Inc. USA entered Indian market. In 1964, a public limited company, Richardson Hindustan Limited (RHL) was formed which obtained an Industrial License to undertake manufacture of Menthol and de mentholated peppermint oil and VICKS range of products such as Vicks VapoRub, Vicks Cough Drops and Vicks Inhaler. In May 1967, RHL introduced Clearasil, then America's number one pimple cream in Indian market. In 1979, RHL launches Vicks Action 500 and in 1984 it set up an Ayurvedic Research Laboratory to address the common ailments of the people such as cough and co ld.
In October 1985, RHL became an affiliate of The Procter & Gamble Company, USA and its name was changed to Procter & Gamble India. In 1989, Procter & Gamble India launched Whisper - the breakthrough technology sanitary napkin. In 1991, P&G India launched Ariel detergent. In 1992, The Procter & Gamble Company, US increased its stake in Procter & Gamble India to 51% and then to 65%. In 1993, Procter & Gamble India divested the Detergents business to Procter & Gamble Home Products and started marketing Old Spice Brand of products. In
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1999 Procter & Gamble India Limited changed the name of the Company to Procter & Gamble Hygiene and Health Care Limited . In 1993, Procter & Gamble Home Products is incorporated as a 100% subsidiary of The Procter & Gamble Company, USA. Procter & Gamble Home Products launches Ariel Super Soaker. In 1993, Procter & Gamble India divests the Detergents business to Gamble Home Products.
Procter &
In 1995, Procter & Gamble Home Products enters the Haircare Category with the launch of Pantene Pro-V. In 1997 Procter & Gamble Home Products launches Head & Shoulders shampoo. In 2000, Procter & Gamble Home Products introduced Tide Detergent Powder the largest selling detergent in the world. In November 2000, Procter & Gamble Home Products Limited presented India in the first International Hair Styling and Beauty Expert Contest- Hair Asia Pacific 2000 in collaboration with Sri Lankan Association of Hairdressers and Beautician. During this period, Procter & Gamble Home Products also re-launched the international range of Head & Shoulders, best-ever Anti-dandruff shampoo with an improved formula, new pack-design and logo, in three variants - Clean & Balanced, Smooth & Silky and Refreshing Menthol, which offers the fine combination of anti-dandruff efficacy and hair conditioning. In January 2001, Procter & Gamble Home Products Limited and Whirlpool India Ltd. launched a special 'Ariel - Whirlpool Superwash' offer, making washing machines more affordable to the people of Hyderabad.
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On purchase of either a 500gms, 1kg or 1.5kg economy pack of New Ariel Power Compact, consumers are automatically eligible to buy a Whirlpool Washing Machine for as low as Rs.238/- in Equal Monthly Installments for 24 months, by filling in the application form that comes with the Ariel pack and contacting any one of the Whirlpool dealers mentioned on the pack. In June 2001, Procter & Gamble in partnership with the Association of Beauty Therapy & Cosmetology (ABTC), India hosted the Pantene Artist 2001 a national stylist competition, which included categories such as Bridal Dressing, Hair Cutting and Body Painting. Present at the event was world-renowned hairdresser and stylist Jun L. Encarnecion, who demonstrated the hottest international haircuts and styles in vogue via an interesting hairhsow. Mr. Encarnecion has trained students in leading hairdressing schools like Robert Fielding School of Hair Dressing (U.K), Pierre Alexander International Academy (U.K), Vidal Sassoon Academy, (U.S.A) among others and also enjoys the reputation of being the official hairdresser for the 1993 Miss Universe pageant.
In April 2002, Procter & Gamble Home Products Limited announced the launch of a special Ariel Bar Refund Offer along with its new Advanced Ariel Compact. Under the Ariel Bar Refund Offer, consumers could exchange their detergent bar on purchase of Advanced Ariel Compacts 1kg and 500gms packs, and avail of a Rs.15 and Rs.7 discount respectively on MRP.
Additionally, Procter & Gamble Home Products announced the Beat The Summer Dandruff offer on which 200ml Head & Shoulders bottle was available for Rs.99/only, thus giving a benefit of a Rs.23/- discount to consumers.
