Category: Procter & Gamble

Application of Maslow’s Hierarchy of Needs

Procter & Gamble is a large American company that specializes in distribution of consumer goods. Some of the products distributed by the company include foodstuff, cleaning agents, beverages, and personal care products. These products are expected to meet different needs of an individual.

Maslow’s hierarchy of needs can be applied to define the preferences of consumers (Noel 2009, p. 124). The following diagram shows the Hierarchy of Needs, as observed by Maslow.

At the bottom are the most basic needs. Such needs are very important because an individual cannot exist without them. As one moves up the pyramid, the needs become secondary. Many individuals rarely reach the highest point, which is the self-actualization need.

As shown above, a number of products distributed by Procter and Gamble are basic implying that an individual cannot do without them. Food and beverages are meant to satisfy hunger and thirst. These are the most basic needs of a human being. The company should therefore consider increasing production of foodstuff and beverages because the two products are in high demand.

It is possible to change consumer needs because they grow over time. An individual may perceive a product like medicated soap to be a social need, especially if its cost is high. However, a marketer can change this perception through advertisements.

This would convince the consumer that the product is needed for the protection of skin. The product would no longer be a social need, but a safety need. This would definitely increase the sales of the company in the market.

Effects of Different Groups on Consumer Behavior

Consumer behavior is always shaped by different factors. A consumer would have a negative perception towards a certain product because of cultural practices or other social factors. Peer is known to be one of the leading determinants of an individual’s behavior. The way an individual behaves would be shaped by the group behavior.

The youth forms a market segment that is most influenced by peer pressure. An individual would buy a product based on how his or her peer feels about that particular product (Blythe 2008, p. 57). At this stage of development, the peers are very sensitive about what others think about them in society.

They would always strive to eliminate all forms of negative comments from their age mates. They would also wish to be viewed as trendy individuals. Religious groupings would also affect the behavior of a consumer. Because of their religion, Muslims would rarely buy pork.

Key Research Areas to Research on as a Marketer of Procter and Gamble

Research activities would focus on youths because they form a major market segment for this firm. The main interest would be to determine the factors that affect the behavior of youths in the market (Solomon 2010, p. 94). Moreover, the researcher would be interested in knowing how the emerging technologies affect the behavior of youths in the market.

From this research, the researcher would be hopeful of coming up with strategies that would make the company benefit from this market segment. This is because the market segment for youths has been growing steadily in the twenty-first century. Moreover, this market segment would be a surety for the firm’s sustainability.

Outline of a Marketing Research Proposal

In conducting this research, the outline will be simple but detailed. The research would focus on covering all the relevant details. It would take the following format:

1. Introduction
2. Literature review
3. Methodology
4. Data analysis
5. Conclusion and recommendations

List of References

Blythe, J 2008, Consumer behavior, Thomson Learning, London.

Noel, H 2009, Consumer behavior, AVA Academia, Lausanne.

Solomon, M 2010, Consumer behavior: a European perspective, Prentice Hall, Harlow.

Diversity and inclusion are arguably the foundations of any business organization. The success of any organization is dependent on the diverse background of its employees in terms of race, age, gender, religion and ethnicity. This paper will therefore discuss how Thompson Hine, a business law firm, and Procter and Gamble are embracing diversity in their business operations to achieve success in the United States.

Thompson Hine law firm is considered among the most successful law firms in the United States with respect to services rendered to its clients. The firm boasts of a pool of over 350 lawyers stationed in Washington, D.C., Dayton, New York, Atlanta, Columbus, and Cincinnati (Thomson Hine, 2011, p.12).

On the other hand, Procter and Gamble is a global company that produces leading household brands such as Aerial, Always, Duracell, among others. These brands generate sales in excess of a billion dollars every year (Procter &Gamble, 2009, p.8).

It is quite evident that both firms value diversity as the driving force for success. For example, Thompson Hine relies on a pool of diverse lawyers from different background and race to drive its operations. Women and minorities form part of executive committee members, committee chairs and office partners-in-charge (Thomson Hine, 2011, p.3).

The law firm’s policy on diversity is also manifested through the implementation of Diversity and Inclusion Initiative and its partnership with community organization that promote the same values.

Some of the diversity programs that Thompson Hine plan and fund include: Organizing diversity leadership seminars in collaboration with Fifth Third Bank in Cincinnati; offering support to Stonewell Bar Association for Lesbian, gay, bisexual, and transgender (LGBT) lawyers in Atlanta; providing financial and technical assistance to the ‘walk, rock and run’ program in recognition of diversity in Ohio; and collaborating with the Cleveland Commission on Economic Inclusion on diversity policies Thomson Hine, 2011, p.6).

The firm also supports the retention and development of a diverse labor force for its business operations. Thompson Hine law firm has put in place several programs to achieve this goal: giving equal healthcare benefits to its workers, attorneys and their families; promoting actions that draw attention to the diverse culture manifested by the law firm; and creating a conducive and alternative work program.

Moreover, the firm has put in place Spotlight on Women initiative to provide professional growth for its women lawyers. Junior minority lawyers can also benefit from the firm’s Minority Associate Advisor Program where they work with senior lawyers to gain more experience (Thomson Hine, 2011, p.8).

Similar diversity programs are also implemented by Procter and Gamble. For example, the Human Resource at the firm has initiated diversity programs that aim to benefit all workers. These support initiatives include: assignment plans, promotion plans, and career discussions.

The firm also has a mentoring program that offers guidance and informal support to all workers. Procter and Gamble’s Harassment Policy aims to create an enabling working environment free from harassment. This policy enables the firm’s diverse labor force to work to their optimal potential (Procter & Gamble, 2009, p.56).

Although there are several good diversity programs that promote social cohesion and integration at work place, there are certain diversity- related activities that are sometimes neglected. Granted, employees with disabilities form an integral part of the success of any firm. However, most of diverse policies fail to address issues facing the physically challenged workers. Just as much as there are policies that protects LGBT employees from harassment, the effectiveness of any diversity program must also address the rights of the disable ones

References

Procter & Gamble. (2009). Designed to Matter. 2009 Sustainability Report. Retrieved from: www.pg.com/sustainability

Thompson Hine. (2011). Diversity and Inclusion. Multicultural Law Top 100. Retrieved from: www.ThompsonHine.com

Essential case facts

Procter and Gamble is one of the largest and oldest manufacturer and distributor of groceries around the world. The company manufactures branded groceries and supplies these products to the market. In addition, the company is leading in determining the distribution channels of branded consumer goods to the market.

The internal processes that occurred enabled the company to make a sales volume of $30 billion US dollars. The company is well known for its aggressive and successful development of world class marketing and high quality consumer goods.

The company growth strategies involved developing and marketing new products, acquisitions and international expansions. The company succeeded in acquiring many medium sized firms in the US and as a result expanded its market share. However, this strategy lasted for only a very short time leaving the company to expand through new product development and international expansion.

The international expansion strategy included the product replication in new markets as well as developing and marketing new products that suits the need of particular market. This strategy enabled the company to increase its sales volume by almost 50%.

P&G product development strategy ensured broad range of product lines that included wide variety of products. The company organized its products into five major sectors. That is, Food/Beverages, Health/Beauty, soap, paper and special products.

Each of these sectors was further organized into product categories. The categories were responsible for the product group brands. New-brands were determined by extensions or improvements on existing products.

The company products were majorly sold through numerous channels including wholesalers, grocery retailers, club stores and mass merchandisers. While there was disharmony in relationship between the company and the distribution channels, the company later recognized that to be successful, it must serve the need of both the channel and the consumers.

Extensive market research, effective advertising, low cost pricing strategy and aggressive research and development contributed to the company sales increases not only in the US but also in other parts of the world.

The main focus of P&G has been to improve the customer value through the provision of superior products. This objective is the main driver of any innovative processes that occurred through the elimination of non-value-added processes in its distribution channel.

These innovative processes that led to the transformation of the organization distribution channel were seen as the information system innovation. That is, the company developed information systems that automated all its distribution activities.

Due to the promotional competition and swings in the prices, P&G adopted new market strategies on its branded consumer products. One of the strategies was to improve the industry efficiency and changing the pricing policy to its products. Both of these strategies were essential in the improvement of its brand value.

