Competitive strategies include plans, procedure, and goals that help a business gain a large market share and increased income by surpassing their competitors. Every organization, regardless of the size, requires an elaborate competitive strategy tailored to the unique qualities of their establishment. Therefore, management should conduct an elaborate internal and external analysis that determines the current situation of the company, the opportunities within reach and the means to attain them. This research paper focuses on creating a competitive strategy for Edgewell Personal Care based on an elaborate SWOT analysis and critique of its current competitive strategy.
Edgewell Personal Care manufactures and markets American consumer products. The organization’s headquarters are in Chesterfield, Missouri where it settled after the corporate split of Energizer Holdings. The entire staff of Edgewell Personal Care adds up to 6000 people. Additionally, the organization prides itself in 25 brands and operations in more than 50 countries ( Tabinda, 2016) . The business mission statement guarantees they will ‘win through focus, insightful innovation, and agility; delivering better solutions to consumers and customers.’ This mission statement supports their vision to be a ‘trailblazing personal care company; leveraging their colleagues’ creativity and passion to challenge convention and drive growth.’ In order for Edgewell to fulfill their mission and vision, they advocate for values such as passion, integrity, respect, teamwork, and initiative.
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Current Industry state
Edgewell thrives in the personal care industry which is very lucrative and expected to grow significantly in the next decade. In fact, this industry registered an income of $432.7 billion in 2016 and is expected to grow to $750 billion by 2024. Edgewell benefits from this industry because out of the eight segments, the organization has established brands in four segments. For instance in the wet shave products are sold under Schick, Edge, Wilkinson Sword, Shave Guard, Skintimate, Shaver Guard and Personna. In the Sun and Skincare segment, Edgewell is represented by Banana Boat, Hawaiian Tropic, Wet Ones and Playtex household Gloves. Its Feminine Care segments include Stay Free, Carefree and OB brands. All other segments include infant care, pet care and miscellaneous.
Consequently, in the financial report released in March, Edgewell revenues decreased by 1%, it registered an increase in income by 10% to $99.2million ( Blaustein, Gall, Nottingham, & Osher, 2016) . Each segment portrayed different financial report in this report. The wet shave segment had dropped by 3%to $648.8M, the Sun &Skin Care’s revenue increased by 26% to $51.7M, and the Feminine Care Product decreased by 6% to $172.3M ( Kumar, 2005) . This assessment proves that the Edgewell brand pulls its weight in the personal care industry. However, some segments are dragging others. Notably, the Wet Shave and Feminine Care segments require proper strategizing to attract greater revenues. Evidently, Edgewell provides a ‘normalized’ EBITDA that is not based on GAAP accounting to provide a basis for comparison with future years.
SWOT Analysis
A SWOT analysis exposes the current competitive strategy and its impact on Edgewell, it consumers and employees. Therefore, recommendations to adjust the competitive strategy are drawn from this analysis.
Strengths
• Strong free cash flow and good return on capital expenditure
Edgewell experiences such financial strengths because it is less risky. According to the Quick Ratio that compares investments to financial liabilities, Edgewell exhibits an average gross margin of 48.6%. This data verifies that the organization has enough finances to invest in new projects in their existing segments.
• Successful track record in developing new products and a strong distribution network.
All brands associated to Edgewell are successful contributors of the recorded revenue. For instance, the Wet Shave brands contribute to 60% of sales, the Sun and Skincare brands show 17% sales, the Feminine Care brand have 16% sales and the others including pet care register 7% sales ( Aburto-Corona & Aragón-Vargas, 2016) . These numbers prove that Edgewell is effective when introducing new brands and the distribution networks established through years of experience are lucrative
Weaknesses
• Gaps in Financial Planning
Edgewell’s average current asset ratio is 1.95 and its liquid asset ratio is 1.30. This data suggests that the organization is not maximizing on resources and finances effectively. Their ‘Kitchen sink’ approach to finances elaborates that they are unprepared for some of the obstacles that influence revenue. For instance, in 2015 they registered an impairment charge (worthless goodwill) of $318.2MM, spin costs and spin restructuring charges of $170.3 M, and sales of industrial business charge of 32.7M. With proper planning, shareholders would expect the organization to foresee and plan for such circumstances.
• Gaps in product range sold by Edgewell
Edgewell products do not extend to all the needs of personal care. Consequently, its competitors take advantage and financially benefit from this market share. For example, Procter & Gamble is a leading competitor of Edgewell. Their brand range is very similar to Edgewell and they include a wide product range that Edgewell does not have such as Head & Shoulders or Wella which are hair products and Oral-B which focuses on dental hygiene ( Weems 2016). If Edgewell does not fill this range gap they lose ground to compete with such companies
Opportunities
• New customers from online channel
Edgewell’s marketing strategy has often relied on traditional forms of advertisement especially television and radio. These methods worked effectively and allowed the company a 33% market share in the Personal Care industry. However, with the increased dependence on e-commerce, Edgewell has an opportunity to acquire more customers by investing in their online platforms such as website, and availability in online shops. The internet is a more effective platform because it reaches a variety of international markets.
• Product innovation in respect to new customer trends
Edgewell has the opportunity to attract more customers by developing products that adhere to customer demands in the Personal Care industry. Currently, consumers are looking for eco-friendly products and organic options. A new awareness of climate change and products that cause harm to the body has prompted individuals around the world to take a conscious approach to personal care. Additionally, the increased purchasing power in developing countries allows consumers the ability to invest in more luxury. Therefore, Edgewell should get innovative and become a trendsetter in eco-friendly products as well as incorporating new technology to personal care.