In June 2003, Procter & Gamble Home Products Limited launched Pampers world‟s number one selling diaper brand with sales of US$ 6 billion annually. Pampers provides superior dryness for uninterrupted overnight sleep, with just one pampers diaper. In India, Pampers Fresh & Dry is available in a variety of three sizes – 4s, 10s and 25s. 18
In July 2003, Procter & Gamble Home Products Limited launched Pantene Long Black, the ultimate solution for achieving the Long and Black hair look, and Head & Shoulders Silky Black - the only shampoo in India to offer the dual benefits of 100% dandruff-free as well as silky black hair. In January 2004, Procter & Gamble Home Products Limited announced the launch of Rejoice – Asia‟s No. 1 shampoo, in India. Rejoice‟s patented Micro -Silicone conditioning technology gives twice as smooth, and easy to comb hair versus ordinary shampoos, at affordable prices in 100 ml bottles and 7.5 ml sachets. In April 2006, Procter & Gamble Home Products Limited announced the launch of Pantene Hair Fall Control, which is designed to free women of their hair fall concerns by reducing hair fall due to breakage by up to 50% within just two months, thus giving them stronger, thicker looking and beautiful hair. The prices of Pantene 100ml and 200ml bottles were reduced by 16%, offering superior value to consumers. In August 2007, Procter & Gamble Home Products Limited signed Preity Zinta – Bollywood's no.1 Actress, as Brand Ambassador for its Head & Shoulders antidandruff shampoo that gives 100% dandruff-free soft beautiful hair.
In October 2008, Procter & Gamble Home Products Limited launched New Pantene Amino Pro-V Complex shampoos, which makes hair ten times stronger.
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SUBSIDIARIES
P&G India has three arms -- P&G Hygiene and Health Care, P&G HOME PRODUCTS and GILLETTE INDIA.
P&G Hygiene and Health Care : Procter & Gamble Hygiene and Health Care Limited is an India-based fast moving consumer goods company. The Company is engaged in the manufacturing and marketing of health and hygiene products. The Company's portfolio includes VICKS, a healthcare brand and WHISPER, a feminine hygiene brand. Its healthcare product portfolio includes Vicks VapoRub, Vicks Inhaler, Vicks Formula 44, Vicks Cough Drops and Vicks Action 500+. Vicks VapoRub is available in five pack sizes of 50 grams jar, 25 grams jar, 10 grams, five grams and two grams dibbi. Under feminine care, its brands include Whisper Maxi Regular, Whisper Maxi XL Wings, Whisper Ultra with Wings, Whisper Ultra XL Wings and Whisper Choice. The Procter and Gamble Company is its ultimate holding company and Procter and Gamble Asia Holding BV is its holding company.
P&G HOME PRODUCTS: Procter & Gamble Home Products Limited manufactures and distributes fabric care, hair care, and baby care products. The company was incorporated in 1989 and is based in Mumbai, India. P&G Home Products is a subsidiary of Procter & Gamble Co. P&G Home Products Limited is one of India's fastest growing Fast Moving Consumer Goods Companies that has in its portfolio P&G's global brands such as Ariel and Tide in the Fabric Care segment, and in the Hair Care segment: Head & Shoulders - world's largest selling anti-dandruff shampoo; Pantene - world's No. 1 beauty shampoo; and Rejoice - Asia's No. 1 shampoo. P&G Home Products Limited is a 100% subsidiary of The Procter & Gamble Company, USA, that in India, has carved a reputation for delivering superior quality, value-added products to meet the needs of consumer. 20
GILLETTE INDIA: Gillette India Limited (GIL) is one of India's well-known FMCG Companies that has in its portfolio GILLETTE MACH 3 TURBO, ORAL-B and DURACELL world's leading brands and has carved a reputation for delivering high quality, value-added products to meet the needs of consumers. Incorporated in the year 1985 as Indian Shaving Products Limited, now Gillette India Limited, its products speak for themselves. The company is always been known for the strength of its brands, and always continues to penetrate deeper into the hearts of Indian Consumers. In the year 1990-91, the company launched two products, first was 7 0'Clock EJTEK PII Shaving System and second was shaving cream with three variants. This was the First time that a shaving cream was introduced in Indian markets with special features. Company successfully relaunched Gillette Foam in 4 Variants .Duracell also launched its Ultra M 3 AA batteries, which was well received by consumers. Oral Care launched Power Oral Care brushes, which were well received in the market. Towards the End of 2003, Company launched Gillette Vector Plus. The Company launched Storm Force, a revolutionary after shave splash and New Ultra Comfort Shaving Gel .In the fourth Quarter, Company launched two new Gillette Series Tube Shave Gel variants, namely for Sensitive skin and Moisturizing, to suit different skin types. Company launched ?New Improved Gillette Vector Plus featuring all new contemporary look. The Gillette Company, USA was acquired worldwide through merger in October, 2005 by Procter& Gamble Company, USA creating the largest Consumer products Company in the World. In the year 2007-2008, Company launched The Gillette Winners program that had sports legends Roger Federer, Thierry Henry and Tiger Woods and Rahul Dravid. An innovative program "Free Dental Check up" was organized to enable consumers to benefit from expertise of professional dentists at no cost. Oral-B brand launched a new variant "Shiny Clean" targeted at the value segment.