As the company was implementing the pricing strategy, it also took leadership role in ensuring that the other players in the grocery industry have accelerated the adoption of new efficient systems and practices that add value to the products channel. The changes in the industry also increased P&G effectiveness in its effort to deliver value to its consumers.

One of the goals of transforming innovations in the channel of distribution was to develop a relationship with distribution partners that were more collaborative and mutually productive. Negotiations were to be replaced with cooperation so as to efficiently serve the consumer needs.

Through the combination of consumer loyalty and the efficient channel together with good relationships, the company would increase market share for its products. Besides, the cost of serving the end user and the channel will considerably reduce thus allowing all the stakeholders to benefit.

Major issues/dilemmas, pros and cons of two alternative paths of action, recommendation

Major issues/dilemmas, pros and cons of two alternative paths of action

There are several issues with strategies that the company implemented in order to increase the customer value. These issues range from the product promotions to the sale of the CSR to the IBM. The demand for the company products was being driven by the end consumer pull through the channel.

The consumer pull gave P&G an added competitive advantage as most of its products find themselves in the stores shelves than its competitors. P&G business engagement was primarily based on short-term negotiations for initiatives and promotions.

There was increased use of promotions as the manufactures within the industry competed for small shelf spaces in retail stores. Forward buying of merchandize was widely practiced by the industry players leading to brands being overstocked.

As a result of attractiveness for forward buying due to the low interest costs, inflation and huge promotional discounts, the product procurement cost was being determined by many incentives and allowances making the cost of a single product on the shelf difficult to determine.

The incapability of understanding the costs, discounts and allowances for aggressive purchasing led to the channels focusing on buying for profit instead of selling for profit.

The multiple promotions together with forward buying led to the increase in the retailer inventories. This requires that the manufacturers must also increase their inventories so as to be able to meet the artificially created increased demand. The variations observed in consumer and manufacturers demand made it difficult to accurately predict demand for the manufacturers.

The uncertainty in total demand and large fluctuations in periodic demand increased both manufacturer’s inventory requirements and cost of production. This could not be experienced under the direct pull through demand processes.

P&G sell its products through retail groceries channels that included wholesalers, retail stores, distributors and club stores. Approximately half of the P&G products go through retail stores while the rest are evenly distributed through wholesale and other distribution channels. These grocery channels operate with very thin profit margins.

High volumes and low unit prices ensured that the channels profits depend on efficient operations. In fact the total sales volume together with retail space becomes the critical factors that determine the channel profits. Moreover, regional market share becomes critical and advertising being significant cost, the channel profitability is being determined by leveraging the fixed cost of the regional advertising.

With these inefficiencies in the pricing and distribution channels, P&G came up with several programs that was aimed at improving services and reduce costs along the channel. The first program was aimed at improving the logistics in the supply chain and reducing inventories within the channels through continuous replenishment process (CRP).

CRP was first tested using the electronic data interchange (EDI) that was used to transmit data on daily basis from the retailer to the P&G warehouse. Using EDI data, P&G was capable of determining the quantity of the product that could be shipped to the warehouse of the retailers.

This process proved to be successful as P&G could easily compute the product order quantities with the aims of providing sufficient safety stock, eliminating excess inventory in retailer’s warehouse and minimizing the overall logistics costs.

Moreover the process led to the inventory reductions, improvements in the service levels and saved much of the retail labor. Furthermore, retailers were capable of doing away with several buyer positions using this restructuring process.

However, there was no clarity on the benefits that the company derives from this process. In addition, the new ordering process proved to be more costly to the company that the previous method where the retailer determined the order quantities.

The success of CRP on mass merchandisers made this program to be implemented in all business processes. Moreover, it generated the interest of other retailers. The CRP process spread very first among mass merchandisers and many implemented CRP.

To these grocery chains the CRP has proved to be successful in reducing inventory as well as stock out levels. The CRP became popular among the retail channels as a tool in selling and expanding their product line.

As the CRP was being integrated in all business processes through the EDI, P&G realized that the technology needs to be redesigned to suit the increasing business processes as a result of expansions. In fact, the redesigning process had to start with the improvement of the total ordering process that has to begin with changing the pricing policies and practices.

The improvement in the ordering quality had to be accompanied simple pricing structure that can easily be understood and tract by the customers in their systems. The pricing policy changes were essential in increasing the consumer value as well as building the brand loyalty. The pricing policy changes and system improvements were beneficial to both channel customers and P&G.

Recommendations

P&G should thrive to improve on its business processes transformation through information technology to have an added competitive advantage and to keep its leadership role in transforming the groceries industry. In addition information technology adoption in the business processes will ensure increased value chain which in essence determines the businesses processes.

Besides, increasing the company competitive advantage, information technology will change the industry structure, the products as well as the mode of competition within the industry. Most importantly, transformations through information technology will add value to the end users of the product.

Three essential concepts on how information increases the competitive advantage

Information technology comprises of that information that businesses create and use as well as the technologies or hardware that process the information. The revolution of information impacts on competition in three different ways.

First it changes the industry structure and as a result changes the rules of competition. Secondly, changes in information create competitive advantage through new ways of doing business that they use to outperform their competitors. Finally, information penetrates all forms of new business in most cases, from within the firms existing operations.

Value chain

Information technology transforms the way companies do business. It has the effect on the entire business processes through which the end products are created. Moreover, it gives the product a new shape. In fact information reshapes the entire package of physical goods and services thereby adding more value to the customers.

The value chain is the important concept that brings out the vital role of information technology in enhancing competitive advantage. The value chain divided the company actions into technologically and economically activities that it performs to do business.

In most cases, what consumers buy is proportional to the values that the company creates in a product or service. Whenever the value that is created is in excess of the value creation cost, the profit is made by the company. Therefore, the company will only have added competitive advantage if operates at lower cost, differentiate its products or sell at lower prices than its competitors.

The company value chain in a specific industry is embodied into the value system. That is a larger stream of activities that the company performs to increase the product value. The value system includes the value chain of suppliers, production processes and distribution channels to the final consumer. In fact, a series of interdependent activities determines the firm’s value chain.

These activities are connected together through relationships. Linkages connect the company activities from the supply chain to the distribution channels that finally deliver the products to the consumers. Moreover, the company competitive advantage created through differentiation and low cost is component of its value chain.

Product transformation

Information also transforms the product. Products normally have physical and information components. The manufactured goods information element is the knowledge that the buyer is required to have so as to make informed decision about the product.

The information component of the product includes its use, characteristics as well as the way it should be supported, for instance, the product accessibility, convenience, service procedures, maintenance and criteria in consumer appliances.

The information technology makes it easier to provide more information together with the physical products. Moreover, information enhances the possibility of offering the commodities to the consumer devoid of substantial constituent. Furthermore, the product information content enhances its performance. In addition, the nature of competition can easily be changed through the adoption of information technology.

Altering the competition

Potentiality of changing the way companies compete within the industry is inherent in the Information technology. The rule of competition is changed by the information technology in three ways. First is the transformation of the industry structure. Secondly, companies use information technology to leverage their activities to create the competitive advantage.

Companies normally thrive to be at the competitive edge and information technology offers the means through which they can have that competitive edge. As search competitors will always try to imitate what the industry leader is doing so as to be at the top of the industry. As a result, a new industry structure is created. Finally the information technology affects almost all the business processes.

These characteristics have been applied by P&G in the transformation of its products as well as the competition in the industry. The company value chain is seen in the innovative CRP system that is aimed at reducing cost and eliminating inefficiencies in the distribution channel so as to add value to the customers.

The company also transformed competition in the industry through the changes in promotions. Through the business process redesign, the company has increased their product information.

Physical environment

The Procter & Gamble Company (P&G) attempts to reduce the impact of their activities on the environment. In particular, the plants of this corporation are powered with “100 % renewable energy” (Procter & Gamble Company 2012). Secondly, they use fully-recyclable materials while packaging their products. Additionally, they reduce their manufacturing waste to the minimum (Procter & Gamble Company 2012).

Overall, one can say that this organization is committed to organizational causes. Apart from that, this company actively interacts with local communities, especially very impoverished neighborhoods, and regions. For example, one can mention that this corporation invests millions of dollars in order to build playgrounds for children (Procter & Gamble Company 2012). Furthermore, they implement a clean water program which is intended for children and adolescents living in Africa (Procter & Gamble Company 2012). Thus, this corporation attempts to act as a responsible corporate citizen.

