Procter & Gamble Company: Company Analysis

Subject: Company Analysis
Pages: 6
Words: 1670
Reading time:
6 min
Study level: PhD

Underlying competition in the hair care market with well-established brands (including L’Oréal, Unilever, etc.)

At present, Procter & Gamble Company is experiencing growing competition in a number of specific industries related to beauty and personal care. In particular, the value of the company in the hair care products industry is evaluated as $73.7 billion (Procter & Gamble Company Profile, 2012). However, in the context of the modern business environment, it is also significant to deduce that since Procter & Gamble Company incorporates more than one brand of hair care products and the revenues are estimated at the level of the global market, there are reasons for concern about growing competition.

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Increased competition in the hair care industry primarily entails larger well-established brands. Among them are such rivals to Procter & Gamble Company as L’Oréal, Unilever, Henkel, Vogue, Garnier, Yves Rocher, etc. In terms of competition in the hair care products industry among the larger corporations, there are many factors involved, including price rates and their linkage to the net sales, regional and category involvement, and consumer reliance and appeal. In comparison to other larger corporations, the main weaknesses in the current strategic framework of Procter & Gamble Company mainly concern the erosion of its market share (Procter & Gamble Company Profile, 2012).

Competition with emerging brands

Alongside large corporations experienced in the hair care products industry, there is also a growing amount of competition from the perspective of newly emerging companies. In particular, one of the weaknesses present in Procter & Gamble Company’s current strategies is that it does not change its business model. The major patterns of lack of appeal to certain categories of consumers negatively affect the development of Procter & Gamble Company in comparison to other large corporations, but the difference is even more drastic between Procter & Gamble and emerging companies in various local markets. First of all, Procter & Gamble Company’s marketing model is aimed at mature consumers, whereas local companies can be more responsive to particular trends and consumer needs in the region, including those that can mostly appeal to younger categories of consumers. Therefore, the pattern in defining the target customer that represents a major threat for Procter & Gamble Company is that both multinational companies and emerging new companies in the industry of hair care focus their efforts on expanding the spectrum of consumers to whom they can appeal with their products.

Specifics of competition in the hair care industry in the U.S.

In the U.S., the companies providing products in the hair care industry are well known by consumers. On one hand, this factor guarantees for each major corporate manufacturer, including Procter & Gamble Company, that there will be a certain share of loyal consumers in the market that would definitely prefer the company’s product (P&G Suppliers, 2016). On the other hand, in the context of a rapidly growing number of various start-up manufacturers, the competition from the market of organic hair care, and increasing competition from other international brands, it is crucial for a business to continue to attract new customers. Since Procter & Gamble Company is well known, it would not be possible to change the conceptualization in order to produce marketing appeal. However, advertising and marketing strategies need to be aligned with the aim of targeting new consumers, especially among the younger categories of the market population.

Research Objectives

Defining key factors responsible for P&G’s current position in the market

The first crucial factor that negatively affects Procter & Gamble’s position in the hair care products market is that it relies on a spectrum of consumers that is not diversified enough in their age. In other words, while appealing to mature consumers has a benefit in terms of consumer behavior, namely, having their loyalty for the product, the younger age groups may be more adventurous in trying new brands and products. Given the fact that in order for Procter & Gamble to be able to sustain a competitive edge, it is necessary to attract new customers rather than rely on the same strategic framework.

Secondly, competition has become more diverse and is now represented by a strong opposition of not only other international corporations but also regional and national companies, hair care provided in salons, start-up manufacturers, producers of organic hair care, homemade products, etc. (Hair & Nail Salons in the US Market Research, 2016). The negative factor is that they all appeal to less generalized needs of consumers than Procter & Gamble does; therefore, they are more respondent and in control of consumer behavior.

Identify the themes from the factors and establish their correlation with the specifics of competition

a. The general theme is that the underestimated competitors represented by local and regional companies, as well as hair care provided in salons, start-up manufacturers, producers of organic hair care, homemade products, etc., have taken over some of the market shares of international brands, including Procter & Gamble Company. The advantage of those types of hair care products and services is that they appeal to narrower groups of people and can respond to more specific needs and trends of the target customers.