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PRODUCTS OF
Fabric Care:
Procter & Gamble has two of its world-leading detergents – Tide and Ariel, in India to cater to the main concerns of the Indian households, namely, outstanding whiteness and stain-removal. Ariel Front-O-Mat Ariel 2 Fragrances Tide Detergent Tide Bar Hair Care:
P&G‟s Beauty Business i s over US$ 10 Billion in Global Sales, making it one of the world‟s largest beauty companies. The P&G beauty business sells more than 50 different beauty brands including Pantene®, Olay®, SK-II®, Max Factor®, Cover Girl®, Joy®, Hugo Boss®, Herbal Essences® and Clairol Nice ‟n‟ Easy®. In India, P&G‟s beauty care business comprises of Pantene, the world‟s largest selling shampoo, Head & Shoulders, the world‟s No. 1 Anti -dandruff shampoo and Rejoice – Asia‟s No. 1 Shampoo.
Procter & Gamble is committed to making every day in the lives of its consumers better through the superior quality of its products and services. Pantene Pro V Head & Shoulders Rejoice
Baby Care: Pampers
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ACQUISITION AND MERGERS Procter & Gamble (P&G), the number one US consumer goods company, and Gillette, the world's largest manufacturer of shaving products, announced the merger of their operations in January 2005. The $57 billion merger was the ninth largest in the US corporate history. Post-merger, the new company would dethrone Unilever as the world's largest producer of consumer goods and is expected to have bargaining power rivaling that of global retailers like Wal-Mart and Carrefour. The merger, scheduled to be completed in late 2005, is expected to reap cost synergies of up to $22 billion for the new company. But the problems encountered by Daimler-Chrysler and Hewlett Packard-Compaq's mergers showed that size could be a potential hindrance to the success of a merger. In the 1940s and 1950s, P&G embarked on a series of acquisitions. It acquired Spic and Span (1945), Duncan Hines (1956), Chairman Paper Mills (1957), Clorox (1957; sold in 1968) and Folgers Coffee (1963)... The Acquisition As per the P&G and Gillette merger deal, P&G would exchange 0.975 shares of P&G common stock for each share of Gillette. It represented an 18% premium to Gillette shareholders based on the closing share prices on January 27, 2005. However, the merger was subject to approval by the shareholders of both Gillette and P&G. The merger was expected to get regulatory clearance by 2005. P&G planned to buy back $18-22 billion of its common stock immediately after the merger. The buy back process could take around 18 months to complete. This would make the deal structure a 60% stock and 40% cash deal, although on paper it was a pure stock-swap. According to marketing guru, Al Ries, "The extra 18% premium paid by P&G for Gillette's stock is going to make it 18% more difficult for the deal to pay dividends to stock holders."P&G would have to borrow funds to finance the planned repurchase of its stock. In light of this move, credit rating agencies put both companies under a review for a possible downgrade. S&P placed all ratings for P&G on Credit Watch with negative implications based on the likelihood that P&G's leverage would increase significantly due to the merger. As of September 30, 2004, P&G had debts of $21.4 billion and Gillette of $3.1 billion.
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CORPORATE SOCIAL RESPONSIBILITY
At P&G, Social Responsibility stems from our Corporate PVP (Purpose, Values and Principles). Social Projects are in keeping with P&G‟s credo of „Business with a Purpose‟. P&G has always demonstrated its commitment to the community not just through the quality of its products and services, but also through socially responsible initiatives for the community. We believe in building the community in which we live and operate by supporting its ongoing development. Project Shiksha II: Educating Underprivileged Children(2007) Project Shiksha: Secure Your Child‟s Future (2003)
Rebuilding Lives In Earthquake Hit Bhuj (2001/2002) Project Poshan: Fighting Malnutrition in India (2000) Project Open Minds: Educating India‟s Working Youth (1999)
Project Future Focus: The First-Ever Round Write-In Career Guidance Service (1998) Project Peace: Environment Education Programme (1996)
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SWOT ANALYSIS OF
“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the
environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources
(strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its
weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy
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STRENGTH:
New Management One of the best marketers in the world Diversified brand portfolio: more than 300 brands with more than 79 billion in Revenue Tightly integrated with the largest retailers in the US and around the world Product innovation Talented management Distribute to 180 Countries Distribution channels all over the world New Billion Dollar brands Leading market position Diversified and innovative products Strong finances in last years Leading Market Position Strong Finances in past years Offers multiple products in each category along with more than one brand Retains strong bargaining positions with retailers Global leader in health and beauty care products, detergents, diapers and food P&G has over than 170-year industry experience and over than 25-year international operations The new acquisitions of companies that are leader in the market of health and beauty care products in Europe. Effective brand management system and brand management team for its brand to plan, develop, direct their brand in its market Strong focus on Research and development The company has a vast experience in oral and personal hygiene products as they are working since 1837
Well-known brands with extensive products line that positions the company to obtain better brand image as home and personal care providers.