Intellectual property issues

The company strives to protect its products and technologies from infringements and illegal use. The patent each of their technologies and designs and these legal acts provide exclusive rights to an organization that invented a certain product. This corporation is willing to make sure that its inventions are not used by for-profit companies.

For instance, one can mention the case Procter & Gamble Company v. Garcoa Laboratories (Newberry 2011). The management of P&G argued that Garcoa Laboratories imitated the bottles of P&G shampoo (Newberry 2011). They were able to defend their interest in the court. Therefore, one can say that the management of P&G actively tries to protect its intellectual property from potential competitors.

The action plan, control, and evaluation

The Procter & Gamble Company closely works with third-party companies in an effort to bring innovations like products or technologies (Procter & Gamble Company 2010). Moreover, almost 50 percent of new products are not created directly by this company (Procter & Gamble Company 2010). They encourage other firms to search for creative solutions.

Nevertheless, they also invest in R&D (research and development) activities. The company strongly relies on focus groups when deciding whether a particular product can appeal to buyers and how the product differs from others. The recommendations of these buyers can tell whether innovation should be further developed. It should be noted that the success of a product is evaluated according to three important criteria, namely customers’ opinions, the cost of production, and its performance in comparison with other brands. These are the main processes that are needed in order to bring new products to the market.

Warranty

The Procter & Gamble gives warranty to their customers in order to gain their loyalty. According to their policies, defective items will be replaced, repaired or reimbursed (Procter & Gamble Company 2011, unpaged). Furthermore, even non-defective products can return to the company, provided that they have not unpackaged (Procter & Gamble Company 2011, unpaged).

Additionally, the customer can find contact information and they can call the company and talk about the malfunctioning of a product and make a return request (Procter & Gamble Company 2011, unpaged). Furthermore, they encourage clients to speak about possible problems, because, in this way, the corporation can improve the quality of their products. Thus, one can argue that Procter & Gamble understands the importance of communication with clients whose recommendations are not disregarded.

References

Newberry, J 2011, Procter & Gamble files suit over look-alikes in Kroger stores. Web.

The Procter & Gamble Company 2010, Core Strengths.

The Procter & Gamble Company 2011, Duracell.

The Procter & Gamble Company 2012, The Overview of Sustainability.

Which concept or concepts related to marketing this company is following, justify your answer

The close analysis of how Procter & Gamble addresses the task of ensuring a high commercial appeal of its line of products in the Arabian FMCG market, allows us to define the Company subdivision’s (Procter & Gamble Gulf FZE) approach to marketing, as such that draws on the ‘societal marketing’ concept of what this activity it ought to be about. According to this concept, the realities of contemporary living presuppose that nowadays, the best way for just about any corporate vendor of goods and services to go about solidifying/expanding its share of the targeted market is adjusting the offered goods/services to be thoroughly consistent with this market’s continually fluctuating demands. The concept’s another crucial provision is that, while trying to remain thoroughly competitive, companies must pay close attention to the ethics-related societal effects of their functioning.

As Laczniak and Murphy noted: “Firms have an unwavering ethical obligation to attend to the claims of affected parties (e.g., employees, customers, suppliers, the host community), insofar as the company negatively influenced or benefited from actions affecting those stakeholders” (287). The ideal state of affairs, in this respect, would be when a company can ensure both: that the chosen marketing strategy does help it to ‘saturate’ the targeted segment of the market, and that the process of this company becoming ever more commercially efficient does have a positive long-term effect on the affiliated society. In light of the above-stated, Procter & Gamble Gulf can be referred to as the actual example that it indeed proves beneficial for a transnational corporation to invest in paying genuine interest to what accounts for the targeted consumers’ lifestyles, on one hand, and in embracing the spirit of corporate social responsibility (CSR), on the other.

The suggestion that Procter & Gamble Gulf is indeed affiliated with the specifically the societal paradigm of marketing can be illustrated, in regards to the following:

1. While operating in the Gulf Region, Procter & Gamble never ceased being observant of the cultural and religious specifics of the area’s business environment, which in turn helped the Company to strengthen the integrity of its reputation, as a socially responsible commercial enterprise. To illustrate the validity of this statement, we can refer to the fact that Procter & Gamble Gulf has always been known for its willingness to adjust the advertisement campaigns of the marketed FMCGs to be consistent with the ethical conventions of Islam. For example, according to Bankhar: “Procter and Gamble a multinational company wanted to promote one of their well-known brands, Buitoni Pasta. After its (company’s) acknowledgement of the Saudi conservative culture, it decided to advertise the product using an image of the pasta and catchy slogan, instead of using a woman model” (11). Thus, the Company’s managers do recognize the importance of marketing FMCGs in the manner that is being the least capable of triggering any ethics-related tensions within society – even if this results in reducing sales.
2. Procter & Gamble Gulf proved itself thoroughly flexible and creative when it comes to conceiving a particular advertisement-campaign. The validity of this suggestion can be shown, in regards to the instances of this company has been able to fuse Islam with the actual advertisement-message, conveyed by TV commercials: “When Procter & Gamble launched Tide liquid in Arab markets in the 1990s, it decided to use a series of ads showing how easily women could use the product to wash their veils. The company was careful to present the act as an everyday chore without religious overtones” (Mahajan par. 11). Essentially the same can be said about the significance of the fact that it is namely during the time of Hajj to Mecca, that Procter & Gamble Gulf can significantly increase its profits: “P&G promotes just about all its products during the hajj, but those that people can take home as gifts sell best. Perfume sales peak, and small appliances, such as electric razors…” (Mahajan par. 35). The Company’s ability, in this respect, implies the ‘holistic’ essence of its business philosophy – Procter & Gamble strives to take advantage of even the seemingly unfavorable circumstances for marketing, which once again substantiates the rationale for defining its marketing approaches as being clearly ‘societal’.
3. While operating in the Arabian Peninsula, Procter & Gamble Gulf made a point in positioning itself fully committed to the provisions of CSR, within the context of how the Company used to go about addressing competitive challenges. The fact that this is indeed being the case can be confirmed, about the Company’s tendency to pay much attention to what account for the societal effects of its presence in the area: “P&G played a pioneering role in developing local industry and national economies across the Peninsula, growing steadily to become one of the region’s biggest investors, exporters and employers… In addition to direct employment, we estimate that our AP operations contribute to creating around 9000 indirect job opportunities in associated services” (“P&G in the Arabian Peninsula” par. 4). The Company’s top-officials are well aware of the fact that nowadays, the extent of a particular organization’s commercial efficiency cannot be discussed outside of what this organization does to contribute to the community’s overall well-being. The same can be said about the significance of the Company’s commitment to ensuring that it conducts its manufacturing operations in agreement with the applicable environmental rules and regulations.
4. Procter & Gamble Gulf proceed with investing the ever-larger sums of money into the continual improvement of its line of brand-products: “P&G delivers a consistent stream of innovative products with a balanced combination of disruptive, sustaining and commercial innovations. Some of the examples of its innovative products include Tide PODS, Swiffer, and Crest Whitestrips” (“Procter & Gamble” 8.2.3). By doing it, the Company exposes its marketing strategy as such that is being defined by the ‘sense and respond’ marketing principle. In its turn, this suggests that while trying to increase profits, Procter & Gamble Gulf takes into consideration the challenges of having to ensure the commercial appeal of its products in the ‘post-industrial’ market of FMCG, the dynamics of which are being largely defined by the consumers’ strive to attain self-actualization. This, of course, naturally prompts the Company to apply an additional effort into making sure that in the eyes of the targeted consumers, the ‘perceived value’ of its products appears to be especially high.

Describe the variable used to segment three consumer markets (Look and Beauty, Home, and Health). What type of market segmentation strategy are Procter and Gamble following? For each, relate some specific examples of products tailored to various target markets.

It can be safely suggested that the main qualitative specific about how P&G operates in the Gulf, is that it mainly relies on the demographic and psychographic variables of segmenting the Arabian market of FMCGs – something that can be illustrated, in regards to the marketing approaches of the Company’s ‘Look & Beauty’ and ‘Home & Health’ sub-divisions. For example, due to being concerned with the promotion of cosmetics/personal hygiene products, the former naturally targets middle-class women (in the Gulf countries, the representatives of the middle-class account for 65%-70% of the population). This explains why the market positioning of many of P&G’s feminine products, such as Cover Girl, Herbal Essenes, Vidal Sassoon, Wella, etc., manufactured by the Company’s production-plants in Jeddah and Dammam (Saudi Arabia), cannot be discussed outside of how women tend to perceive the surrounding social reality and their place in it.

