Procter & Gamble is an organization that is involved in the manufacture and sale of consumer products around the world. It has five main segments which it operates in namely beauty, grooming, hair and personal care, home care and fabric care as well as baby, feminine and family care segments. The organization’s beauty as well as hair care provides to consumers products such as deodorants and antiperspirants. Grooming segment provides consumers with razors and blades (Procter & Gamble, 2016). The health care provides minerals as well as vitamin supplements as well as personal health care products. The home care segment provides products such as detergents and fabric enhancers. The baby, feminine and entire family care segment offers feminine care products as well as children products such as diapers, pants as well as towels. The focus of this study is on the personal products industry, Procter and Gamble in Particular. It will focus on the key segments that the organization is engaged in, competitive forces in these segments, its value chain and, internal and external forces that affects the industry.
Segments
Market segmentation refers to the identification of consumers with homogeneous needs that an organization can serve profitably. In this particular case, out of the five segments that Procter’s & Gamble serves, the organization has two key segments that will form the bases of this presentation. These segments are the beauty, hair and personal care segment as well as well as the health care segments. The organization derives high level of revenues from the segment hence a need to assess the factors that could help in enhancing the ability of the organization to exploit opportunities in the industry as well as to mitigate the threats that players in this industry could be facing. There are various ways in which these segments affect the organization as well as the personal care products industry Decker, 2014). Today, there is growth in demand for beauty and health care products around the world especially among women. This has led to significant growth in demand of these products increasing the revenues that firms are generating from the industry. Equally, the demand for healthy products in the industry has increased. This has been as a result of increasing consciousness among individuals on the need to purchase products are healthy as well as well as to keep check on their health. Due to growth in demand, it is evident that the segment is likely to generate high level of revenues in the industry. In the personal care products industry, the segment is competing with the beauty segment in terms of revenue generation. In fact, many health care products shops are selling their products together with beauty products as the demand for the two raises in the industry in the United States of America In fact these are the key segments that firms in the personal care industry are focusing on serving (Procter & Gamble, 2016).
Delegate your assignment to our experts and they will do the rest.
Porter’s five forces
From the above forces, it is evident that the bargaining power of buyers and the threat of substitute products are the key main factors that will affect the personal products industry. Due to existence of variety of personal care and health products in the market, customers are pushing sellers to lower their prices if they are to purchase their products. This has the potential of pushing the profitability of such organizations down. If the organization fails to manage these threats effectively, chances of its sustainability will be reduced. At the same time, the organization is faced with the threat of substitute products. For instance, when it comes to skin lotions, there are thousands of different lotion types around the world. Making a customer loyal to one brand is thus difficult. As a result of this, firms need to identify ways of boosting the position of their products in the market amidst such competition (Decker, 2014).
There are various measures that the organization has put in place in an effort to address these issues. For instance, in the personal care products the organization has many product lines. This implies that among the many brands competing on the market, it has a big share in terms of the brands it has presented in the market. At the same time, the organization is packaging its products in different weights. This implies that it can sell the same brand at different prices, though at different weights. This has the potential of increasing the affordability of its products among customers. Through such a strategy, the organization will be in a position to mitigate the threat of customers’ bargaining power. Buyer bargaining power often results to customers pushing the organization to cut the prices of its products. This risk is eliminated as the organization can now provide the products to customers at prices that they can afford. In spite of this, there will be a need to identify more ways of mitigating the medium threat of buyer bargaining power to the organization in the future (Procter & Gamble, 2016).
The organization has also put measures in place to mitigate the threat of new products in the market. The organization is positioning its products as one that meets customers’ expectation without interfering with their health. In the health segment, the organization is showcasing its products as being tailored to improve the healthy well-being of its customers in the market. This has enabled it to attract health conscious customers who in some cases are willing to pay even a premium price to secure such healthy products. For instance, in marketing of its healthy products, the organization has communicated to customers its focus on development of healthy skin care products. On its dermatology site, it has indicated its discovery of niacin amide (Vitamin B3) (Procter & Gamble, 2016). The vitamin boosts cell energy applied by women on their skin through the beauty products. The vitamin also strengthens skin moisture barriers, enabling the women to maintain soft kin all day. Moreover it helps by protecting the women from the exposure to ultra violet rays (Dyer, Dalzell, & Olegario, 2014). It is through communication of its products as being healthy that the organization has been in a position to sustain demand of its products amidst the threat of many substitute products in the market. Nevertheless, as more and more substitute beauty care products keeps on flooding the market, the organization has no option but to devise ways of mitigating their threats (Procter & Gamble, 2016).
Mitigating competitive threats
There are a number of measures that Procter’s and Gamble may assume in mitigating the threat of substitute products as well as the buyers bargaining power. To mitigate the threat of substitute products, there will be a need for the organization to strengthen its position as a provider of health products in the market. This will help in increasing the demand for its products among the customers. Today, many customers are concerned on the long term effect of their beauty products on their skin. Through positioning of its products as being healthy, the organization will attract more customers in the beauty segment. In health care segment, the same positioning will help in increasing its demand over that of competing firms in the market. Many people are now getting conscious of lifestyle diseases and are seeking assurance for longer healthy life, something that P&G can provide
P&G may also adopt a number of measures in mitigating the threat of buyer bargaining power in the market. The organization needs to position its products as being of high quality and healthier than those of competing firms. When customers are assured that the product presented to them is of superior value, they avoid over bargaining on bases of price. This helps the organization to continue selling its products at prevailing prices without having to cut its profit margins. At the same time, the organization may also invest in loyalty programs. This ensures that customers gains redeemable points as well as chances to win gifts as a result of continued purchase of products from the organization. This would ensure that the clients do not shift to a new brand in an effort to increase their redeemable points as well as increase their chances of winning prices in the organization. This would thus help in mitigating the adverse effects of buyers bargaining power in the organization (Procter & Gamble, 2016).