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WEAKNESS:
Top Brands Losing Market Share Quality control a problem Decreased revenues in some market Health and Beauty Women Only Lagging behind in online media presence & leadership Missing opportunity: Refuses to manufacture private label products for its retail customers Slow Process Heavy Culture Views Product Performance only Expansion for brands is limited Increased promotional spending to keep healthy sales Production cost Production capacity for the demand on the first years Leads times for alternative pack sizes and designs Work capacity Different culture, wants and needs of customers Unable to protect imitation P&G s innovative products and marketing strategies of competition Competitors had pre-empted them in national markets where the local subsidiary was constrained by budget or organizational limitations Increasing instances of product recalls Dependent on Wal-Mart Stores for majority of its revenue Quality control Problem Decreased Revenues in their Northeast Asian Market The company has not already convinced the markets or investors about the benefits of acquisitions. This is true since the earnings per share was estimated to decline by $0.25 and $0.30 per share. ’
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THREATS:
Substitute brands that have a cheaper price Private label growth Slowdown in consumer spending in the US & globally Key competitors expanding their product portfolios through acquisitions Increase in raw material price. Competitors New regulation Key competitors expanding their product portfolios through acquisitions Increase in raw material price so cost to the company is increasing. Commodity cost and currency exchange rate placed tremendous pressure on the business New and increase of regulations The number of suppliers and brands, the European market was even more crowed as US. The top and bottom price classes was even bigger than the US. Difference between prices for the same quality. Many important competitors Regulatory Environment Global Economic Conditions Counterfeit goods Rising cost of energy prices Due to recession, the consumer spending has decreased globally.
OPPORTUNITIES:
Health and Beauty for Men Doubling Environmental Goals for 2012 Adding Value for the Conspiracy Utilizing online social networks Going Green/Eco Friendly Capitalizing on online media Continue to divest brands that don't align with the company's longterm goals (i.e., Folgers) 28
Emerging markets New acquisition opportunities Selling directly to consumers Design for better product experience Developing markets Continue to divest brands that don't align with the company's long-term goals (i.e., Folgers) Has room to expand margins by improving productivity The growth of the shampoo and condition market The increase of hair washing products The undeveloped conditioner in Europe The experience and the leader positioning of the new companies that P&G bought The Know-how of the success of Pert Plus in the US market Expansion in developing markets Future growth plans Growing Indian FMCG market Demographic trends across the world Company is constantly trying to pursue growth overseas
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Industry analysis:
1.Threats
Porters five forces model
of New Entrants
In detergent industry the production is on large scale. Here the fixed cost is same whether you produce one unit or thousand. The only thing that 30
matters here is the variable cost. Like the marketing expenses to capture the share of unorganized sector or to get market of loose detergent. The research also required heavy amount of investment, so barrier exist here. All the brands are well know and very mannerly identified by customer. Huge amount of capital is required and an expense to new entrants like marketing and distribution expenses requires heavy investment
When the new competitors want to invest in any business, they have to face with some barriers of entry. Note that the barriers of entry are the factors that the entrants have to overwhelm to survive in their new business. For shampoo industry, there are many factors for new entrants too. In this section, some factors: scale and experience, access to supply or distribution channels, and brand royalty, will be mention.
2. The threat of substitute products The substitutes for shampoos are rather few. The most proximal product might be soaps. However, people do not admire to use soaps for washing their hair because the properties of soaps is different from shampoos. However, there is a possible substitute: two in one product. H&BC Company has launched a men shower gel in Radox brand. Such shampoo has distinctive properties that it can use as both shower gel and shampoo. It can be assumed that H&BC Company's researchers might explore the men behavior before launching such product. Because such product is easy for using and convenient to carry for traveling that it might be similar to almost men behaviors. Besides, the price of Radox is quite cheaper than some P&G shampoos. This can attract consumers to buy. Therefore, P&G should be careful by monitoring their sales. If they are successful in sales, P&G might launch the similar products and attempt to occupy their market. However, P&G has soaps industry, and hence it is not difficult for P&G to compete the rivals.
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2.Bargaining Power of Supplier The bargaining power of supplier is low in detergent industry. Ariel is imported from Egypt and surf excel is assembled here and have supplier in different countries. Bouns, brite, wheel have different supplier for different ingredients. So the bargaining power of supplier is zero.