That is, the advertisement-campaigns for these products aim to:

• persuade women that, as a result of using the mentioned brand-products, they will appear attractive in the eyes of men – something that in the Gulf countries often remains the only predictor of a woman’s ability to achieve social prominence,
• convince the targeted consumers that the quality of P&G’s ‘look & beauty’ products is indeed higher than that of the Company’s competitors.

It is understood, of course, that the outlined marketing-approach, on the part of Procter & Gamble Gulf, correlates perfectly well with the highly emotional workings of a woman’s psyche. There is, however, is even more to it. How these P&G’s products are being promoted also takes into account the psychographic factor of what has always been known about the personality of Arabic women – namely, their acute sense of shyness. This is the reason why the Company’s strategy for marketing its women-oriented products can be defined as being fully compatible with the so-called ‘feminine values’, on one hand, and with the fact that in the Gulf countries it is considered inappropriate exploiting sexually suggestive images for any marketing-related purposes, on the other.

Essentially the same line of logic applies when it comes to discussing the specifics of how the ‘Home & Health’ sub-division goes about defining the segmentation-variables in its market. For example, unlike what is the case with most the P&G-owned brands of laundry detergents, the one branded ‘Bonux’ is being mostly sold in packages with Arabic inscriptions on them.

Given the fact that the overwhelming majority of Saudi women are housewives, entrusted with the duty of household-keeping (doing laundry is the essential part of it), we can speculate that this product is concerned with targeting specifically those female-consumers that are not well-versed in English, which automatically presupposes these women’s association with the lower social classes. This conclusion is consistent with the fact that the ‘Bonux’ line of laundry detergents, sold by P&G in the Gulf countries, has traditionally featured the cheapest prices in the affiliated market-segment. Thus, here we again see that the marketing positioning of ‘Bonux’ products is being simultaneously predetermined by the ‘demographic’ and ‘psychographic’ variables. After all, it is not only that these laundry detergents are women-oriented, but also that the specifics of how the concerned products are being marketed reveal the fact that the designers of the marketing-strategy in question were well aware of how one’s class-status affects his or her existential attitudes and consequently – purchasing choices.

Is the P&G portfolio of brands an advantage or a disadvantage? Assess the pros and cons of operating in so many segments of the market.

There can be only a few doubts that, given the specifics of the Arabian market of FMCGs, the Company’s ownership of the extensive portfolio of 26 brands comes in extremely advantageous, within the context of how Procter & Gamble Gulf goes about striving to ensure its competitiveness. The reason for this has to do with the earlier mentioned fact that the majority of consumers, targeted by the Company, consists of the well-off representatives of the middle class. Consequently, this implies that these consumers are far from being price-sensitive and that they expect FMCGs to be tailored to their exact specifications (often purely subjective). Being able to provide consumers with the opportunity to choose between differently branded but quintessentially the same lines of FMCG products, without having to turn to the products of other companies, helps P&G to address the factor of competition, on the part of its smaller rivals in the market (Neff 34).

Thus, there is indeed a good rationale in referring to P&G’s brand-portfolio in terms of competitive strength: “Comprehensive product portfolio helps the company (P&G) to serve diverse customer needs and preferences and increase its overall sales… Diverse products portfolio coupled with well-known brands help to achieve balanced revenue platform” (“Procter & Gamble” 8.2.1). Moreover, the fact that Procter & Gamble Gulf continues with the policy of acquiring more and more of the world-famous FMCG brands and introducing them to the Peninsula’s residents, benefits the Company in the sense of strengthening its ‘holistic’ integrity. After all, it represents a well-known fact that the measure of just about any company’s functional resilience positively relates to the actual size of its market-share – especially if the factor of demand-volatility in such a market appears to be neglectful.

At the same time, however, there can be no guarantee that the Company’s currently deployed portfolio-policy will prove beneficial in the long run. The reason for this is that there are no objective preconditions to expect that the socio-economic prosperity of the GCC countries (something that makes possible the proliferation of the middle-class in the area) will continue to persist into the indefinite future – quite to the contrary. After all, it does not represent much of a secret that this prosperity came about as a result of the Gulf states being rich in oil, just as we are well aware that this natural resource is not self-renewable. The above-mentioned helps to identify the main con of operating in many segments of the market.

The adoption of this specific policy only proves feasible in the situations when there is a good reason to expect the continued growth of the economy, which in turn makes possible for people to be willing to spend money on purchasing FMCGs that are believed to account for a high ‘perceived value’. However, in the situations when the economy takes a steep dive, the continual deployment of the aggressive brand-diversification policy ceases to make much sense, because the increased price-sensitiveness of consumers leads them to associate the notion of ‘high value’ with the notion of ‘low price’. Given the fact that the political tensions in the area continue to escalate, and the fact that the GCC countries do not enjoy any de facto sovereignty (otherwise, they would not be now deliberately dropping prices for oil – the policy that hurts the economy), it can be predicted with a high degree of certainty that it is only the matter of time before the economy of these countries experiences a dramatic setback. When this happens, P&G in the Gulf will sustain financial losses. However, given the Company’s sheer size, there can be only a few doubts that this will not result in P&G being driven out of the Arabian market of FMCGs altogether.

What kind of positioning strategy should the company adopt for the Caring about home Segment?

When it comes to adopting one or another positioning strategy in the market of FMCGs, it is important to assess the qualitative dynamics within this market and to define the main forces behind them. As it was mentioned earlier, the most important factor to be considered, in this respect, is the overall state of the economy. The second equally important factor is whatever happened to be the objectively predetermined essence of consumerist attitudes, on the part of the targeted buyers. Thirdly, the marketed products’ actual nature should be taken into consideration, as well. In light of this suggestion, the main recommendation as to what should account for the positioning strategy, on the part of the Company in the ‘Caring about home’ segment of the market, can be formulated as follows:

P&G should proceed with the policy of expanding its share of the household-item market in the Arabian Peninsula, which in turn is best accomplished by the mean of purchasing smaller rivals that operate in the same field – something that the Company has been doing up until now. The rationale behind this suggestion has to do with the fact that, as of today, the economies of the GCC states continue to grow, which in turn presupposes the continual increase of the number of consumers that can be potentially targeted, on one hand, and the amplification of their buying power, on the other. The trend in question will inevitably lead towards more and more people associating FMCGs with not only the utilitarian value but with the ‘perceived’ one, as well. Yet, as marketers are being well aware of, it is namely people’s realization that by buying a particular household-item they make a ‘conscious’ choice, which allows them to experience the sensation of emotional satisfaction in the aftermath of having purchased it.

This explains the Company’s practice of shelving differently branded household-products (such as ‘Tide’ and ‘Bonux’ laundry detergents) together – only a few consumers realize the illusionary nature of the ‘choice’ they are being faced with, in this respect. After all, both brands are owned by the same company, which means that essentially the same components have been used for manufacturing these laundry detergents. Because the market of FMCGs in the Gulf leaves only a few chances for the ‘new entrants’ to be able to succeed in gaining a share of it, the proposed strategy indeed makes much sense. Rather than seeking to saturate even further the ‘Caring about home’ market-segment, P&G should strive to solidify and expand its share of it. At the same time, however, the Company may never cease remaining closely observant of the macro-economic situation in the area, to be able to apply adjustments to the proposed strategy, in case the circumstances call for it – just as it was suggested in the paper’s previous sub-chapters.

Critically evaluate the Corporate social initiatives the company pursuing as part of their Sustainability initiatives from Procter and Gamble in the market in the Gulf.

Procter & Gamble Gulf does function in close conjunction with the provisions of CSR, the main of which has to do with the assumption is that by choosing in favor of conducting their operations in the socially responsible (ethical/environmentally friendly) way, companies can contribute towards increasing the rate of these operations’ long-term commercial sustainability. The Company’s range of CSR-activities is indeed rather extensive. For example, ever since it entered the Arabian FMCG market in 1956, P&G continued to position itself as a ‘communally conscious’ commercial enterprise – something that can be illustrated, in regards to the Company’s commitment to participating in different charities.

