Product extension of procter and gamble

Product extension of procter and gambleThe Procter guess Comp some(prenominal) (PG) is integrity of the worlds largest consumer goods companies. It markets more than 300 brands in the beauty, health, fabric, home, botch up, family, and personal apprehension output categories. The keep c b an separate(prenominal)-out operates in the Americas, europium and Asia. It is headquartered in Cincinnati, Ohio, and employs around 135,000 people.CORPORATE OBJECTIVESThe objective of Procter Gamble is that They pull up stakes provide branded harvest-times and services of superior quality and re determine that rectify the lives of the worlds consumers, now and for generations to come. As a result, consumers will reward us with drawing cardship gross revenue, profit and value creation, al junior-gradeing our people, our per centumholders and the communities in which we live and work to prosper. (http//www.uk.pg.com/ community/aboutPG/purposeValuesPrinciples.html)CORPORATE STRATEGYPr octer Gamble (PG), superstar of the worlds largest consumer goods companies is also a groundbreaker in the utilization of mass media. The friendship has used newspaper advertisements, wireless and soap operas to advertise its popular brands like Crest, Pampers, Pantene and Folgers. During 1990-2000, however,its rate of growth took a plunge. When AG Lafley took all over as CEO in 2000, he gave PG a complete makeover with the concentrate on on innovation and advertising. Since 2000, PG has been increasingly embracing targeted, viral and on-line marketing. (http//www.uk.pg.com/ partnership/aboutPG/purposeValuesPrinciples.html)PROPOSED PRODUCTolayLogo87_Jul06.jpg EvolutionOlay is a worldwide intimationer in peel c ar and have been trusted by women for litre years. Graham Wulff, an innovative and entrepreneurial South African chemist real the original formula at the beginning of the 1950s. Olay has eight global harvest-feast lines offering a multiple of product. Product such as Olay master key pro-X, Olay Definity, Olay Regenerist, Olay Total effect, Olay complete, Olay hydrate cleanse, Olay clarity, Olay body lotion, Olay touch of sun and Olay body cleanup spot (http//www.docstoc.com/docs/14719894/Oil-Of-Olay-Products). tegument attention is evolving warmer than ever with independent clinical runnel and new standards in natural and organic cosmetics. Olay evolution will be a combination of Olay total effects (7 s point forcefulnessful anti-ageing in one) and Olay Definity (fight wrinkles, brown spot and discolouration). Many consumers want products that offer more than one benefit. So this product is expected to moisturize, fight free radicals and give the sputter a more youthful appearance. This product would offer the costumer an precedent combination of the world most roleful peel off foreboding solution.Anti-aging is the fastest- ontogenesis cutis segment, standing at $567.6 million, now representing the biggest category in shin get by, co personnel casualtyal facial cleansers which stand at $559.2 million. (http//www.allbusiness.com/population-demographics/demographic-groups/5517853-1.html)product-landing-definity_v6.jpg product-landing-total-effects.jpgWomen are real(prenominal) particular when traffic with their face. They need to be convinced the product will deliver all the promised benefits. Women are willing to try new things and spend more silver to look better and younger. Skin care attracts customers from all income level as most women like to take care of their appearance. The increase number of women on the job(p) equates women with more money to spend and skin care is one of the preferred avenues for their spending.Based on Procter Gamble F4Q10 (Qtr End 06/30/2010) Earnings band Transcript, Female Skin Care grew volume double digits with positive appoint trends. In the U.S., Olay all-outlet value share of the Facial Moisturizer segment was up just about two points behind the go along s trength of the Olay Pro-X line and the Olay Regenerist Roller puffiness Eye Treatment innovation. Olay also had self-coloured results in underdeveloped markets, more than doubling shipments in India, Saudi Arabia and the Philippines. Organic sales increased 5%, driven by 8% organic volume growth. (http//seekingalpha.com/article/218380-procter-gamble-f4q10-qtr-end-06-30-2010-earnings-call-transcript) appraise of Global skin care market 2002 and 2007Country2002 (M)2009 (M)US6,752.28,059.2FRANCE2,391.14,368.0GERMANY1,975.13,239.3ITALY1,440.02,340.4SPAIN956.41,897.9UK1,612.72,937.6 opening Euro monitor internationalBelow are the analyses of the business environment to stand up the proposal.ANALYSIS OF BUSINESS ENVIRONMENTEvery Business operates at heart an environment, these environments directly and indirectly affects the way those businesses function. Competition in the skin care industry tends to be more intense and there are galore(postnominal) changes that can be regarded as threat and opportunity that it is important for managers to finagle with.MACROPoliticalThe political environment Relates to the pressures and opportunities