| Name | The Procter & Gamble Company (NYSE: PG) |
| Industry | Personal and Household products |
| Founded | 1837 |
| Headoffice | Cincinnati, Ohio |
| CEO | David S. Taylor (30/10/2021), Successor: Jon Moeller (01/11/2021) |
| Revenues | $76.21 Billion, 2021 & $70.9 Billion, 2020. |
| Net loss | $14.04 Billion, 2021 & $ 13.1 Billion, 2020. |
| Competitors | Unilever, Colgate-Palmolive, Henkel, Coty, Kraft, The Clorox Company, Reckitt Benckiser, Johnson & Johnson |
Company Overview:
In 1837, P&G was founded in Cincinnati, when British candle-maker, William Procter and Irish soap-maker, James Gamble, merged their businesses. With a market capitalization of $339.5 Billion, P&G is a multinational consumer products corporation that manufactures and distributes home, personal, and healthcare products. P&G sells its products in 180 countries through five operating segments of beauty, healthcare, grooming, home care, and baby and family care. P&G ranked 43rd in the US fortune 500 lists, ranked 27th among the 50 most innovative companies in the US, and ranked 36th among the 100-top powerful brands. Let’s now go over the swot analysis of the company.
Procter and Gamble (P&G) Strengths 2021:
- Multi-brands dominance.
According to Procter & Gamble (2021), the company competes in 300 product categories sold in 160 countries and has a market leadership position in two-third of these categories. P&G product brands include laundry detergents and additives (Ariel and Tide), Shampoo and personal cleaning (Head and shoulder and Gillette), Soap, hair and skincare (old Spice and Olay), paper towels, diapers (Pampers and Always), feminine care categories and many other brands generating between $500 million to $ 1 Billion each as shown in the diagram below - Diverse business segments and revenues.
In 2021, P&G operates through six strategic (SBUs) with revenue streams percentage of Fabric and Home Care (34%), Baby and Feminine Care (25%), Family Care and P&G Ventures (19%), Beauty, Grooming (9%), and Health Care (13%). P&G leverages its brands’ strengths through these five financial attractive categories for growth and value creation (Procter & Gamble, 2021). - 105 global manufacturing units’ ownership.
Globally, P&G owns and operates 105 manufacturing sites. In the US, the company has 23 manufacturing sites in 17 states and 82 sites are located in 36 other countries. Among these sites, 22 manufactures beauty products, 18 for grooming products, 21 for health care products, 37 for baby, feminine & family care, and 38 produces fabric & home care products. - P&G’s innovative supply platform (MOQx).
P&G has developed a special digital technology platform for advanced supply chains known as Minimum Order Quantity platform or MOQx for resilient P&G supply network. The new platform allows customizing manufacturing capabilities through changing SKUs for flexibility and responsiveness for grocery retailer chains, mass merchandisers, wholesalers, drug stores, distributors (Procter & Gamble). - Global subsidiaries and economies of scale.
According to Procter & Gamble (2021), the company has operations in 80 countries and through six region subsidiaries. P&G subsidiaries’ contribution towards revenues is North and Latin America (47%), Europe (22%), the Asia Pacific (9%), Greater China (10%), India, the Middle East (6%), and Africa (6%). The global scale of operation benefits the company through cost-effectiveness, processes efficiency and resource utilization for economies of scale.
Procter and Gamble (P&G) Weaknesses 2021:
- P&G lacks corporate branding.
Devault (2021) elaborated that P&G’s multi-brand strategy has allowed the company to position multiple brands in the market but it lacks corporate branding. P&G does not promote corporate brands when compared to major competitors such as Unilever, Johnson, and Reckitt. - Environmental challenges.
The two major challenges for P&G are palm oil and deforestation which attract a lot of criticism as shown in the diagram below. The wood pulp contributes degradation of forests and palm oil procured through non-certified sources (Jordan, 2021). - The threat of new entrants (Porter five forces).
P&G has a high threat of new entrants in multiple segments because of low entry barriers. Cavale (2021) pointed out that the competitors selling quality products at affordable prices and penetrate the market to attract P&G customers. Even the global brands such as Nestle and Unilever develop new products and position against P&G products such as Comfort, Sunsilk, and Garnier. - Imitable product nature:
Bitter (2019 ) evaluated that the imitable nature of P&G products in consumer products markets is one of the major weaknesses for the company. The products from competitors have considerable similarities and thus, the company is susceptible to imitation.