3.Threats of Substitute The major substitutes for the industry are:
Bar Soap Liquid Soap
Bar Soap
Following are the major brands of soap:
Gai Soap Ladoo Soap Sufi soap
4.Bargaining Power of Buyer
The bargaining power of buyer is high in detergent industry because The detergents are equal in quality and standard for each segmented customers. The numbers of substitute are in number and have switching cost is negative. Very less difference in price for each segmented customer so switching cost is either zero or in negative. Like customers of Aerial have zero cost if they switch to surf excel and negative switching cost if they to bonus. 32
The bargaining power of shampoos customers can be reckoned as high because some conditions are propitious to customers such as concentrated buyers, low switching costs and brand royalty.
5.Current Competitors Jockeying within the Industry There is intense competiton with in industry to capture the market in terms of SOM. Major key players in the industry and their SOM are given below:
-
Colgate Palmolive Procter & Gamble Unilever Other
45% 17% 36% 2%
Colgate Palmolive is catering to specified high class customers while Aerial is catering to same class. The technology used here is the stain free. While bonus and brite total is catering to middle class and vastly used for white clothes. Te other 2% is the unorganized sector of detergent.
Porter’s Five Forces Model (Analysis) The analysis of Procter and Gamble (P&G) Company by using five forces analysis. The following part will show the insight and limitation of five forces analysis. The analysis of shampoo industry in India will be discussed by using five forces analysis in the last part.
Part 1. Procter & Gamble Company Procter and Gamble Company is a leader company for producing some essential products in daily life such as toiletry products. In recently, the company has
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established five strategies for sustainability; products, operations, social responsibility, employees and stakeholders The first strategy focuses on their products. They attempt to improve their environmental profile from delighting customers with the sustainable innovations such as using biodegradable materials. The second strategy is the improvement of their operations with environmental concerning such as using an additional 20% reduction in carbon dioxide emissions. The third strategy is the concerning in improving children's lives by social responsibility programs. The forth strategy focuses on employees by supporting them to have the sustainability thinking and implementing the thinking to daily works. The last strategy considers in stakeholders by supporting in transparent working with them. The recent change of strategy might be considered as the results of some business environmental changes for example the increasing of environmental concerning behaviors. Therefore, environmental threat and opportunity can be reckoned as the crucial factors for managers. It is their responsible for adapting the organizations to cope with the changes.
Part 2. Five forces analysis The five forces analysis is a framework for analyzing industry for developing business strategies created by Michael Porter. Note that the word industry means a group of companies that produce the same products or serve the same services. There are five elements in such framework; threat of new entry, threat of substitute products, the bargaining power of customers, the bargaining power of suppliers and the intensity of competitive rivalry. The first force of the analysis is the threat of entry that involve with barriers to entry. The barriers to entry are factors that new entrant need to conquer for entering to the business successfully. There are several factors to be considered as such barriers such as scale and experience, access to supply or distribution channels, expected retaliation, legislation or government action and differentiation. The second force is the threat of substitutes. Johnson et al 34
describes. Substitutes are products or services that offer a similar benefit to an industry's product. For example, in airline industry, the substitutes can be cars, train, and boats. However, their price to performance ratio should be less than such ratio of industry's products or services. It means that substitutes should have cheaper prices if it serves the same product performance. The third force is the power of buyers that tend to be high if some conditions occur such as concentrated buyers, low switching costs and buyer competition threat. The forth force is the power of suppliers that are organizations that supply whatever for producing products or services . The power seems to be high if there are low concentrated suppliers, high switching cost and high supplier competition threat . The last force is competitive rivalry. This force will be high if the former forces are intense. Moreover, it depends on some factors such as competitor balance, industry growth rate, high fixed costs, high exit barriers and low differentiation.
Part 3. The analysis of Procter and Gamble (P&G) Company by using five forces analysis. In this section, five forces analysis will be applied to shampoos industry in P&G Company and follow by some recommendation in each force.
1. The threat of the entry of new competitors When the new competitors want to invest in any business, they have to face with some barriers of entry. Note that the barriers of entry are the factors that the entrants have to overwhelm to survive in their new business. For shampoo industry, there are many factors for new entrants too. In this section, some factors: scale and experience, access to supply or distribution channels, and brand royalty, will be mention.