brought by changes of the government and their views toward the skin care industry. Each government always have a authorization to regulate the use on non organic ingredients in most skin care product.EconomicThis Refers to economic factors and structures and such variables like the stock exchange, use up and inflation rates, the nations economic policies and performance, exchange rates, etc. Although PG is based in the US, it earns revenues, give birth expenses, own assets and incur liabilities in countries using currencies other than the US dollar. As a result, increases or decreases in the value of the US dollar against other major(ip) currencies will affect the companys net operating revenues, operating income and the value of balance sheet items denominated in foreign currencies.SocialMiddle-aged women are very interest ed in skin care items that help them concord a more youthful appearance and complexion. Observing social factors helps organisations champion their reputation among stakeholders.TechnologicalChanges in technology can affect a company free-enterprise(a) posture. Industries merge new strategic groups emerge currents products improve and the cost of production gets reduced by process innovation. Because the skin care industry is very belligerent, the company necessitate taking receipts of the up-to-the-minute technology and revolutionary substances to create new product in browse to maintain customers interest and loyalty.EnvironmentalWith global warming and carbon tail end prints being big concerns, governments and scientists are encouraging companies and individuals to be more environmentally aware. PGs policy is to Ensure its products, packaging and operations are safe for their employees, consumers and the environment. garnish or prevent the environmental impact of produc ts and packaging in their design, manufacture, scattering, use and disposal whenever possible. They relief the sustainable use of resources and actively encourage reuse, cycle and composting.MICROBuyer PowerConsumer products companies face weak buyer power because customers are disjointed and have little influence on bell or product. But considering the buyers of consumer products to be retailers rather than individuals, then these firms face very fortified buyer power. sensation good example is the business kindred between wall-mart and PG (see swot analysis).Supplier Power the company could face nigh amount of supplier power simply because of the costs incurred when switching suppliers. Notwithstanding, suppliers that do large amount of business with the company also are evenhandedly obliged to their customers nonetheless, negociate power for both the firms and their suppliers is probably limited.Threat of new-fashioned EntrantsGiven the amount of capital investment nee ded to enter the skin care industry, the assumption is that threat of new entrants will be moderately low.Threat of SubstitutesWithin the skin care industry, brands thrive in service to build a competitive advantage, but even the pricing power of brands can be scoured with substitutes. Threats to this product may arise from other anti-aging products such as Avotone, Revitol, Ceramide C etc.Degree of Rivalry Skin care industry is a very competitive market, taking advantage of the latest technology and revolutionary substances to create new product in order to maintain customers interest and loyalty will be very important. In doing so it will increase the companys competitive advantage over other top brands like Avon and Nivea Visage.INTERNALThe intragroup environment constitutes variables and forces within the control of the organisation. These variables are conditions, entities,events, andfactorswithin an organization whichinfluenceitsactivitiesandchoices, its philosophy, particu larly the deportment of theemployees. Other variables include theorganisation mission statement,leadership style, and itsculture.SWOT digest this is a planning method use to evaluate the strength, weaknesses, opportunities and treat to a business. It involves specifying objectives of a business at the same time identifying the internal and international elements that will affect the business both positive and negative in the race to attain its stated objectives.StrengthsWeaknessesLeading market baffle adapt on a strong brand portfolio. evidentiary RD and market investment. blue hard currency productivenessIncrease instances of product recall.Excessive dependant on Wal-mart.High product prices translated into sales volume decline and market share loss.OpportunitiesThreatsFuture growth plans- Increase concentration on its amount of money beautiful businesses and enhancing its customer base.Increase investment in manufacturing capacity in create countries.Acquisitions to emb roider portfolioCounterfeit goods.Changing global retail scenario and rise of undercover labels.Commodity cost and currency exchange rate.Rising cost of cypher pricesEconomic slowdown in US and Euro zone.