Case Study - Procter & Gamble (P&G)

1. P&G’s impressive portfolio includes some of the strongest brand names

in the world. What are some of the challenges and risks associated with
being the market leader in so many categories?

P&G adopts a multi-brand approach a portfolio of over 300 brands, with 25 brands making over
US$1billion in annual sales in 2012, but it faces many key challenges. It uses a multi-brand
strategy, there are drawbacks: with this multi-brand strategy, one brand could easily affect another
through association. A scandal relating to another P&G brand could undo all the good customer
relationships built by another brand with a customer. This is potentially disastrous because if one or
more of P&G’s brands erode significantly, their financial status and market positioning will be
adversely affected. As the market leader, consumers pay closer attention to the company as such,
mistakes committed by the company would usually gain more negative publicity. Lack of price
sensitivity also hampers the company’s long-term growth, since a growing middle class might not
be willing to spend on premium household products despite higher disposable incomes, with
cheaper local alternatives available. Consequently, P&G has lost its customers in developed
countries like Europe to cheaper and equally capable products made by rivals such as Unilever. As
such, rivals have gained significant market share with more successful innovations and improved
their market positioning, threatening P&G’s market leadership

2. With social media becoming increasingly important and fewer people

watching traditional commercials on television, what does P&G need to
do to maintain its strong brand images?

P&G uses the major social media sites Facebook, Youtube, and Twitter. It has only a minor
presence on other sites such as Pinterest and Google+. Also, none of the Chinese sites are used,
despite China being a big market for P&G, and that the Chinese have no access to the three sites
due to government ban. Therefore, P&G has to channel more resources towards the other major
sites such as Google + as well as Chinese sites to achieve enough reach. A more subtle method
involves P&G organizing campaigns that help to improve society as a whole and publicising them
on social media.

P&G needs to do more advertisements on social networks such as Facebook, Twitter, Blogs and
to do fewer ads on TV, radio. These efforts help Infuse stronger emotional appeals into its
communications and create deeper consumer connections.

3. SWOT Analysis

STRENGTHS-

1. P&G has over 300 brands globally which are available in over 180 countries
2. Over 100,000+ people are employed in P&G globally
3. It has around 24 brands which have annual sales over a billion dollars
4. Its brand has a high recall, high visibility due to excellent marketing and advertising
5, P&G has operations in over 80 countries
6. P&G brand has also contributed as sponsors in major sporting and entertainment events
7. Several of its brands like Gillette, Duracell, Ariel, Olay, etc are prominent global brands
8. Excellent distribution and availability of P&G products through supermarkets, groceries,
online, etc.

WEAKNESS-

1. Fake products sold under the name of their brand name is a big concern for P&G
2. Its products have stiff competition from big domestic players and international brands

OPPORTUNITIES –
1. P&G can tap rural markets and increase penetration in urban areas
2. Mergers and acquisitions can be done to strengthen the brand
3. Increasing the purchasing power of people thereby increasing demand
4. P&G can leverage its strong name and powerful brands to diversify into more consumer
products

THREATS-
1. Intense and increasing competition amongst other FMCG companies can affect the market
share of Procter and Gamble
2. FDI in retail thereby allowing international brands worldwide
3. Competition from unbranded and local products
4. Since P&G is a global brand, recessions, fluctuating dollar prices, economic crisis, etc can
affect its business operations

4. Identify Issues and Challenges faced

 P&G faced more than its fair share of challenges during the quarter, and management
outlined a few of the biggest, including major shipping disruptions in Brazil, a sharp
economic contraction in Saudi Arabia, and soaring inflation in Egypt and Nigeria.
 Rising commodity costs and reduced prices pushed the profit margin lower.
 Pricing trends will be negative early in the year, it said but will start lifting results in later
quarters. P&G went so far as to forecast significantly higher sales volumes despite
aggressive price increases that it plans to implement over the next few months.

5. Recommend a future course of action

P&G should work on the communication process and make sustainability a respected and
integrated topic. Employees should be involved in the company’s commitment and
empowered to act on the vision. Furthermore, the plan for visible performance
improvements, including recognizing and rewarding the employees, should be enhanced.
Finally, to become a truly sustainable business, P&G has to shift its perspective from
seeking to minimize its negative impacts through the improvements listed above to
understand how it can create significant positive impacts in relevant areas for society and
the planet.