Opportunities and threats
Opportunities
There are various opportunities facing the Procter & Gamble. The organization is yet to meet the global demand for its products. There is thus an opportunity of exploiting the rural markets while at the same time penetrating the urban markets where there is still demand that is yet to be met. Exploring new markets in other countries will also increase the ability of P&G to sell its products in the market (Murray, Beiske, & White, 2013)
The next opportunity that the organization is facing is the increasing demand for healthy and beauty products globally. People, both men and women are becoming more concerned about their looks and cleanliness as well as health. This has led to increase in demand of products that meets these demands. Fortunately, Proctors & Gamble is one of the leading providers of such products to customers in the market. The organization thus has the chance of exploiting this opportunity in the market (Procter & Gamble, 2016)
Threats
Competition is a major threat to the operations and survival of Procter’s & Gamble. Increasing competition has led to growth in the level of substitute products in the market. Increase in the number of substitute products has the potential of reducing the demand or products of P&G since customers have other alternatives to choose from. Equally it may push the organization to shoot the price of its products down in an effort to mitigate competition. This would end up hurting the organization’s bottom line, and reducing its overall level of profitability (Procter & Gamble, 2016)
Dealing with threats and opportunities
From the above section, it is evident that the biggest opportunity that the organization is facing is that of increasing demand of beauty and healthy products around the world. This has significantly increased the demand of its products in diverse parts of the world. To exploit this opportunity, there will be a need for the organization to engage in systematic market survey in different countries. This will help it in identifying markets where the demand for its products are yet to be made. After identifying such markets, the organization will need to distribute its products to such markets. In cases where direct distribution may not be cost effective the organization may also opt to set up production facilities in such locations (Procter & Gamble, 2016)
In order to address the threat of competition, the organization will need to boost the quality of its products. When consumers that its products are of high quality, they are likely to prefer purchasing products from the organization as opposed to purchasing them from competing firms in the market. At the same time, there will be a need for the organization to position its products as promoting healthy. This will be a unique selling point (US) to the organizations it will play an important role in ensuring that the overall performance is enhanced by providing customers with something that the competing firms are not in a position to provide to customers in the market. This will significantly boost its revenues in the market as well as popularity among consumers (Procter & Gamble, 2016).
Strengths and weakness
Strengths
P&G enjoys a strong global brand. Customers can easily distinguish its products from others from competing firms. The organization has wide brand portfolio increasing its ability to serve customers with diverse needs. The organization has a wide distribution. It has its markets in over 80 countries around the world. This enables it to serve customers and meet demands in such far lands, increasing its revenues and profitability (Procter & Gamble, 2016).
Weaknesses
The organization has not been able to develop sufficient and effective strategies to fight off competition. As a result, its products are subjected to stiff local and international competition. This has the potential of reducing sales in the organization. The organization is further experiencing a challenge in dealing with fake products Murray, Beiske, & White, 2013). Some firms are developing products and disguising them as having been developed by the organization. Due to the weaknesses ion P&G research personnel to identify such companies and take the necessary legal action, competing firms will continue exploiting its brand to its disadvantage (Procter & Gamble, 2016).
Dealing with strengths and weaknesses
To take advantage of the above strengths, the organization will need to engage in integrated marketing communication, increasing awareness of the existence of its brand in the new markets. Since many people are aware of its brands, they will easily opt to purchase its commodities as opposed to those of competitors. To mitigate the weakness of fake products, there will be a need for the organization to invest in an investigation team that will expose firms producing such fake products that are branded as P&G products. This will reduce the loss of sales to such firms while at the same time cushioning customers from being presented with unhealthy products. This would also help in eliminating potential lawsuits that may emanate from delivery of such low quality products to customers, disguised as P&G products (Procter & Gamble, 2016).
Resources/capabilities and core competencies
P&G enjoys a high financial capability as well as human capital. This has enabled the organization to expand and deliver its services in over 80 countries around the world. The organization has capabilities in development of unique and health products. This is attained through employment of highly trained personnel in the organization. As a result of this the organization has been in a position to sustain its brand for years (Procter & Gamble, 2016).
Value chain
Procter’s & Gamble has extensive value chain across 80 countries across the world. The organization sources for raw materials from diverse sources. The organization has entered in long term contracts with suppliers to ensure that there is reliable access of raw materials in the industry (Murray, Beiske, & White, 2013). In terms of distribution, the organization is engaged in both direct distribution as well as use of middle men. The sue of middle men enables it to minimize distribution as well as housing costs (Procter & Gamble, 2016)
From the above presentation, it is evident that external and internal factors affect the viability of an organization in the market. While P&G has extensive financial resources and strong brand, there will be a need for it to put measures in place that can address the threat of competition. This will be mainly through development of high quality products that are positioned on bases of healthy and enhancing its value chain. Presenting same products at different quantities will also enable it to deliver cheap products in the markets increasing customer affordability, subsequently boosting sales.
References
Decker, C. L. (2014). Winning with the P & G 99: 99 principles and practices of Procter &
Gamble's success . New York: Pocket Books.
Dyer, D., Dalzell, F., & Olegario, R. (2014). Rising tide: Lessons from 165 years of brand
building at Procter & Gamble . Boston, Mass: Harvard Business School Press.
Murray, J., Beiske, B., & White, S. (2013). Procter & Gamble Europe: Vizir Launch . München:
GRIN Verlag GmbH.
Procter & Gamble (2016). The science behind. Retrieved from http://www.pgdermatology.com/