(www.datamonitor.com)STRENGTHSLeading market position garnered on a strong brand portfolioWith revenues of $79,029 million, PG is the worlds largest consumer products manufacturer, with its products reaching 4 one million million people worldwide. PG is the 20th largest company in sales and the 9th largest company in profit among the Fortune 500 companies. The companys market capitalization in 2009 was nigh $150 million, making it one of the 10 most valuable companies in the US. PG holds tip global market shares in a variety of categories, including baby care (33%), blades and razors (70%), feminine protection (37%), and fabric care (33%). The companys leadership position is built on its strong brand portfolio. Strong brand portfolio enables the company to achieve economies of scale in distribution and retain a strong bargaining position with retailers. Leading market position provides PG with evidential competitive advantage as well as stabilizes the companys financial growthSignificant RD and market investment.Being a consumer products company, PG relies hard on innovation and continued marketing investments in order to establish a significant competitive advantage. As a result, the company has made significant investments in RD and marketing. oer the last decade, PG has invested more than $2 million in consumer and market research (nearly twice that of its closest competitor, Unilever and equal to the combined total of its other major competitors Avon, Clorox Company, Colgate-Palmolive Company, Energizer Holdings, Henkel, Kimberly-Clark, LOreal, and Reckitt Benckiser). Virtually, all the organic sales growth delivered by PG in the past nine years has come from new brands and new or improved product innovation. PG also involves external innovation partners to boost its internal innovative capability, an approach it calls Connect and Develop. Currently, more than half of all product innovation coming from PG includes at least one major piece from an external partner. PGs strong RD capabilities and a marketing-driven understanding of consumer needs are back by significant marketing investments. The company invests more than $7 billion in advertising annually, consistently making PG one of the worlds largest advertisers. Strong think on research and breeding allows PG to renew its product line at regular intervals, which boosts customer loyalty and revenue growth. Significant marketing investments to support its brands and a broad product portfolio help PG to remain at cutting edge in a competitive market.Robust cash productivityPGs cash productivity the character of earnings converted into cash has averaged over cytosine% since 2001, consistently among the very best in the industry. This is primarily due to PGs strong foc us on productivity, working-capital management and cost reduction. Furthermore, PG is equally rigorous about managing costs. The company has reduced overhead costs as a percentage of sales by more than 300 basis points since 2001. The cash productivity allows PG to maintain the companys excellent credit rating, to pay strong dividends, and to have the flexibility to invest in the business organically or through mergers and acquisitions. Therefore, robust cash productivity ensures that PG has the flexibility and the resources to invest in growth even in the most challenging environments.WEAKNESSESPG has been registering increasing instance of product recalls. One case in point is in November 2009, the company voluntarily recalled ternary lots of its Vicks Sinex nasal spray in the US, Germany and the UK. The recall was a preventive step after finding the bacteria B. cepacia in a miniscule amount of product made at its plant in megascopic Gerau, Germany. In March 2010, PG voluntar ily recalled its Pringles Restaurant Cravers Cheeseburger potato crisps and Pringles Family Faves Taco dark potato crisps in response to a recommendation from the Food medicate Administration (FDA) to the food industry to protect consumers from potential Salmonella exposure. Most latterly in June 2010, PG voluntarily recalled a small percentage of 1-liter bottles of Scope real Mint and Scope Peppermint mouthwash with malfunctioning child-resistant caps in the US and Canada. Recurrent product recalls could affect the brand image of the company, which would lead to low customer loyalty and brand equity.Excessive dependent on Wal-MartPG is heavily dependent on Wal-Mart Stores (Wal-Mart) and its affiliates for generating major part of its revenue. Sales to Wal-Mart and its affiliates represented almost 15% of its total revenue since 2006. High dependence upon a Wal-Mart reduces the bargaining power of the company. Also, Wal-Mart could use its bargaining power to impose unfavourabl e damage on the company. Any decrease in revenue from Wal-Mart could have a negative impact on the companys businesses. Hence, the loss of this customer will lead to a sharp decline in PGs revenues and also a loss of its market share.OPPRTUNITIESFuture growth plansIn order to grow in a super competitive environment, PG is pursuing a clearly drafted outline with focus on two areas increasing concentration on its center field attractive businesses and enhancing its customer base. The