Procter & Gamble(P&G)

1. As in any race, staying ahead requires a tremendous amount of energy, the ability to overcome physical as well as mental obstacles and most importantly perseverance. Relating these traits of a champion to a corporation as large as P&G: staying number one in so many categories requires manpower, capital and patience from shareholders and investors. P&G faces stiff competition from small firms who specialize in a specific segment of the market. These firms usually have a very loyal customer base and P&G has to make sure to continuously monitor and analyze its performance in key markets while continuously looking for new opportunities in emerging markets.

Imitation is also another problem, and usually what lacks in the imitation is quality, a characteristic that P&G products are known for. This might lead to customers who come across these products to be disappointed and look to competitors to serve their needs. All P&G products are seen as superior products as compared to its competitors’, however, the higher price point is the trade off. In times of economic hardship, consumers may look for less expensive options, of which there may be many.

Being such a large company also makes it a very easy target for lawsuits and negative publicity, two issues any corporation, public or private face on a daily basis.

2. Although some of its products do have extracts and concentrations that are derived from naturally occurring chemicals, P&G makes products that are mostly synthetic. In the last 5 years, social media has quickly brought to light consumers concerns over long-named unfamiliar scientific jargon in the ingredients list of edible and non-edible products. For example, Subway bread was found to contain azodicarbonamide, which coincidentally is also found in shoe rubber and yoga mats. McDonalds has seen a large backlash over its pink slime ”filler” for their hamburgers. (1) To this day they still have not released the full list of ingredients in its “slime”. P&G needs to educate and familiarize customers with their long-named ingredients so it is not so daunting to answer the question “ Do you know what’s in that? “

P&G adds about 3 million customer contacts to its database every year through email and phone. However, in the Internet of Things age, there are many options to use when it comes to contacting those prospective customers. Facebook, Twitter, Instagram are just to name a few options. These social media tools have not just become a medium to promote products but also allow P&G to quickly and effectively correct its mistakes or release pertinent important information to its customers. This information

may include recalls, apologies for poor customer service or product quality, corporate announcements and press releases. To maintain a strong brand image P&G needs to continuously remind customers that its core value is quality of its products and the fact that it has held this high standard of quality for close to 200 years.

3. Threat of New Entrants (Low)

o New entrant would need significant capital to manufacture and market its products.

o P&G applies for 3,800 patents yearly. These along with its vast war chest of existing patents hold off competitors from imitating its products and gaining market share.

Buyer Power (High)o Relies too heavily on a few retailers. This makes P&G's negotiating

power very weak. Power of suppliers (Low)

o No single supplier who provides majority of common ingredients. P&G can also switch suppliers easily due to its large size and not suffer huge losses in the process.

o Since P&G buys a mass quality of materials at once, its negotiating position is very strong.

Competitive rivalry (High)o P&G market has been established now for close to 200 years. In

that time competitors have had a chance to observe and analyze the business tactics of P&G long term and make changes in their corporate strategies accordingly. P&G must highlight the age of the brand and its resilience over the years though the acquisition of key companies that fit perfectly into its exiting product portfolio.

Threats of substitutes (Low-Medium) o Most of P&G products are everyday staples. For example there is

not a clear alternative to toilet paper. Its competitors have to spend a great deal of money on R&D to make everyday products standout. Usually competitors fight back with lower prices, however when products are priced too low they give off an air of decreased quality.

o Consumers are very loyal to the brand. 200 years would cover at least 4 generations if not more. Since the majority of its products are everyday staples, it can rest assured that customers won’t change their brand preference as they have been using the same product with high satisfaction repeatedly. For example, when we think of getting Toilet Paper, we don’t even have to think where in the isle we can find that particular brand. This is usually because once our mind has found a product that suits our requirement of a balance of price and quality.

(1) http://www.hellawella.com/4-major-fast-food-fails-caused-public-backlash