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Procter & Gamble Strategic Analysis


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Procter & Gamble Strategic Analysis

  1. 1. Steven PerdochMatthew Dymit Carrie LoeraDan McGowanElana Muradova Strategic Management, Spring 2012
  2. 2. History Founded in 1837 William Procter and James Gamble Incorporated in Ohio on May 5, 1905
  3. 3. In the beginning… Proctor and Gamble came to be by manufacturing soap and candles. After the invention of the electric light bulb, the demand for candles fell significantly, thus causing the newly formed P&G to cease their production. During the Civil War, the government began to order mass quantities of soap from P&G for the Soldiers’ use—this significantly led to P&G’s return to the market and their second chance at rising in the business world.
  4. 4. Organizational Structure
  5. 5. Acquisition Summary Between 1905 (Incorporated) – 2010, P&G invested in 34 acquisitions Periods of frequent acquisitions occur in the 1930’s, 50’s, 80’s and 90’s. Some of the larger acquisitions include: – Charmin, Clorox, Crush, Revlon, and Gillette
  6. 6. P&G Today Products sold in > 180 Countries On the ground operations in 80 countries Organized into 2 Global Business Units (GBU’s) Health Care Fabric and & Home Care Beauty & Household Baby and Grooming Grooming Care Family Care Beauty Snacks and Pet Care
  7. 7. P&G: Who we are.
  8. 8. Health Care Segment includes products in oral care, feminine care, respiratory, toothpaste, OTC drugs and other personal care categories
  9. 9. Health Care - Overview 14% of Net Sales in 2011 Products sold in drug stores supermarkets, and mass merchandisers Mature market Name Brand & Private Label competitors
  10. 10. Health Care – Core Competencies Strong, Dependable, High Quality Products – Strict internal standards and guidelines to comply with FDA – Most recent recall was early 2010 - Vicks – Vicks 4-Hour Nasal Spray (wrong expiration date) Health Care Research Center – Promote innovation and bring new products to the market quicker
  11. 11. PGT Healthcare
  12. 12. Threats Intense competition – Private labels are much cheaper Top Cough Syrup Makers - Market Share Company % - 2010 % - 2011 % Change Wyeth Labs, Inc. (Pfizer) 25.17 25.87 0.7 Reckitt Benckiser 26.82 24.23 -2.59 Private label 24.78 22.17 -2.61 Procter and Gamble Co. 13.59 19 5.41 Other 3 3.31 0.31 Novartis Consumer Health 2.61 3.02 0.41 Blacksmith Brands 0.65 1.12 0.47 Health Care Products 1.36 0.73 -0.63 Boiron-Borneman 1.13 0.55 -0.58 Qualitest Products 0.9 0 -0.9
  13. 13. Baby Care and Family Care• Segment includes diapers, baby wipes, paper towels, and toilet paper
  14. 14. Baby Care & Family Care Key Info.• 19 % Of Net Sales• Products sold in supermarkets, convenience stores, hotels,motels,and other industries• Baby Care and Family Care competitors
  15. 15. Beauty Segment This segment includes cosmetics, fragrances, hair care, and skin care products
  16. 16. Beauty Segment Beauty accounts for approximately 34% of P&G’s product portfolio. 24% of Net Sales & Net Earnings – Head & Shoulders, Olay, and Pantene are some of the biggest brands within this segment.
  17. 17. P&G Beauty in The Marketplace P&G’s beauty products are highly recognizable; brand differentiation is a strength. Product availably is great; products are sold at practically all domestic retailer chain and drug stores. Proctor & Gamble is associated with tried and true, trusted products.
  18. 18. Beauty SegmentCompetition and Growth Competitors – Unilever – L’Oreal – Private Labels 3% Net sales growth from 2010 – 24% of P&G’s Net Sales are from the Beauty segment
  19. 19. Threats to Beauty Segment Greatest threat to P&G’s Beauty Segment is the Threat of Rivalry – Unilever, L’Oreal, Private Labels Mature Market Threat of Buyers and/or Suppliers? – Relatively low, due to the working relationship between both categories and the trust created in order to maximize that relationship.  Suppliers are even involved in P&G’s creative process in developing new products.
  20. 20. Fabric and Homecare Segment contains products including laundry cleaning products and fabric conditioners; home care products, including dishwashing liquids and detergents, surface cleaners and air fresheners; and batteries Fabric care dominates the market with over 30% of the global market share Global home care market share is over 15% across the categories in which we compete
  21. 21. Fabric and Homecare (Cont.) Proctor and Gambles largest, and most profitable division - 30% of net sales Has been increasing steadily - 6% in 2011 Mature Market Market made up of Brand name and Generic brands
  22. 22. Snack and Pet Care This segment includes food products and pet food products Smallest segment
  23. 23. Snack and Pet Care Overview Least profitable P&G business segment 4% of P&G’s net sales in 2011 Pringles was the only existing snack brand* Pringles owned 3% of US Snack Food Production Industy’s market share Utilizes Eukanoba and Iams to appeal to all types of pet owners
  24. 24. Threats Lack of presence in the industries Mature market Fierce competition Extension would require major investment into creating new products and brands Competition has more industry-focused product lines
  25. 25. Recommendations
  26. 26. Disinvest/Sell off Snack & Pet CareBusiness Segment Least profitable business segment (4% net sales ’11) Pringles sold for $2.7 Billion Iams and Eukanoba (value?) Increased focus on profitable business segments Increased opportunity to innovate in successful segments
  27. 27. Growth in Developing Markets Company-wide initiative: Acquire 1 billion additional consumers by 2014/2015 P&G Sales Growth: 2000 to 2012 90% 80% 80% 77% Developed % of Total Company Sales 70% 63% Developing 60% 50% 40% 37% 30% 23% 20% 20% 10% 0% FY 00 FY 05 FY 12
  28. 28. Demographic/SocioeconomicTrends Population is forecasted to grow 700 million people by 2020 (Think of all those diapers?) 95% of this growth will come from developing markets Wealth and Per Capita income increasing Plan of attack? – Expand geographically and fill in the ―White Space‖
  29. 29. Improve Productivity in All Areas Cost of Goods – Reduce RM costs  Long-term contracts  Increase # of Suppliers? – Reduce excess inventory – Develop partnerships (PGT Healthcare) Research & Development ~ $2 billion annually – Continuous improvement – Product Innovation
  30. 30. Open Innovate Connect + Develop Continue to nurture the Open Innovate: Connect + Develop method of research and development. What is OIC+D?
  31. 31. Connect + Develop“Today, open innovation at P&G works both ways — inbound and outbound — andencompasses everything from trademarks to packaging, marketing models toengineering, and business services to design. Its so much more than technology.”-Bruce Brown, CTO
  32. 32. Why is OIC+D Important? Collaboration Ultra-fast product-to-market delivery
  33. 33. Marketing Opportunities Proctor and Gamble wants to cut $10 Billion in expenses In 2010 P&G spent $2.2 million on Television advertising While many of its advertising campaigns boost sales is it too much? Focus on digital marketing & social media and spend more efficiently
  34. 34. Top 10 Advertisers in 2010
  35. 35. Thank you… Any Questions?