According to Mahajan: “In 2009… P&G announced that for every pack of Tide White Musk customers purchased during Ramadan, it would donate one garment to a needy family… By the end of Ramadan, P&G and its customers had combined to provide 640,000 garments to needy children” (par. 29). P&G is also known for its commitment towards the cause of protecting the environment: “The Procter & Gamble Company has launched (in 20100 the Supplier Environmental Sustainability Scorecard and rating process, to measure and improve the environmental performance of its key suppliers” (“Procter & Gamble” 10.1). Many of the Company’s TV commercials in the GCC countries do emphasize the fact that P&G conducts its manufacturing activities in an environmentally friendly manner.

Nevertheless, it would be naïve to believe that by presenting itself as a socially responsible company, Procter & Gamble Gulf truly does seek to ensure the long-term sustainability of its operations – just as the concept of CSR presupposes. Rather, the Company acts socially responsible to strengthen its ‘ethically sound’ reputation, which in turn should prove helpful within the context of P&G trying to achieve high sales. That is, the Company’s corporate social initiatives are essentially nothing but part of its PR-strategy – pure and simple. This simply could not be otherwise, because the concept of CSR stands in opposition to the main methodological principles, behind the functioning of a free-market economy. Given the fact that the main purpose of just about any commercial organization is to generate profits, and that it is specifically the short-term commercial objectives that are now being considered the only legitimate ones by most businesses (due to the on-going economic recession), the concept in question appears to be just another neo-liberal myth.

The objective realities of today’s ‘globalized’ living leave only a few doubts that this is indeed being the case: “Social investments are unlikely to pay off in the two to four-year time horizon that public companies, through demands of the stock market, often seem to require… investments in things like the environment or social causes become a luxury” (Doane 25). As of today, the concept of CSR serves mainly the purpose of allowing large businesses to divert people’s attention from the actual issues of substance, within the context of how these businesses operate. In this respect, Procter & Gamble Gulf is no different. At the same time, however, it would be rather inappropriate to refuse to recognize the benefits of the Company’s active stance on social issues in the area – it does contribute to society’s well-being. In the future, Procter & Gamble Gulf is most likely to pursue the same policy of social responsibleness, as yet additional means of increasing the commercial appeal of its products among the consumers that are endowed with much ‘buying power’. This, however, will cease to be the case, as soon as the economies of the Gulf countries enter the phase of recession – a rather likely scenario, given the current geopolitical situation in the world.

Works Cited

Bankhar, Selwa. “Saudi Women in Advertising Agencies in Saudi Arabia and the Gender Roles in the Workplace.” Order No. 1591220 Bowie State University, 2015. Ann Arbor: ProQuest. Web.

Doane, Deborah, and Naomi Abasta-Vilaplana. “The Myth of CSR.” Stanford Social Innovation Review Fall (2005): 22-29. Print.

Laczniak, Gene, and Patrick Murphy. “Stakeholder Theory and Marketing: Moving From a Firm-Centric To a Societal Perspective.” Journal of Public Policy & Marketing 31.2 (2012): 284-292. Print.

Mahajan, Vijay.Understanding the Arab Consumer. 2013. Web.

Neff, Jack. “Change At Procter & Gamble.” Advertising Age 80.15 (2009): 34. Print.

Procter & Gamble Hygiene & Health Care Limited: Consumer Packaged Goods – Company Profile, SWOT & Financial Report. Basingstoke: Progressive Digital Media, 2014. ProQuest. Web.

P&G in the Arabian Peninsula at a Glance. 2015. Web.

Procter & Gamble from its website is a multinational firm that is involved in the production and selling of a wide range of consumer products. The company deals in pharmaceutical supplies, fabric care, and house care supplies, personal care, and pet supplies. The brand I selected for this paper is cleaning and house care supplies. The company has positioned its brand in the market in such a way that it is easily accessible to consumers. The company has been able to prove to have very reliable and high-quality products, which consumers easily identify with.

The products that the company provides are rated cheap compared to its competitors, and they are easily accessible to consumers from any convenience store in the country (DeRoulet, 27). Accessibility of the product in a wide area makes it preferable by the consumers to other products. This is a key aspect that any producer should focus on to maximize their sales. The company has used segmentation and mainly targets women who are mainly viewed as the homemakers for this product. The company uses marketing techniques that mainly target women and thus increasing the company’s market share.

The company has used the brand effectively to build a relationship with its consumers. This is because the consumers already identify the company and its Procter. the producers gamble brands with quality and reliable products that the customers or consumers consider as a good bargain when they are purchasing them (Graeme, 126). The company in all its products and the brand has been able to create the right psychological mood for any products by the company. This is because the company has been at the forefront of manufacturing innovative products for the market. The products have always met the end user’s expectations, and thus the company has been able to build a strong brand for itself. Therefore, the company’s brand has positioned its brand umbrella in a very advantageous position that will highly support the adoption of any new products into the market.

At home, I use a number of the company’s products, which include:

• Ariel
• Oral-B
• Pampers

Therefore, to increase the marketing and segment me as a consumer the most important thing to a marketer is being able to maximize the reach of the advertisement. By maximizing the reach of the advertisement, the advertiser can appeal to a greater audience. By only concentrating on the frequency of the advertisement then the advertiser will not attain the targeted audience for the advertisement. Maximizing reach for an advertisement campaign will ensure that the company can reach a greater audience at a cheaper cost (Adaval, 9). On the other hand, maximizing the reach of an advertising campaign ensures that the advertiser reaches his or her target audience.

The advertiser by maximizing reach will have created a strong brand for itself and will impose a strong identification of its products such that consumers and the public. The company has been able to create an image, a set of consumer expectations also an apple logo that is easily identifiable by consumers. The company has been able to separate itself from all its competition and has set itself apart in an effort to attract consumers. The consumers easily pick their products over products from other companies that are competing for an equal market share.

Works Cited

Adaval, Richard. How Good Gets Better and Bad Gets Worse: Understanding the Impact of Affect on Evaluations of Known Brands. The Journal of Consumer Research. 2003, 30(3).

DeRoulet, David. Designing – and Sustaining the Gains from – a Service Strategy. Journal of Business Strategy, 14(1), 1993, pp.21 – 30.

Graeme, Melvin. Branding and people management: what’s in a name? New York, NY: CIPD.

The article under consideration is written by Huston and Sakkab (2006). It dwells upon the application of a new model for innovation by one of the largest companies in the world Procter & Gamble. The model is called connect and develop (C&D).

The authors compare the new model with the model largely used in 1980s ‘research and develop’ (R&D). The R&D model is proved to be less effective in the contemporary business environment (Huston & Sakkab, 2006). The authors comment upon the peculiarities of the new model and provide some advice for the implementation of the new C&D model.

Huston and Sakkab (2006) point out that Procter & Gamble first used the new model in 2002. The first product to be developed was a “line of Pringles potato crisps” which was launched in 2004 (Huston & Sakkab, 2006, p.58). The company decided to find the necessary solutions outsides the company. The experience was very successful.

Therefore, A.G. Lafley, CEO, decided to change the R&D model into more appropriate and effective model for innovation. The authors state that the use of the new model led to the increase of innovation success rate whereas costs of innovation fell. Apart from providing good examples of the effectiveness of the new model, the authors give some advice.

For instance, they note that it is important to determine the area of innovations. The company should determine the categories of products to be developed. When the categories are determined, it is possible to find institutions and individuals to collaborate with.

The authors provide an effective pattern to determine areas of innovation: researching top 10 consumers’ needs, defining adjacencies and technology game boards. The authors also comment upon possible networks to use.

Procter & Gamble use propriety networks (technology entrepreneurs and suppliers) or open networks specially designed for C&D model (NineSigma, InnoCentive, YourEncore, Yet2.com).

Huston & Sakkab (2006) also comment upon the most appropriate time to use this model. Finally, the authors emphasize the rapid change of business environment which requires the use of the new model for innovation.

Key points

The article under analysis provides a detailed description of the use of the new model for innovation, C&D model. The authors share a valuable experience of one of the largest companies in the world. It goes without saying that such a detailed and exemplary illustration of the model’s effectiveness can be very helpful for many other companies.

The authors justify the effectiveness of the new model for innovation. They state that there are far too many resources outside companies, so it is but natural that companies can use those resources. However, they point out that it is impossible to create new products using the new model only as it can lead to failure.

