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SWOT ANALYSIS of PROCTER & GAMBLE (P&G) cheshnotes

P&G

SWOT ANALYSIS of PROCTER & GAMBLE (P&G)

 INTRODUCTION:-

Procter & Gamble is  a number one shopper items model of the world with a big  and international gross sales and distribution community. Aside from its giant portfolio that caters to the wants of numerous buyer segments, it has targeted on creating a definite picture and maintained a robust market presence. Whereas the buyer items business is seeing intense competitors, concentrate on innovation has develop into all of the extra important for shopper items manufacturers like P&G to retain excessive working and internet revenue margins. P&G spends a big sum annually on advertising and promotions to retain its market share and buyer base. Being a globally common model, its major power lies in its model fairness. Nevertheless, nonetheless it focuses on innovation for greater operational effectivity, efficient advertising in addition to for steady product enhancements. Within the current years, it lowered its variety of manufacturers to focus solely on ten product classes and 65 manufacturers which have been probably the most worthwhile. The U.S. financial system is performing nicely and shopper spending has gone up. In such a state of affairs, P&G is considering of elevating costs on a few of its key merchandise. US  market accounts for a bigger a part of the whole gross sales and income of the corporate.

Learn extra about P&G (Procter & Gamble) and its key Strengths and Weaknesses on this SWOT evaluation :-

Strengths:-

  • Model picture:-

  • Model picture is among the many most essential strengths of Procter and Gamble. It’s a main international shopper items model with a robust picture. Tens of millions of consumers around the globe belief P&G. A robust picture additionally means greater reputation and higher gross sales. The reason being that the corporate has targeted on product high quality and invests in making steady enhancements to its merchandise and types. 
  • Product portfolio:-

  • Within the current years, P&G has largely restricted its product portfolio to only ten product classes and 65 manufacturers. It has achieved this to handle its product portfolio extra strategically and to derive higher outcomes from its present merchandise. This additionally permits the model to focus upon probably the most worthwhile product classes. The ten product classes embrace child care, material care, household care, female care, hair care, house care, grooming, private well being care, oral care & skincare private care. The material and residential care merchandise  accounted for the very best a part of its internet gross sales in 2018 adopted by child, female and household care merchandise.  Most of the manufacturers in its portfolio are very fashionable and luxuriate in excessive degree gross sales and buyer loyalty the world over.
  • International operations:-

  • P&G is a worldwide model with gross sales and operations across the globe. It is a worldwide model with headquarters in Cincinnati, Ohio. P&G merchandise promote throughout greater than 180 nations and territories. The corporate makes use of a number of channels to succeed in its clients. It sells its merchandise primarily by means of mass merchandisers, e-commerce, grocery shops, membership membership shops, drug shops, department shops, distributors, wholesalers, child shops, specialty magnificence shops, high-frequency shops and pharmacies. Aside from a big and international distribution community, the corporate has manufacturing websites situated in numerous elements of the world. In US, it owns and operates 25 manufacturing websites situated throughout 19 states. All over the world, it owns and operates 85 manufacturing amenities throughout 37 extra nations. It manufactures magnificence merchandise at 24 of those places and grooming  merchandise at 20, well being care at 18, material and residential care at 41 in addition to Child, Female & Household Care at 39. P&G’s principal regional basic workplaces are situated in Switzerland, Panama, Singapore and China. On this means, the corporate has managed a robust international presence.

 

  • Advertising:-

  • The buyer items business has grown extremely aggressive and due to the stiff competitors within the business, each model invests a big sum in advertising annually. P&G makes use of each conventional and trendy channels for promoting and promotions. Aside from print and TV promoting, in addition to internet advertising, the opposite channels that it utilises for promotions embrace its personal web site in addition to e-commerce web sites. The corporate spent 7.1 Billion dollars on promoting in 2018. Aside from demand creation, shopper items manufacturers use advertising for model recall and to drive gross sales and income. Nevertheless, aside from promoting and promotions, additionally they use different advertising instruments like reductions and commerce exhibits.

 

  • Innovation:- 

  • Innovation can also be an important focus at P&G. The corporate aside from product innovation additionally focuses on innovation in different areas for environment friendly operations and advertising. Product innovation can also be a way of making demand in buyer items business. It could possibly assist drive reputation and gross sales excessive. Furthermore, altering market dynamics and shopper preferences additionally require the manufacturers to focus upon innovation.

 

  • Rising on-line presence:-

  • Within the current years, the corporate has seen elevated income from on-line gross sales. E-commerce gross sales of P&G have grown quicker in recent times.  Aside from e-commerce channels for on-line gross sales, the corporate can also be utilizing on-line channels for advertising.

Weaknesses:

  • Greater dependence upon US and Walmart :- 

  • Walmart is the most important buyer of Procter & Gamble. The corporate derives the most important a part of its gross sales from Procter and Gamble. Gross sales to Walmart Inc. and its associates constituted roughly 15% of P&G’s complete gross sales in 2018, 16% in 2017 and 15% in 2016. Nevertheless, this additionally leaves P & G depending on Walmart for a really giant a part of its income. Equally, P&G relies upon upon the US marketplace for a really giant a part of its internet gross sales. Internet gross sales in the USA accounted for 41% of complete internet gross sales of P&G. No different particular person nation exceeded 10% of its complete internet gross sales.