company is sharply focusing on its core attractive businesses (the beauty and health market segments and several(prenominal) household care categories) as these are fast-growing businesses. For instance, the global market for personal care products has annual sales of over $39.5 billion and is growing at a rate of around 5% annually. PG intends to increase its customer base by acquiring under served and unserved consumers. In line with this, the company is targeting developing markets extending its dis tribution systems and expanding its brand and product portfolio. Developing and emerging economies are expected to posting for 90% of the worlds population by 2010, and this is expected to drive lease for fast moving consumer goods.Increased investment in manufacturing capacity in developing countriesPG is planning the biggest increase in its manufacturing capacity in order to expand into categories and countries where it doesnt have a brand presence. The company is investing 4% of sales in capital spending, including funding for new manufacturing capacity to support prospective growth. Over the next five years, PG plans to add 20 new manufacturing facilities. virtually all of these facilities are in developing markets, and almost all will be multi-product category facilities. By focusing on developing markets, the company would reduce the cost of serving these markets while also being appressed to regions with the greatest long term growth potential.Acquisitions to expand port folioPG has made significant acquisitions in the recent past. For instance, in June 2009, the company acquired the Zirh skincare brand. Zirh is a leading super premium, male grooming brand available in high-end section stores, specialty outlets and online. Later in May 2010, PG entered into an agreement to acquire Natura embrace Products, a privately-held pet food business. Most recently, in July 2010, the company reason out its purchase of the Ambi Pur Brand from Sara Lee Corporation. Ambi Pur is a leading global ambiance care brand with presence in 80 countries, and also has several toilet care products, with strong presence in Western Europe and Asia. These kinds of acquisitions will strengthen PGs presence across a range of categories and in turn augment its top line and bottom-line.THREATSChanging global retail scenario and rise of private labelsPGs products are sold in a highly competitive global marketplace which is experiencing an increased affair concentration and the growing presence of large format retailers and discounters. With the growing trend toward retail trade consolidation, it is increasingly dependent on key retailers. Some of these retailers have a great bargaining strength than PG. They may use this leverage to demand higher trade discounts, allowances or slotting fees, which could lead to reduced sales or profitability. Commodity cost and currency exchange rate instability places abominable pressure on PGs business. Not to mention the unexpected and dramatic devaluations of currencies in developing or emerging markets reduce profits.Counterfeit goodsTrade of counterfeits and pass-offs products is negatively affecting the growth of FMCG companies like PG. The top two brands within any category be it cosmetics, detergents, or soaps are effected the most by counterfeit. It is estimated that the loss due to counterfeit products convert into around 6 billion ($8.5 billion). Furthermore, with the advent of digital channels there has bee n a surge in the sale of counterfeit products and online sales of these products increased by 9% in 2009. Besides revenue losses, counterfeits and pass-offs also affect the companys brand as they are unsafe.(Swot analysis Source www.datamonitor.com )The best strategies accomplish an organisation mission by exploiting an organisation opportunity and strength, while neutralizing its treat and avoiding its weakness.Ansoff matrixAnsoff matrix play up four possible market strategy for the make product.ansoff_matrix-124013-1.jpeg(http//www.brothersoft.com/ansoff-matrix-124013.html).Product development as this is a new product in the range, much fury will be to offer the product to the existent customer base. use the competitive advantages and brand image of previous products to lunch the propose product. With the companys focus on advertising, (worlds largest advertisers) it can use the advertising power to push the product to recognition. Sixty percent (60%) of the strategy will be o n product development.Diversification One of the opportunities available to the company is launching into new markets and developing economies. Forty percent (40%) of the strategy will be to launch the propose product in an entirely new market.Market Penetration this occurs when the company sells its existing product in its existing market, perhaps through greater promotional efforts. As this is a new product this strategy cogency be considered in the future.Market Development this occurs when the company tries to sell it existing products in new and emerging markets. This strategy as well power be for future considerations.