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Scale and experience
In shampoos industry, the large numbers of shampoos need to be produced for fulfilling to customers demands because shampoos can be considered as mass products that are essential commodity used for cleaning bodies in every day; therefore, economics of scale is very important. Before they can reach the largescale production of incumbents, the new entrants might be advert in some point such as producing the higher unit costs when compared with the incumbents (ibid, P.61). Therefore, this is an advantage for P&G because P&G has already achieved producing in lower unit costs. Moreover, the high investment is required for producing shampoos. This investment might include machines costs, costs from researching of shampoos recipes, costs from logistics and costs from advertisements or marketing expenses. Especially, new product management expense and marketing budgets are big investments for toiletry industry (Key Note, 2009, P.81). Advertisement are very necessary because they can be regard as a significant factor for customers to make a decision to buy shampoo as we can see from a large amount of advertisement in 2008, £53.8m was spent as main media advertising expenditure (ibid, P.56). The continuous marketing activities could affect customers to accept and attract them to trial products (Brassington and Pettitt, 2007). Therefore, the high investment will be an obstacle for new entrants. Access to supply or distribution channels
The entrants have to make efforts to wholesalers and retailers for placing their products in the good locations; for example, place in eyes-level shelves by giving the better proposal such as paying an extra money or reducing their prices. However, the incumbent as P&G can react by offering the same or better proposal too. In addition, an extensive product spreading is also needed because it has to response to mass consumers that spreading on all areas of United Kingdom. Therefore, the entrants have to allocate a budget for managing the logistic to satisfy customers and preventing from insufficient products situations.
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Brand Royalty
Brand is one of the important factors when customers decide to buy. It takes times for letting customers accept and be familiar with new brands, so the entrants have to concern a lot in marketing to promote their brands. Furthermore, it is not easy to make customers alter their mind to use new products. Marketing activities and continuous development of products are needed to make brand royalty for P&G Company. In shampoo industry, it is not easy for entrants to be successful because the strong brand royalty appears. However, there are some group of customers are willing to try new products (ibid, 2009, P.81). The entrants might search the opportunity from new product sectors of market and then rapidly preoccupy. Therefore, P&G Company should set a marketing team to explore possible markets and observe coming changes before the new entrants found. For instance, nowadays, people tend to concentrate on organic substance or green ingredients. The Soil Association's Organic Market Report 2009 indicated organic toiletries products grew quickly in 2008 (ibid, P.4). P&G Company might research for launching new product to response the needs. However, as we have seen in their strategy, they try to generate sustainable image that can support them to be a green organization and also differentiate P&G from other competitors. Another example may be men products. The demand of men's toiletries increases according from the speedily increasing of men in the population (ibid, P.4). P&G Company should have more concerning in men products such as launching shampoos for men and set the team for analyzing men behavior in buying shampoos.
2. The threat of substitute products The substitutes for shampoos are rather few. The most proximal product might be soaps. However, people do not admire to use soaps for washing their hair because the properties of soaps is different from shampoos. However, there is a possible substitute: two in one product. H&BC Company has launched a men shower gel in Radox brand. Such shampoo has distinctive properties that it can 37
use as both shower gel and shampoo. It can be assumed that H&BC Company's researchers might explore the men behavior before launching such product. Because such product is easy for using and convenient to carry for traveling that it might be similar to almost men behaviors. Besides, the price of Radox is quite cheaper than some P&G shampoos. This can attract consumers to buy. Therefore, P&G should be careful by monitoring their sales. If they are successful in sales, P&G might launch the similar products and attempt to occupy their market. However, P&G has soaps industry, and hence it is not difficult for P&G to compete the rivals.
3. The bargaining power of customers The bargaining power of shampoos customers can be reckoned as high because some conditions are propitious to customers such as concentrated buyers, low switching costs and brand royalty. Concentrated buyers
As shampoos can be accounted as an essential commodity in daily life, so there are many choices for buyers in markets . Buyers have the chance to select the most preferable products when such products have a high percentage of the buyers' total purchases. Therefore, customers tend to have the higher power in this topic. P&G might solve the problem by persuade the other companies to institute an association for identifying approximate ranges of shampoos prices. This could ease the price war and it is an advantage for everyone. However, it is difficult to do because this might give the opportunity for new entrants to sell in lower prices and occupy the marker share. Porter (1979) recommends three competitive strategies: differentiation in product, producing in lower cost and launching marketing campaign. P&G can take these strategies to have the upper hand.
