SWOT Analysis of Procter & Gamble (P&G) | P&G Strengths and Weaknesses, Opportunities and Threats
1. What is P & G?
P & G is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio, founded in 1837 by William Procter and James Gamble.
It specializes in a wide range of personal consumer health, and personal care and hygiene products; these products are organized into several segments including Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine, & Family Care.
P&G is incorporated in Ohio. The current Chairman and CEO of the company is David S. Taylor.
2. How is the Business Model of P & G?
Procter and gamble has been a large company for many years now. They’re the number one manufacturer of many products which many households around the world use on a daily basis.
They have a certain business model that drives their business and is key to their success and that is by making and selling products that people need and want.
One of the most popular products they make and sell is soap. They sell so many different types of soap to so many different types of people around the world and it ensures that most people can find a soap they like and need.
This is just one example of the many products they make and sell and over the years it has just made them even more successful.
Procter & Gamble’s business model is to focus on global brands and market power while decentralized management of their businesses. They mainly focus on new products and innovation.
Procter and gamble has adapted their business model to be more environmentally friendly to increase sustainability.
Sometimes, P & G partners with other companies to offer promotions on their products. The most recent product that was promoted this way is Gillette’s Fusion Power Razor Power Cartridges that were featured in a Doritos commercial.
P&G uses a cross-selling strategy, cross-selling is a marketing technique that involves adding extra services or products to the core offering in order to attract new customers and keep existing ones.
Many companies are expanding their product ranges by adding things that have little similarity to their main offers.
Bundling is a marketing technique used by P&G to promote their products. They offer customers a free gift, or discount on the second purchase for buying one of their products.
P & G have products that are targeted at different people. The brands are sold in different ways to appeal to their different target audiences. This is done by the design, marketing strategy, and price of each product.
3. How does P & G makes money?
a) Products: These are sold in supermarkets, drug stores, sheet-goods distributors, mass merchandisers, specialty stores and outlets. They have products for almost every demographic group. These are popular with women. Some of these are household cleaning products, personal care products, baby care products, facial skin care products, food products and toiletries.
b) Merchandising: They work with licensees to re-brand and resell their brands. For example, P&G’s Old Spice brand is made by Procter and Gamble’s licensee, The Clorox Company. These share ideas and strategies for product development and publicity placement.
c) Sales: These are known as “Other Operating Income” (OOI). It includes the sale of marketing rights, licensing fees, and royalty payments.
d) Selling market share: They also try to maintain their market share by offering discounts to retailers. Discounts are offered if a customer purchases a certain amount of a particular brand within a particular time period.
e) Mergers and acquisitions: Mergers and acquisition (M&A) is the process of combining two or more companies together to form a new company. P & G has done this to increase their market share.
4. Revenue and Financials of P & G
In 2021 the Company had a total revenue of increase US$76.120 billion with an operating income of increase US$18.79 billion and a total net income of increase US$14.31 billion.
In 2020 the total asset was increase US$120.7 billion with a total equity of decrease US$46.88 billion. The Company had 101,000 numbers of employees in 2020.
5. Partners of P & G
a) WHO:P&G produces healthcare products such as Oral-B, Braun and Gillette. The company partners with the World Health Organization (WHO) for the oral health program.
b) MonoSol: MonoSol produces single-use and multi-use vials, bottles and cartridges. They provide oral care products such as Crest, Oral B and Braun.
c) McNeil: P&G partners with McNeil for producing healthcare products such as Tylenol, PediaCare, Infants’ Advil, etc.
d) Banking: They have partnerships with Morgan Stanley and Barclays in the U.S. and Credit Suisse in Europe. They also have an agreement with American Express for cross-promotions in the U S
e) Butler: P&G has partnered with Butler for marketing their products to students.
f) Other advertising agencies: They work with other advertising agencies such as Saatchi and Saatchi, BBDO Worldwide and Ogilvy & Mather.
g) Partnerships with universities: P&G gives research grants to numerous universities in the USA, UK, Canada, Australia and New Zealand.
h) Beanstalk: P&G has partnered with the charity organization, Beanstalk to promote literacy among children.
6. Competitors of P & G
a) Unilever: Unilever focuses on brands like Dove, Lipton, Ben & Jerry’s, Hellmanns and Knorr in the food portfolio. Its personal care products include Axe, Vaseline and Sunsilk.
b) L’Oréal Group: L’Oreal is the world’s largest cosmetic company by revenue.
c) Colgate-Palmolive: Colgate-Palmolive is a major player in the laundry soap market. It has brands like Palmolive, Dial, Trojan, Crest and Tide.
e) Church and Dwight: Church and Dwight is another leading branded dishwashing detergent manufacturer. It has brands like Ivory, Ziploc, Dawn, Glad and Ziplock.
f)Nestle: Nestle is the world’s largest food company. It produces dairy products like Milupa, Nescafe, Karo-Koko and Ithaca under its name.