Procter and Gamble (P&G) Opportunities 2021:
- Anti-aging products.
According to BusinessWire (2021), the global anti-aging product market will be $47 Billion by 2027 with a CAGR of 5% per annum. In the US, the anti-aging products market will be $19.1 Billion and it presents future growth opportunities for P&G. - India’s Feminine care market.
P&G sales and marketing efforts focus on feminine care in rural markets present new opportunities for business growth and sales expansion. The product innovation for rural markets would enable P&G to penetrate rural markets through price and availability (PRNewswire, 2021). - Digitalization of the beauty market.
The digital beauty industry in the US will be $160 Billion with a CAGR of 5.5% by 2029. There is rising demand for digital platforms based on consumer orientation, components, and end-users for beauty products. - Green business initiatives.
Beer (2021) pointed that green business initiatives present opportunities for P&G for customer satisfaction. For instance, the raw material sourcing from sustainable sources such as preserving forest and palm oil from ethical sources provide the opportunity to address environmental criticisms.
Procter and Gamble (P&G) Threats 2021:
- Big retailers own brands.
Allingham (2021) pointed out that the big supermarkets such as Walmart, Tesco, and Woolworths have successful own consumer packaged goods brands for skincare, personal care, body care, and detergents that directly affect the marketing share of P&G. - $ 2 Billion new input costs in 2021.
The changes in commodity and transportation costs have had a direct impact on the gross margin of P&G. The pandemic-led disruptions to supply chains for commodities, freight and plastic have increased costs and consequently, the product prices for the consumers (Procter & Gamble). - Strict regulations in the US.
P&G manufacturing operations and products are subject to multiple laws and regulations including the Environmental Protection Agency (EPA), the U.S. Food and Drug Administration (FDA), the Federal Trade Commission (FTC), the Occupational Safety and Health Administration (OSHA), and the Consumer Product Safety Commission (CPSC). - Third-party risks.
With operations in 180 countries, P&G relies on third parties such as suppliers, contractors, and business partners. There is a need to manage third-party agreements and relationships to avoid legal, financial, and reputational risks. - Counterfeit products.
Denton (2020) analyzed that with multiple product categories and global operations, the risk of counterfeit products is high for P&G. The product recalls result in loss of revenues and bad publicity and consumers lose trust in the brands - Social backlash with P&G marketing practices.
P&G advertisement for controversial Gillette razor, secret deodorant for women equal pay, always maxi-pads for transgender, equal division of household chores have triggered a backlash from critics (Meyersohn, 2020).
Procter and Gamble SWOT Analysis Conclusion:
In recent times, the challenges for P&G are environmental challenges, branding and product imitation risks, and increase the cost of operations. Despite the challenges and pandemics, P&G diversified global operations and multiple successful brands have contributed to the profitability and growth of the company. P&G should tackle operational and marketing risks and leverage new market opportunities to remain the market leader in the consumer goods industry.
References:
- Tom Allingham (2021). Try the supermarket downshift.
- Beer, Jeff (2021). Why P&G is asking you to change your habits to save the planet.
- Bitter, Alex (2021). In emerging markets, local brands challenge growth at P&G .
- Bloomberg (2021). Procter & Gamble Co/The. Bloomberg.
- BusinessWire (2021). Global Anti-Aging Products Market Report 2020-2027. Business Wire.
- Cavale, Siddharth (2021). Procter & Gamble, rivals take refills. Reuters.
- Denton, Dale (2021) Proctor-and-gamble-partners-cbp-eliminate-counterfeits-us-supply-chain.
- Devault, Gigi (2021) The History of Procter & Gamble’s Brand Strategy.
- Jordan, Ashley (2021). P&G needs to take more action on deforestation.
- Meyersohn, Nathaniel (2021). Taking a stand on social issues is risky. The world’s largest advertiser did it anyway.
- PRNewswire (2021). India’s Feminine Hygiene Products Industry.
- Procter & Gamble (2021). Annual Report. Procter & Gamble.
- Procter & Gamble (2021)—. Brands — Iconic brands you can trust in your home.
- Procter & Gamble (2021)—. Global Operations.
- SyncForce (2021). Procter & Gamble – Rankings per brand.