This is a very valuable tip for companies which are trying to adapt in the modern business environment. More so, Huston & Sakkab (2006) stress that ideas taken from outside have been still analyzed by researchers in the labs of Procter & Gamble.

The authors provide particular examples when ideas were taken outside, but they were checked and developed by researchers of Procter & Gamble. It is important to note that the authors comment upon each stage of the process of creating new products. Huston & Sakkab (2006) outline helpful strategies of developing new products.

For instance, many companies fail to implement the new model as they fail to choose the right ideas and develop new products. The authors note that it is essential to choose products which will meet top ten consumers’ needs and will ‘support’ existing products. The authors also name precise networks used by Procter & Gamble.

Of course, the same networks can be used by many other people interested in suggesting or acquiring various ideas. Finally, the authors highlight certain threats.

The authors point out that it is crucial not to overestimate external sources or underestimate internal resources as ideas found outside usually need further development. Basically, the authors draw a successful pattern of the use of C&D model illustrating all their arguments with particular examples.

Follow-on research

The new model for innovation has been discussed for at least two decades by researchers. Huston & Sakkab (2006) focus on the experience of Procter & Gamble whereas Huizingh (2010) and Li & Kozhikode (2009) deal with some other examples concentrating on more theoretical points. Thus, Huizingh (2010) dwells upon the essence of the notion.

The author provides an analysis of the major peculiarities of the model. Interestingly, Huizingh (2010) states that there will be no such a term ‘open innovation’ (or Connect & Develop model) soon as the model will be used by all companies. In other words, it will become a norm.

Nonetheless, the author also stresses that although many companies used the model effectively, the further study is necessary as there are many essential phenomena to be identified. Huizingh (2010) points out that profound quantitative and qualitative research should be implemented. Li and Kozhikode (2009) also note that further study is necessary.

The authors also mention several successful examples of the model implementation, but they stress that companies should be prepared to face certain threats as the strategies used by multinationals cannot be always used by smaller companies.

It is important to note that Li and Kozhikode (2009) concentrate on Asian companies (and individuals) which are regarded as the main sources of outside ideas for Western companies. The researchers suggest that smaller companies should work out their own strategies using the successful experience of other companies (both multinationals and smaller companies).

Li and Kzhikode (2009) focus on the implementation of the new model by multinational companies and smaller enterprises. The researchers point out threats which can both multinationals and smaller companies face. It is necessary to point out that both articles provide several successful examples of the use of the open innovation model.

Applications

The article under consideration provides new insights into the process of new products development. The article depicts a successful model of new products creation. This model can be useful for many companies. The detailed analysis of the C&D model provided can help companies develop their own strategies. More so, companies or even individuals can make use of the mentioned networks.

Huston & Sakkab (2006) also depict certain threats. For instance, the authors point out that companies should not underestimate internal resources. This is a very important observation which can be helpful for many companies. Admittedly, lots of companies fail to launch new products as they misuse successful strategies used by others.

The authors comment upon every stage of the new products development using the C&D model (providing helpful tips). Following that pattern companies will be able to work out their own successful strategies. The article under consideration can help companies to adapt and succeed in the contemporary rapidly changing business environment.

Reference List

Huizingh, E.K.R.E. (2010). Open innovation: State of the Art and Future Perspectives. Technovation, 31(1), 2-9.

Huston, L. & Sakkab, N. (2006) Connect and Develop: Inside Procter & Gamble’s New Model for Innovation. Harvard Business Review, 84(3), 58-66.

Li, J., & Kozhikode, R.K. (2009). Developing New Innovation Models: Shifts in the Innovation Landscapes in Emerging Economies and Implications for Global R&D Management. Journal of International Management, 15(3), 328-339.

Procter and Gamble is a multinational company that was started in the mid-1800s in Cincinnati by two brothers. One of them was a candle maker, and the other was a soap maker. The founders’ idea of the business was born when they were given an opportunity to supply soap to the army. The company grew from a small plant to a successful business empire; however, in order to sustain its profitability and retain employees, the two owners began a profit-sharing program whereby they sold part of their shares to their employees. Expansion of the company started in 1947 when it began to increase its brand presence in major markets through product differentiation.

Generally, the purpose of P&G is to provide high-quality products that contribute to the value-addition and sustainable satisfaction of all consumers, with special attention to their health. The mission of the company is the improvement of life by producing food that mainly helps people improve their health, thus providing value and quality.

The success of P&G can be attributed to its corporate structure, which consists of an organizational structure and branding structure. The organization uses its brand against its competitors. Its strong brand has not only helped P&G to establish an identity in the marketplace, but has also made it one of the leading producers of goods (Dyer, Dalzell, & ‎Olegario, 2009). P&G embraces an organizational structure associated with hierarchy, lines of communication and reporting responsibilities; this type of structure is in regards to centralization and decentralization in terms of geography

In P&G, the staffing policy is ethnocentric; this means that people of the parent country fill all key positions in the company. In 2011, the company structure was divided into business segments, varying from beauty products to home care. P&G also uses the strategy of employing fresh graduates from college (Kandola, 2001). The company places the recruited persons and gives them responsibilities in their respective regions or countries in order to allow them to assimilate into the company. As a choice, the company will offer growth in terms of its expansive products. The fact that it has business segments under its global units provides a range of products for brand expansion.

In my career line, P&G provides an opportunity to enhance knowledge in production due to its commitment to capacity building. Another part is the extensive training programs offered during employment in order to enhance career growth and development; this involves both on-the-job and off-the-job training programs (Cherunilam, 2009).

In regards to career enhancement, the fact of being employed by P&G Company will provide a better understanding of different international laws in regards to labour. The learning environment will extensively add to my knowledge in relation to diversity based on culture (Stormei, 2001). Moreover, it will provide a chance to learn more about different leadership cultures or styles established in company outlets or plants across the world. P&G is highly ranked among multinational corporations in the world, and it stretches its products to almost every corner of the global market. This penetration has been influenced by the company’s strong policy on corporate social responsibilities mostly touching on children’s health, thus boosting its sales greatly; this provides an illustration of how a business can become successful by providing solutions to social problems.

As an individual working for such a company, I will enhance my knowledge and critical social skills that are needed to sharpen my career, as the organization recognizes my skills in entrepreneurial knowledge, which is beneficial to my career. In assessing the company’s profile, I have established that it has managed to merge with different companies, thus improving product development and international markets penetration (Shaw, Newholm & Dickinson, 2006). This has greatly influenced my choice, as the company provides an opportunity to fully sustain my endeavours, including putting my knowledge and skills to proper use and providing a platform for growth. Unlike most companies, Procter and Gamble promote within the company.

In conclusion, P&G has evolved to become one of the most successful producers of goods, with a positive influence on the health of consumers. Reaching this has made the company’s products very attractive in the market. Its sound human resources policy has enhanced P&G’s global ranking as one of the most admired workplaces providing maximum employee satisfaction. Achieving this type of recognition for any international company elevates it to a high echelon of productivity, growth, and net worth. It would truly be an honour to have the chance to work in such a company.

Reference List

Cherunilam, F 2009, International Business: Text and Cases, PHI Learning Pvt. Ltd, New Delhi.

Dyer, D, Dalzell, F & ‎Olegario, R 2009, Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble, Havard Business Press, MA.

Kandola, R S 2001, The Graduate recruitment manual, Gower Publishing, Ltd, Hampshire.

Shaw, D, Newholm, T & Dickinson, R 2006, Consumption as voting: an exploration of consumer empowerment, European journals of marketing, vol. 40, no. 9, pp.1049–1067.

Stormei, LK 2001, Creating Mentoring and Coaching Programs: Twelve Case Studies from the Real World of Training, American Society for Training and Development, Alexandria, VA.

Any company must devise a pricing strategy and change it over time in order to be competitive and make a profit. Thanks to successful pricing policy, P&G holds a leading position in many market segments. The purpose of this essay is to consider Procter & Gamble’s pricing strategies after the Great Recession of 2007-2009 and explain why the company had different pricing strategies in 2009 and 2010.