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Low switching costs
Buyers tend to have the higher power in this topic because they can change to use another shampoos by no switching costs. Therefore, the efficiency of products is very important for maintaining customers because the customers will be continuous buying the products if they impress such products. In addition, P&G might launch the idea of membership to create a barrier of switching decision. For example, the members might have privileges in reduced prices on P&G products, special services or can use member cards to get other benefit such as having the ability to attend P&G activities, having discount on theater or plays. However, they should specify some rule for pushing customers buy their products usually. For instance, the cards might be activated when customers buy their product in normally by identifying the minimum period such as 500 pounds per year or the cards will activate by collecting points. Another ideas might be selling the combination of products. P&G might sell their shampoos with other products such as conditioners, shower gels or new launching products in special prices. Such ideas will be advantages for P&G from increasing motivation in trial new products and this also increase brand loyalty. Brand loyalty
P&G tend to have the higher power in brand loyalty aspect because there is a group of buyers prefer P&G shampoos. The quality of shampoos can account as an important factors. Buyers will buy shampoos if they feel such shampoos can propose the effective results. Therefore, P&G should maintain their quality and attempt to develop their products by researching or concerning new technology. Besides, they should support the presenting of shampoos qualification by advertisement. Customer competition threat
The priority customers of shampoos industry are shampoos users. However, retailers can be regarded as customers too because retailers act as intermediate organizations. Moreover, retailers recently launch their products in cheap prices. 39
This could be considered as a threat of P&G. However, customers tend to dislike retailers' products because there is differentiation of product's quality. The important of quality is shown here again. Another ideas for P&G to differentiate their products might be the differentiation of packaging. Customers will be appreciated the beautiful and modern packages and the convenient appearance might persuade them to buy. Moreover, this will affect to customers that buy the product for gifts. Therefore, P&G might combine the other products and design their packages for selling to customers that want to buy in souvenir purpose. 4. The bargaining power of suppliers
The power of suppliers will be considered in these aspects: ingredient of shampoos and supplier competition threat. Ingredient
For P&G, power of suppliers tends to be low because there is no specific or rare ingredient and there is more than one supplier that has ability to provide raw materials. Therefore, there are many selections for P&G to select another company instead of the old one. For instance, P&G could buy active chemical ingredients from the Swiss company Lonza Group Ltd, Cognis, Dragoco (Great Britain) Ltd and Ciba Specialty Chemicals . However, the concerning of organic materials trend might increase supplier power. There are two major aroma chemical suppliers: Treatt PLC and Swiss Company Givaudan. According to green trends, both companies make progress for organic aromas . If one of aroma suppliers successes in producing of 100% organic fragrances, this will differentiate such supplier and they will have more power than P&G. However, it is less possible that the other suppliers surrender to one supplier. They would research and develop in producing organic aroma. Therefore, P&G can be reckoned as having the higher power then suppliers. Moreover, P&G tend to have higher power than suppliers because the suppliers depend on P&G. P&G is a giant company, so the company will order their material in large amount. P&G will have more power in negotiation.
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Supplier competition threat
In addition, Johnson et al described power of suppliers might increase if buyers act as intermediates . The suppliers of P&G might expand their business by producing shampoos but this is almost impossible. Because there are many factors to attract shampoos consumers to buy shampoos such as brand royalty, shampoos recipes, experiences of shampoos industry and high advertising costs, therefore it is difficult to suppliers to success. 5. The intensity of competitive rivalry
The last force is the intensity of competitive rivalry that it will be affected from other forces as well. The intensity will increase if the other forces are high. This section will mention in four factors for shampoos industry of P&G; competitor balance, industry growth rate, high fixed costs and low differentiation. Competitor balance
The competition of shampoos industry tends to be intense because there are not many competitors in each segment. For example, in premium shampoo segment, P&G might consider Unilever (Dove brand) and Loreal as competitors of P&G (Pantene brand). The high rivalry can be seen from the activity of marketing especially advertisement that can maintain their existed customers and introduce new products. Furthermore, the attempting to attract new customers by developing new products can reflect the intense of rivalry. Industry growth rate
Due to shampoos industry is nearly saturated point, so it is in situation of low growth rate, only 0.3% change of value from 2007 and 2008. Moreover, in low growth market, high price competition could be seen . Therefore, the degree of competitive rivalry seems to be high in this topic.
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High fixed costs
Shampoos industry is required high investments such as equipments costs and research expenses therefore shampoos companies will produce in high volumes to decrease unit costs. This will lead to high rivalry from price wars. Low differentiation
Moreover, shampoos can be regard as a commodity products that there are poorly differentiated therefore it is easy to customers for switching between competitors. This would be occurred price competition in order to hold more penetration. However, for P&G, the company has continuously developed their product to be effective by concentrating on researches. This could differentiate P&G among competitors if customers can feel the better result from using P&G shampoos. Moreover, the attempt to construct sustainable or green image will differentiate P&G from others.
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Limitations However, there are several limitations of Porter's framework, such as: One of the limitations of five forces analysis is the underestimate of strength of company competency. Due to five forces tool focuses on the industry layer of the business environment , so such tool might lack of concerning in core competency of companies. For example, five forces ignore the strength organization structures such as the advantages of occupying innovative staff. Moreover, the industry value chains are oversimplified by five forces framework such as the lack of segmentation of buyers and the differentiation of channels, intermediate buyers and end buyers. Besides, the model ignores the interdependence of large organization because it analyzes in individual business strategies. For instance, hardware and software can be the complementors that can be worth than separately. In addition, the continuous changing of industry boundaries might change the definition of industry. The convergence of telephone and photographic industries could be an example of the changing of industry boundaries. Because the addition of photographic functions in mobile phones, so they can be the substitutes of photographic industry.