Threats
• Increased competition
Edgewell faces the threat of aggressive competitors such as Proctor and Gamble which record a revenue average revenue of $80B, Unilever whose recent revenue report was $60B, BIC, Dollar Shave Club that was recently acquired by Unilever, Kimberly Clark which is prominent in female care and Bayer and Johnson and Johnson which is a major brand in the sun and skin care segment ( Hossain, 2016) . Often, critics accuse Edgewell of producing new products in response to their competitor’s products instead of setting the bar in innovation. Therefore, any of these competitors can easily phase out the company if they design better and efficient products for the Edgewell clientele.
• Counterfeit products
Counterfeit and imitation products of Edgewell brands are a threat to annual revenue. They are especially common in developing countries where the product laws are not as strict. It is estimated that Edgewell loses at least 26% of its income to counterfeit and imitation products ( Meier et al., 2015) . Unfortunately, the organization has little control over this threat. In fact, the most they can do is create awareness to their customers through aggressive advertising, and take the culprits to court where the result does not prevent other pop-ups. In the long run, the company finds itself in competition with these counterfeit products.
Edgewell Competitive Strategy
Edgewell chose value-creation as its competitive strategy. Using this approach, they edge-out their competitors by increasing their market share. The management at Edgewell seeks to increase the perceived value of their brands and products by using economies of scope. This term is used to refer to spreading their resources and capabilities across the organization to reduce cost and increase efficiency. A key part of value-creation is product diversification. Edgewell achieves this by offering an array of products to their consumers to dominate a large part of the overall market share.
Value-creation manifests in different ways within Edgewell Personal care. For example, the organization accelerates top-line growth investments. Therefore, their portfolio includes fast-growing products that have room for innovation such as skin/sun care products and wet shaves. Investing is such products allow the company to diversify extensively on one product such as offering shavers for men and women ( Vainauskiene, & Vaitkiene, 2015) . Also, another form of value-creation is systemic cost reduction. Edgewell enforces cost reduction practices such as using distributors and third parties rather than having their own international organization. This approach reduces the cost of production and risk of losses if international markets prove unfruitful.
Part of the value creation strategy is free cash flow generation. This refers to the act of accounting for income after catering to expenditure such as loans and building. The benefits of this aspect include having constant cash-flow for investments and a clear picture of the company’s assets. Notably, Edgewell takes a cautious approach to acquisitions and leverages the power of its colleagues as well. Both factors involve the use of resources to reduce cost and increase efficiency which is the foundation of a value-creation strategy.
Using value-creation as a competitive strategy is ideal for Edgewell because the organization is large and need to monitor its resources closely. Without this approach, the organization would spread thin and lack resources to sustain its consumers. However, the recent quarterly reports suggest that the organization should consider another competitive strategy. This worrying report includes decreases in many of its brand's revenue such as wet shave sales which dropped by 1.3%, and the sun and skin care sales decrease by 1.3% excluding the impact of go-to-market changes. Perhaps, a new strategy can elevate the company’s financial status and put it in a position to compete strongly in the personal care industry.
A value-neutral competitive strategy would maximize on the companies situation and reduce risk. Edgewell management can employ this strategy to meet short-term and long-term goals. A key short-term goal is creating synergy among colleagues and teams around the world. This avoids dis-synergies such as loss of employee productivity, not understanding customer motivation, loss of quality employees to competitors and underestimation of impact ‘one-time’ costs as was noted in 2015. Additionally, the value-neutral competitive strategy allows Edgewell to solidify their US business by creating an oversight to keep its customers happy and loyal.
Conclusion
In conclusion, Edgewell has proved a force to reckon with in the personal care industry. However, they are loopholes in its business strategy that should be addressed to ensure the brand name is sustained for generations to come. Their core value for progress should remain innovation because the limit of their industry is yet to be explored. There are many possibilities that are not yet maximized. Edgewell should invest in research that maximizes lucrative innovations. Lastly, the must take a stand to ensure the clients, resources, and income is steady before taking any plans for the future.
References
Hossain, M. (2016). Brand Activation of Parachute Advansed Beliphool.
Blaustein, L. A., Gall, D. A., Nottingham, J. W., & Osher, J. (2016). Edgwell Personal Care Washington, DC: U.S. Patent and Trademark Office.
Aburto-Corona, J., & Aragón-Vargas, L. (2016). Sunscreen Use and Sweat Production in Men and Women: Journal of athletic training .
Kumar, S. (2005). Exploratory analysis of global cosmetic industry: major players, technology and market trends: Technovation .
Weems Jr, R. E. (2016). A Man in a Woman's World: Anthony Overton's Rise to Prominence in the African American Personal Care Products Industry: Journal of African American History .
Tabinda, F. F. (2016). Impact of media in growing brand.
Meier, H., Fischer, F., Barry, K., Stewart, K., & Zeigher, T. (2015). U.S. Patent Application No 14/846,883 .
Vainauskiene, V., & Vaitkiene, R. (2015). Foresight Scenario of Brand Vulnerability: The Case of the Lithuanian Beauty and Personal Care Products’ Industry Branch. Trends Economics and Management , 9 (22), 59-73.