Procter and Gamble Co. (P&G) has managed to occupy all the niches of the consumer market due to the high diversification of the business; in fact, the company does not have a specialized market, and accordingly, it does not depend on market conditions. The use of different pricing strategies and a successful marketing campaign saved P&G from significant losses in the period of the Great Recession when consumer demand deteriorated sharply because of the difficult economic situation. As part of the anti-crisis strategy, in 2009, the corporation had to raise product prices to keep profits from falling. According to Byron (2009), it resulted in a 7% sales decrease in total sales of the company. Moreover, in the third quarter of 2009, the net income of the corporation was 3.6% lower than a year ago at the same time (Byron, 2009). First of all, people bought fewer products because the price went up. The availability of substitutes also affected demand elasticity of the company’s products – people could replace P&G’s products by goods of other companies offering the same categories of products at a lower price. Accordingly, demand was elastic because the quantity was sensitive to a change in the price of the P&G’s products.

In 2010, the company decided to change its pricing policy in order to be competitive on the market. The company lowered prices for most of its products, increased sales, and paid increased attention to its advertising campaign. It was done to regain market share lost after the 2009 price campaign. The owner of the brand hoped to stop the outflow of customers. As a result, the strategy of price reduction allowed to increase sales growth by 7% compared to last year (Byron, 2010). In this case, demand was also elastic because a change in price impacted the quantity that happened because of availability of substitute goods and reduction of the cost.

References

Byron E. (2009). P&G, Colgate hits by consumer thrift- household products makers see sales weakening, raise prices to keep quarterly profits from plunging. Wall Street Journal. Web.

Byron E. (2010). P&G puts up its dukes over pricing-consumer-products makers risk margins to grab market share from rivals and cheap store brands. Wall Street Journal. Web.

Introduction

Procter & Gamble [P&G] is a public limited company that was established in 1837 in Cincinnati, Ohio, US. The firm operates in the consumer goods industry and has managed to venture into the global market. The firm operates five main segments, which include Family Care and Baby Care, Health Care, Grooming, Beauty, Home Care and Fabric Care.

The firm has over 121,000 employees (P&G 2013). In the course of its operation, P&G has managed to develop a strong market position both in the local and the international market. The firm’s success can be explained by the effective management and marketing practices that have been integrated. Moreover, the firm has adopted optimal business models, which ensure that its products are aligned with the prevailing customer needs and wants. Consequently, its products have gained substantial market acceptability (P&G 2013).

Vision and mission statement

P&G intends to position itself as the global leader with regard to consumer products and services. Moreover, the firm is committed towards providing customers with high quality products and services.

Values and principles

The firm has adopted a number of values and principle. Some of its core values and principles include trust, leadership and integrity.

Objectives

P&G is focused towards achieving the following objectives

1. To develop a strong customer base and ensure that its brands achieve market leadership.
2. To transform its existing businesses into market leaders.
3. To regain market leadership and growth momentum in Western Europe region.

In addition to meeting the customers’ needs, P&G is focused towards delivering high value to shareholders’ by maximising their wealth. Over the 175 years it has been in existence, P&G has managed to survive challenging economic situations such as economic downturns and other changes emanating from the external and internal business environments.

The firm cannot rule out the likelihood of such occurrences in the future considering the fact that it does not operate in isolation. Consequently, the firm may experience challenges in its quest to achieve the aforementioned objectives.

Aim

This report is aimed at conducting a comprehensive situational analysis of P&G. This is achieved by evaluating the challenges that the firm faces and the strategies that the management team should integrate in order to enhance the firm’s competitiveness and future success. The report mainly focuses on the strategies that the firm can adopt in order to develop a high competitive advantage.

Situational analysis

Businesses operate in an environment that is characterised by a high rate of dynamism. One of the elements that characterise the modern business environment is hyper-competition. Lancaster (2005) is of the opinion that it imperative for firms’ management teams to continuously monitor the external business environment in order to adjust their firms’ competitive strategies.

Ferrell & Hartline (2013) are of the opinion that “a thorough situation analysis empowers the marketing manager because it encourages both analysis and synthesis of information” (p.56). Firms do have control of the external business environment. Therefore, failure to understand the external business environment may adversely affect the organisations’ competitiveness.

To understand the external business environment, it is imperative for P&G’s management team to take into account the cultural, economic, social, political, legal and demographic variables. This can be achieved by integrating the PESTLE and the SWOT models as illustrated below (Hiebing & Cooper 2004).

PESTLE Analysis

SWOT and TOWs matrix

Core competencies

According Boone (Kurtz & Boone 2013), core competencies are critical in an organisation’s marketing practises because they enable an organisation to optimally position itself. P &G’s success is based on a number of core competencies, which include.

Source: (P&G 2013)

Porters’ five forces

According Stonehouse and Snowdon (2007), the five forces model enables a firm’s management team to determine the attractiveness of a particular market and hence the potential of attaining its desired level of profitability. The degree of industry attractiveness varies from one industry to another.

The Porter’s model is comprised of five main dimensions, which include the threat of new entrant, buyer and seller bargaining power, degree of rivalry and threat of substitute. Below is an analysis of the Porter’s five forces with specific reference to P&G Group.

Degree of rivalry-High

The firm operates in an environment that is characterised by a high degree of rivalry (P&G 2013). Yannapoulos (2011) is of the opinion that “competition forces companies to constantly engage in offensive and defensive marketing strategies” (p.1).

The rivalry emanates from the regional, local and global firms that have established operations in the industry. P&G competes against organisations that deal with private labels and branded products. The firm’s main competitors include Colgate-Palmolive, Revlon, Kimberly-Clark Johnson & Johnson and Unilever.

The large number of competitors gives consumers a wide range of options to select from (Drummond & Ensor 2009). Consumers select products on the basis of their price, quality, and the strength of the brand amongst other factors. P&G Group is experiencing an increment in competition emanating from non-branded products, which are sold at a lower price. Thus, low-income consumers can afford diverse health and wellness products (Rehtmeyer 2010).

Threat of new entrants-moderate

According to Rehtmeyer (2010), the consumer goods industry is characterised by a low threat of entry. New entrants do not have the capability to rival big and well established entities such as P&G, which are adequately capitalised.

Another factor that acts as a barrier to entry relates to the high cost of research and development that the firms are required to undertake (Rehtmeyer 2010). New entrants must ensure that their products are effectively differentiated. The industry is in its mature stage thus making it less attractive to new entrants (Doole & Lowe 2012).

Threat of substitute-Low to moderate

The consumer goods industry is characterised by a low threat of substitute products. According to Rehtmeyer (2010), most firms in the industry deal with necessities, which do not have perfect substitutes.

Supplier bargaining power- low

P&G derives its competitiveness from partnerships and joint venture. Consequently, the firm is able to invest in research and development (Rehtmeyer 2010). Moreover, the firm has the capacity to control its suppliers because of its large size. Consequently, the firm sets standards, which suppliers are required to adhere to in the course of supplying the raw materials (Serena 2013).

Buyer bargaining power-moderate

P&G mainly depend on Wal-Mart and other business affiliates in its quest to generate revenue. It is estimated that 15% of the firm’s sales originate from Wal-Mart. Organisational consumers such as Wal-Mart have a relatively low buyer bargaining power compared individual consumers who have the option of selecting competing products. Therefore, the industry’s has a moderate buyer bargaining power.

Source: (Rehtmeyer 2010)

Market commoditisation and innovation

According to Ferrell and Hartline (2013), the consumer goods industry is increasingly becoming commoditised. Most of the products offered by competing firms are similar.

For example, the products have similar features and they have minimal price differences. Ferrell and Hartline (2013) postulates that “commoditisation is a consequence of mature industries where slowing innovation, extensive product assortment, excess supply and frugal consumers force margins to the floor” (p.2).

According to the company’s Chief Executive Officer, Mr. Lafley, it is imperative for the firm to review its product differentiation strategy. This will ensure that the firm’s products remain unique and relevant to the consumers (Jopson 2013).

Commoditisation of an industry presents a major challenge to industry players. This arises from the fact that the competing firms have to ensure that they adopt effective differentiation strategies in order to be competitive.

The consumer goods industry in the US is experiencing a high rate of commoditisation as a result of its lucrative nature, which is increasing the intensity of competition. More firms are venturing into the industry in an effort to exploit the industry’s profitability. Consequently, it has become difficult for firm’s such as P&G to successfully differential itself (Pulendran, Speed & Widing 2002).

In order to survive in such an industry, it is imperative for industry players such as P&G to formulate strategies that will attract and retain customers. This calls for organisations to be innovative. One of the ways through which the firms can achieve this is by investing in value-added strategies.