 

  • Stagnant Progress :-

  • P&G isn’t having fun with quick progress within the current years. Progress has stagnated at P&G because of a number of causes. After having reached 74.four Billion dollars in 2014, the corporate has seen its internet gross sales declining within the current years. Income has stored declining until 2017 to succeed in 65.1 Billion dollars in 2017. Then in 2018 its income grew to 66.eight Billion dollars. Nevertheless, during the last 5 years, income of P&G has stored falling, the corporate’s progress has almost stagnated.

 

  • Years of Administration associated issues :-

  • P&G has been dealing with administration associated issues for final a number of years. For years, the corporate has confronted administration turmoil in addition to poor strategic selections. Aside from that unhelpful macroeconomic tendencies and a stronger greenback have additionally develop into an issue for the corporate. A. G. Lafley returned as its CEO after Robert McDonald left amid intense criticism. David S Taylor is the present CEO of P&G. Nevertheless, the corporate continues to be dealing with administration associated points. The outcome has been that regardless of decreasing the dimensions of its product portfolio, the corporate has not been capable of see spectacular progress.

Alternatives:-

– Advertising innovation:-

The buyer items business is seeing intense competitors and every model is extremely specializing in advertising and product high quality for gross sales and income progress. Aside from creating demand, advertising can also be important for shopper items manufacturers for extra causes. They should interact and retain clients. Aside from a robust advertising technique, the corporate must make use of revolutionary advertising methods which assist it emerge from the heavy competitors.

 

– Product innovation :-

P&G is  a number one shopper items model that has targeted on 10 key product classes and simply 65 manufacturers. Nevertheless, a lot of the merchandise it sells have a number of substitutes and the corporate doesn’t take pleasure in any main benefit from differentiation. Lack of differentiation results in larger aggressive strain and low natural progress. Product innovation may help the model differentiate its product choices from these of the rivals. Aside from that it’ll assist the model enhance its merchandise’ high quality and in addition cost higher costs. Underneath the present state of affairs, the place the corporate is dealing with stiff competitors and can’t improve costs, product innovation is the one good choice earlier than it to seek out quicker progress.

 

– Mergers and acquisitions :-

Mergers and acquisitions are additionally an ideal technique of attaining quicker progress for the corporate. It has made a number of acquisitions up to now aside from the newest shopper Well being Unit of German Merck KGaA. Mergers and acquisitions don’t simply assist it develop its product line and increase its shopper base but in addition permit it to diversify into new segments and differentiate its product line from its rivals.

 

– Rural & rising markets :-

The agricultural and rising markets additionally supply vital alternatives of progress for Procter & Gamble. There’s a giant buyer base for the buyer items merchandise within the rural markets. Within the Asian nations with rising modernisation and development of Info Know-how, there’s a bigger buyer base for shopper items manufacturers of their rural markets. There are a number of rising economies which additionally supply engaging potential for gross sales progress.

Threats:-

– Aggressive pressures :-

Rising aggressive strain is a serious menace earlier than the buyer items manufacturers. Aside from Unilever, there are different smaller manufacturers tat are additionally including to the aggressive pressures.  A number of native manufacturers within the Asian and different markets are additionally competing with P & G for market share and gross sales. Rising aggressive strain has led to larger advertising in addition to R&D prices. The strain associated to product and advertising innovation can also be larger on the model which already spends fairly a fortune on promoting and promotions annually.  Greater aggressive strain additionally means larger strain associated to buyer retention. General, aggressive pressures are resulting in larger operational prices for shopper items manufacturers like P&G.

– Regulatory pressures :-

Regulatory pressures are additionally a serious menace for the buyer items manufacturers. Larger degree of political and authorized laws are resulting in larger value pressures for manufacturers together with shopper items manufacturers like P&G. Internationally, the legal guidelines range from one nation to a different. Compliance is a vital focus for worldwide companies since noncompliance may end up in heavy fines. From product high quality to labor and different areas, there are legal guidelines in each space that require compliance.

– Rising prices of uncooked supplies and labor :-

The prices of uncooked materials and labor have stored rising resulting in greater operational prices for the buyer items manufacturers. Rising prices are including to the operational prices of P&G additionally. That is additionally an essential menace for the model because it impacts the corporate’s revenues and internet earnings.

Conclusion:-

P&G is a number one shopper items model with a robust international presence. Whereas the buyer items business has grown extremely aggressive, the corporate has to take a position a big sum annually in advertising in addition to analysis and innovation. The corporate is experiencing stagnant progress within the current years. Furthermore, it has confronted administration issues for a number of years. The corporate is looking for quicker progress by investing in product innovation in addition to advertising. There are a number of extra challenges dealing with the buyer items business. Aggressive and regulatory challenges in addition to a stronger greenback are additionally affecting the buyer items business.  Nevertheless, the US financial system is performing very properly and this has led to more healthy shopper spending. P&G has determined to boost the costs on a few of its merchandise. Nevertheless, worthwhile progress may also require the model to beat a number of different challenges.

Sources:

P&G Annual Report 2018

https://www.businesswire.com/news/home/20181130005573/en/PG-Completes-Acquisition-Consumer-Health-Business-Merck

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