7. SWOT Analysis of P & G
Strengths of P & G
a) Strong brand name: P & G’s brands are market leaders in many categories. Their brands are household cleaning products, personal care products, baby care products, facial skin care products, food products and toiletries.
b) High-quality service: P & G has a very strong customer service system in place. The company has over 100 centers of excellence located all over the world.
c) Strong manufacturing partners: P & G has produced some of the best-selling household cleaning products including Pledge, Gain Flings, and Ajax etc.
d) Financial position: P & G has a strong financial position. It has an asset base of US$120 billion and a net profit of US$14.31 billion in its latest financial year.
e) Large market: P&G is one of the largest companies by revenues and profit. They have more than 100 brands operating in different categories.
f) Government support: P&G is an important company in the Indian economy.
g) Strong distribution network: P&G has wide network of distributors and retailers for their products.
h) Strong R&D: P & G having strong research and development (R&D) team. It has produced great products like Pampers, Pepto-Bismol and Crest.
i) Strong ethical standards: The Company follows very strict ethical standards while manufacturing its products. It also provides a lot of protection to its workers.
j) Wide distribution: P&G has a very strong distribution system in place. They have a large market share in many categories.
k) Product innovation: P & G is a pioneer in the personal care products. They have come up with many great products like Pampers, Crest and Lysol.
l) Wide brands: P & G has more than 100 brands in personal care and household care products.
Weaknesses of P & G
a) Price rise: A few years ago, P & G increased the price of its feminine hygiene products like Always and Tampax. This led to a fall in sales and profits.
b) Weak market share: the Company’s market shares for some of its leading brands like Ariel, Gain and Tide have declined over the years.
c) Fake products sold under the name of their brand name are a big concern for P&G: The Company has taken measures to check fake products like Lypsyl, MiraDry and Drysol under the name of their brands such as Tampax and Gain.
f) Weak presence in online marketplace: P & G has a very weak presence in the online marketplace.
g) Lack of flexibility of the business due to its massive size: the Company’s volume and prices are controlled by the government. This makes it a less flexible business to operate.
h) Some of its brands have a low brand value: The Company has a very low brand value for those brands which have been shut down or those brands which are in the process of getting discontinued
i) Weak corporate social responsibility (CSR) performance: P & G has not done well in terms of its CSR performance. It has never received the UN Global Compact Award.
Opportunities for P & G
a) Playing a greater emphasis on CSR: The Company has a lot of opportunities to improve its CSR performance. It is one of the most social-responsible companies in the world.
b) New trends in consumer products: P & G can take advantage of new trends like natural foods, organic food and healthy life style.
c) Focusing on health and beauty products for men: The Company has a very strong position in women’s health and beauty products. Now it can come up with products for men’s health and beauty.
e) Online marketing strategies: P & G should take advantage of the online marketing strategies to promote their products.
f) Targeting rural consumers: P & G should focus more on rural consumers to expand their market share in India.
g) Formation of strategic cooperation with local businesses: P & G should form strategic partnerships with local companies to expand their presence in rural areas.
i) Benefit from the growing middle class: The middle class is growing at a rapid pace in India. P & G should focus more on them.
j) E-Commerce: P & G should foray into e-commerce to reach out to more customers.
Threats of P & G
a) Increasing competition from local manufacturers in global markets: In India, P & G faces competition from local companies like Nirma, Hindustan Unilever and United Spirits. These companies have a lot of challenges to deal with.
b) Introduction of trade barriers in key international markets: Trade barriers like anti-dumping and countervailing duties will affect the company’s ability to export its products.
c) Introduction of nationalization in selected emerging economies: The Company also faces the risk of nationalization in some countries such as Brazil, Turkey, South Africa and Chile.
d) Counterfeiting of products: Counterfeiting products is one of the big threats to the company. The company should take measures to tackle this matter.
Loss of key brands: P & G has very strong brands like Pampers, Crest and Dannon Yogurt. If any one of these brands should face problems in production, it will affect their worldwide operations.
FAQS of P & G
a)What are the common challenges of P & G?
Reliance on financial leverage over R&D spending: The Company has a huge drawing power to fund its projects. However, it has not done well in terms of R&D spending. P & G has hardly invested anything in research and development.
b) What is P&G motto?
The company’s motto is “to create health and hygiene for better living”.
c) What are the key strategies used by P&G?
P & G’s strategies are to make its products simple, reliable, affordable and accessible to its customers.
d) Where is it based?
P & G is based in the US.
e) Who is the current CEO of P&G?
The current CEO of P & G is David Taylor.
f) Why Procter and Gamble is so successful?
P & G is one of the most successful companies in the world. If you are planning to start your own business, it will be a good idea to study some of their strategies.
g) Why is it called Procter and Gamble?
The company got its name from two German inventors called Proctor and Gamble.
h) How popular is P&G in India?
P & G has a very strong presence in India. It has more than 100 brands across the country.
i) How many products are sold under the P&G brand name?
By 2014, P & G was selling more than 700 household products under this brand name.
j) Who does Procter and Gamble support?
Procter and Gamble supports many causes like conservation, education, health care, human rights and environment.
k) is Procter and Gamble sustainable?
Procter and Gamble is very sustainable. It has more than 100,000 employees spread across more than 60 countries.
l) What is P & G’s brand value?
P & G has a very high brand value with its brands like Tide, Gain, Ariel, Crest and Always.
m) Does Procter and Gamble test on animals?
Procter and Gamble does not test on animals. It is one of the leading companies in the world, which opposes animal testing.
n) What are the sectors in which Procter and Gamble operates?
P & G operates in four sectors i.e household products, personal care products, pet food and diapers.
o) How does P&G give back?
Procter and Gamble helps many communities in many ways. It helps in environmental protection, access to healthy food and education for all.
p) Where is P & G headquartered?
P & G is based in Cincinnati, Ohio.
r) Does P&G outsource production?
P & G has outsourced both manufacturing and IT related projects to many countries like India, China, Belarus and the Philippines.
s) Who are the competitors of Procter and Gamble?
The main competitors of P & G are Unilever, Reckitt Benckiser plc, SC Johnson & Son Inc., Colgate-Palmolive Company plc and Kimberly