The firm’s management team should conduct a comprehensive consumer market research in order to determine what the consumers’ needs and wants. Secondly, the firm’s research and development department should be adequately innovative in order to develop products that are customised.

Such a strategy will improve the effectiveness and efficiency with which the firm addresses the customers’ value. Such an analysis will enable P&G respond to the consumers’ unarticulated needs hence improving their level of loyalty.

Customising its products will also enhance the firm’s capacity to survive in a market that is mature. Alternatively, P&G can also consider integrating the concept of targeted extension, which entails adding value to the firm’s core products and marketing them to specific market segments in order to meet the desired market needs (Wierenga 2008).

Developing competitive advantage

In order to remain competitive, it is imperative for P &G Group to consider improving its competitive advantage. According to Davidson and Keegan (2004) “competitive advantage is achieved whenever your company does something better than competitors” (p. 167). Thus, it is fundamental for P&G to develop it competitive advantage in order to survive in the long term. P&G can develop its competitiveness by adopting the strategies proposed by the Ansoff Matrix. The advantages of these strategies are discussed herein.

Market development

P&G should consider investing in market development strategies. According to McDonald, Brian & Ward (2007), market development strategies entail marketing existing products to new markets. This entails identifying a new customer group to whom a firm markets its product to. P&G mainly markets its products to female consumers. However, it is imperative for the firm’s management team to consider marketing its products to men. Moreover, the firm can achieve market development by identifying potential markets that it can enter.

To achieve this, P&G should focus on entering the emerging and developing markets. Consequently, the firm should abolish its centralised operational strategy (Jopson 2013). Some of the markets that the firm should consider include Brazil, China, Russia and India. Prior to entering new markets, P&G should conduct a comprehensive market research in order to determine the prevailing market potential.

According to Jopson (2013), consumers in the developing economies are increasing consumption of household and personal consumer products despite the poor economic performance. P&G should also ensure that it develops a comprehensive understanding of the target markets’ culture, and consumption behaviour. This will improve the likelihood of its products gaining sufficient market penetration.

Product diversification

Currently, P&G specialises in five main market segments, which include Family Care and Baby Care, Health Care, Grooming, Beauty, Home Care and Fabric Care. It is essential for the firm’s management team to consider diversifying its product portfolio. This will improve the likelihood of the firm attracting a new customer group.

In its product diversification strategy, P&G should focus on Fast-Moving-Consumer Goods [FMCG]. This will minimise the need of the firm to develop new capabilities and resources.

Currently, the firm specialises in producing high-end products. To increase its customer base, it is imperative for the firm’s management team to consider targeting low-income consumers. This will enable the firm increase its sales revenue. Furthermore, product diversification will caution the firm against macro-environmental changes hence enhancing its financial sustainability.

Product development

Firms in the consumer goods industry are experiencing a challenge arising from change in consumer behaviour. The consumers’ product tastes and preferences are changing at an alarming rate.

According to Wright (2006), firms that specialise in production of consumer goods are experiencing an increment in pressure to ensure that their products are innovative and are aligned to their needs and wants. Wright (2006) further opines that “failure to address the consumers’ needs and wants may lead to loss of sales and to a complete demise of an organisation” (p.14).

To survive in such an environment, it is imperative for the firms’ management team to increase its investment in research and development. The research and development will enable P&G to undertake continuous and new product development. In its product development efforts, the firm should consider enhancing the content of its products.

Furthermore, P&G should improve its product packaging. According to Wright (2006), product packaging plays a critical role in enhancing the attractiveness of a product, which is a quintessential element in an organisation’s effort to build its brand. Investment in new and continuous product innovation will contribute towards improvement in the firm’s ability to attract and retain customers.

According to Jopson (2013), it is important for the firm to ensure that the new products are successfully launched in the market. Previously, P&G has experienced botched product launches, for example the Pamper Dry Max. Furthermore, the firm experienced a challenge in its quest to launch the Tide Pods laundry (Jopson 2013).

Market penetration

McDonald, Brian & Ward (2007) posit that market penetration entails marketing an existing product or service to an existing market. One of the strategies that the firm can adopt in its quest to achieve sufficient market penetration entails targeting the competitors’ customers. Adopting market penetration strategies will contribute towards improvement in the firm’s market share.

Despite these benefits, there are a number of challenges associated with market penetration. First, targeting the competitors’ customers will increase the degree of rivalry between P&G and its competitors, which might culminate in price wars hence leading to a decline in the industry’s profitability.

Conclusion and recommendations

The report shows P&G operates in an environment that is very dynamic. Despite the challenges faced, P&G has managed to survive the transformations emanating from the external business environment. One of the challenges faced by the firm relates to increment in the intensity of competition.

Some of its main competitors include Kimberly-Clark, Colgate Palmolive and Johnson & Johnson. Most of the industry players have adopted aggressive operational and competitive strategies such as continuous product improvement and new product development in an effort to meet the consumers’ needs.

Consequently, the industry has become commoditised. Moreover, the industry’s transformation also emanates from the change in consumer behaviour. To survive in such an industry, it is essential for P&G’s management team adopt effective growth strategies. Some of the strategies that the firm should consider are outlined below.

1. The firm should consider expanding its market by venturing into the developing and emerging markets. Some of the markets that the firm should focus include Russia, Brazil, India and China. Market expansion will enable the firm maximise its sales revenue. Moreover, the firm will be able to achieve economies of scale.
2. P&G should also consider integrating the concept of product diversification. However, the firm should focus on fast-moving consumer goods in order to successfully exploit its capabilities and core competences. This strategy will enable P&G to attract new customer groups.
3. It is also important for the firm to consider developing products and services that are aligned with the consumers’ needs and wants. The firm can achieve this by conducting a comprehensive consumer market research. As a result, the firm will be able to deliver high value to consumers. Moreover, P&G will be able to differentiate its products.

Reference List

Bohlen, B., Carlotti, S. & Mihas, L. 2010, How the recession has changed US consumer behaviour. Web.

CISCO: Intelligent innovation in the consumer packaged goods industry; faster, cheaper, local 2012. Web.

Cooper, L. 2000, ‘Strategic marketing planning for radically new products’, Journal of Marketing, vol. 64 no.1, pp. 1-16.

Davidson, H. & Keegan, W. 2004, Offensive marketing; an action guide to gaining competitive advantage, Routledge, New York.

Doole, I. & Lowe, R. 2012, CIM coursebook 08/09; strategic marketing decision, Routledge, New York.

Drummond, G. & Ensor, J. 2009, Introduction to marketing concepts, Routledge, New York.

Ferrell, O. & Hartline, M. 2013, Marketing strategy; text and cases, Cengage, Mason, Ohio.

Hiebing, R. & Cooper, S. 2004, The one day marketing plan; organising and completing a plan that works, McGraw-Hill, New York.

Hattingh, D., Russo, B., Basorun, A. & Wamelen, A. 2012. Web.

Jopson, B. 2013, Procter and Gamble; time to freshen up. Web.

Kurtz, D. & Boone, L. 2013, Boone and Kurtz contemporary marketing, Cengage, Mason, Ohio.

Lancaster, G 2005, Management of marketing, Routledge, New York.

McDonald, M., Smith, B. & Ward, K. 2007, Marketing due diligence; reconnecting strategy to share price, Butterworth, Boston.

P&G: Core strengths 2013. Web.

P&G: Pampers and UNICEF; working together for healthy babies 2013. Web.

P&G: Supplier engagement 2013. Web.

Pulendran, S., Speed, R. & Widing, R. 2002, ‘Marketing planning, market orientation and business performance’, European Journal of Marketing, vol. 37 no. 3, pp. 476-497.

Rehtmeyer, J. 2010, The Procter and Gamble company, M.J Neeley School of Business, New York.

Serena, N. 2013, P&G, big companies pinch suppliers on payments. Web.

Stonehouse, G. & Snowdon, B. 2007, ‘Competitive advantage revisited’, Journal of Management Inquiry, vol. 16, pp. 256-275.

Wierenga, B. 2008, Handbook of marketing models, RSM Erasmus University, Rotterdam.

Wright, R. 2006, Consumer behaviour, Cengage Learning, New York.

Yannopoulos, P. 2011, ‘Defensive and offensive strategies for market success’, International Journal of Business and Social Science, vol. 2, no. 13, pp. 1-12.