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FINDINGS: The ability to cope with changes can be regarded as important to current organizations. P&G is one of organization that attempts to improve their business. In this report, the five forces analysis was applied to P&G for analyzing threat and opportunity in shampoos industry and evaluating their strategy as well as recommend some ideas. In five forces analysis, there are some forces that can considered as weak for P&G. Therefore, they should implement some strategies to solve such weaknesses. From five forces analysis, there is a weak point in threat of substitutes that come from two in one product, Radox brand. P&G should provide some researches about customer behavior in two in one products and monitoring their sales. If there is tendency to success in such product, P&G might launch similar products and attempt to conquer by using competitive strategies such as producing in lower costs or sale in lower prices. Another strategies might be concentrating in marketing activities such as promotion. Furthermore, from the risk of power of suppliers that increase from the emergences of environmental concern, P&G might invest in their suppliers' shares to have more power. However, P&G should only invest in suppliers that can be considered as important suppliers. However, some strategies of P&G can be evaluated as appropriated strategies such as they attempt to create corporate image as sustainable organization. Another strategy is the concentrating on continuance of developing products that can differentiate their products. It would affect to decrease power of customers because they have no choice if they want to buy the products that have the same properties. It also seems to decrease the intensity of rivalry. Besides, the focus on market segment could help P&G to eliminate both forces too. In addition, as we can see from P&G strategies, they try to develop their organization image in sustainable ways. 44
RECOMMENDATION & SUGGESTIONS
RECOMMENDED OR SUGGESTED STRATEGIES:
The practice of incomplete market coverage should not be followed because you cannot hijack other company‟s customers and new customers as well. All these scenarios require following strategies: MARKET DEVELOPMENT STRATEGY:
P&G is emphasizing on urban areas while it has neglected the suburban areas, which is also a big market for soaps like safeguard. For this purpose, they should efficiently utilize their Marketing Information System to collect information about the demand and attitudes of the people in these areas. By using this strategy, safeguard can fetch the customers of competitors and will be successful in building new customers.
PRODUCT DEVELOPMENT STRATEGY: It describes to develop new products or modify the existing products with respect to size, color, packaging, etc. Safeguard is a well-perceived product among the customers, and at this moment, it is available in two sizes; 75gm and 125gm, which cannot satisfy the demand of every segment. While the products of the competitors are available in multiple sizes which provide abundant choices for purchases to customers for example Lifebuoy Gold has 140gm and 95gm and Medicame has 80gm soap available in the market. This provides an opportunity to the customer to have multiple choices. It can be a threat for the market share of safeguard. On the other hand, in case of safeguard the choice to customer is very limited. This is what they have analyzed through market survey.
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Therefore, it is necessary that safeguard should be available in maximum possible sizes to meet the selection criteria of the customer. As far as launching of new product is concerned, it is not necessary for P&G at this moment, but in future, they will require taking this step as well because they have some other soap like ivory, and zest which are very famous in international market.
MARKET PENETRATION STRATEGY: It describes that a company tries to sell more of its product by introducing new supplementary uses. Safeguard is that product, which contains such chemicals useful for beauty care as well. This characteristic, we have analyzed through its product formula. Therefore, it is more useful to supplement this idea with existing safeguard or introduce safeguard into different pack sizes especially for capturing the female customers.
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CONCLUSION
The ability to cope with changes can be regarded as important to current organizations. P&G is one of organization that attempts to improve their business. In this report, the five forces analysis was applied to P&G for analyzing threat and opportunity in shampoos industry and evaluating their strategy as well as recommend some ideas. In five forces analysis, there are some forces that can considered as weak for P&G. Therefore, they should implement some strategies to solve such weaknesses. From five forces analysis, there is a weak point in threat of substitutes that come from two in one product, Radox brand. P&G should provide some researches about customer behavior in two in one products and monitoring their sales. If there is tendency to success in such product, P&G might launch similar products and attempt to conquer by using competitive strategies such as producing in lower costs or sale in lower prices. Another strategies might be concentrating in marketing activities such as promotion. Furthermore, from the risk of power of suppliers that increase from the emergences of environmental concern, P&G might invest in their suppliers' shares to have more power. However, P&G should only invest in suppliers that can be considered as important suppliers. However, some strategies of P&G can be evaluated as appropriated strategies such as they attempt to create corporate image as sustainable organization. Another strategy is the concentrating on continuance of developing products that can differentiate their products. It would affect to decrease power of customers because they have no choice if they want to buy the products that have the same properties. It also seems to decrease the intensity of rivalry. Besides, the focus on market segment could help P&G to eliminate both forces too. In addition, as we can see from P&G strategies, they try to develop their organization image in 47
sustainable ways. This can reckon as a good idea for coping with the changes because it can embed the green images into P&G products.
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