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b. Hair care brands such as Head & Shoulders and Pantene are among the largest assets of Procter & Gamble, but neither of the brands has an affiliation with a certain spectrum of needs or any particular product design for a niche or specific product. It is more than imperative for Procter & Gamble Company to appeal to younger consumers since its major rivals, L’Oréal and Unilever, Garnier Paris, and Yves Rocher have a wider range of appeal.

Produce, assess, and analyze the potential effects of the strategies that can be used to improve P&G’s current position in competition

The set of strategies that could be effective for improving the position of Procter & Gamble in the current situation should rely on the increase in popularity of some of the younger segments of the market population. One of the expected effects is to eschew the dominance of the same marketing model, whereas it is also important to be able to respond to a wider range of customers’ needs by introducing products that are more customized.

Approach to the Problem

Background information and research to identify the patterns of customers’ preferences in the hair care industry

Considering the fact that hair care products were the main sources of revenue for Procter & Gamble Company, at present, there is a lack of attempts either to regenerate its potential or to appeal to more consumers. Meanwhile, L’Oreal prioritizes market segments that are more profitable for them as well as acquiring some of the market share that was originally occupied by Procter & Gamble (US Hair Care & Colour Market Competition, 2016). Consumers prefer more customized types of hair care products designed specifically for their type of hair, preferences, etc.

Statistical information in the proposal to represent data concerning sales of hair care products depending on the value, value growth, shares of different categories of companies, and sales forecasts

In recent years, the value share of Procter & Gamble’s main competitor, L’Oréal, dropped to 41% and share of value sales to 22%; Unilever experienced a value sales growth and reached 18%; Vogue raised its value sales by 3%; and Henkel increased value sales by 1%, whereas Procter & Gamble’s own did not change (Hair Care in the US, 2016). A flat infrastructure of value share implies that there is the lack of attempts in the company to change its marketing model (Scherer, 2001). Therefore, the forecasts are more optimistic about L’Oreal than Procter & Gamble since despite a drop in value sales, the market of the former is the largest, and it has a wider spectrum of potential consumers.

Qualitative and quantitative research

  1. Face-to-face interviews are used in order to identify particular consumer behaviors inherent to an interviewee.
  2. Online interviews will serve the purpose of reaching out to differentiated segments of consumers. These will help to identify generalized insights of consumer preferences in comparison to statistical data.

Research Design

Exploratory research focusing on determining the reasons for P&G’s current position in the hair care industry

  1. The participants should represent a number of people differing in age and gender as well as consumer preferences.
  2. The sampled data during face-to-face interviews will be analyzed in terms of advantages and disadvantage of Procter & Gamble, namely, the reasons why participants would prefer the products of the company and the reasons why they prefer products of other companies.
  3. Online interviews will include more generalized questions on consumer preferences. In particular, the sampling will be conducted in relation to whether participants are currently using Procter & Gamble hair care products.

Experimental research

It will be conducted in relation to the themes and patterns identified during the previous research stages. It is to compare the statistical information with the customers’ opinions and preferences revealed during the research.

Data Collection and Analysis

The data is to be collected via personal surveys as well as face-to-face and online interviews. Various elements of in-depth analysis will be applied to the data collected in order to reach a conclusion on whether potential strategies for improving the position of P&G in the current market will be effective in the framework of themes and patterns of consumer behaviors revealed in the research.

Reporting

Various channels will be used for reporting since it is more effective to monitor the status of the research in this way. One of the challenges is to keep track of the progress of both face-to-face surveys and telephone interviews; however, it would be easier to report the research by stages.

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Project Personnel

As for the interviewers, for the purposes of the research, it would be more effective to have both male and female interviewers since the topic of research involves discussing personal care (reasons and choices of hair care products), and it would make the interviewees feel more comfortable on many levels.

References

Hair & Nail Salons in the US Market Research. (2016). Web.

Hair Care in the US. (2016). Web.

Procter & Gamble Company Profile. (2012). Web.

P&G Suppliers. (2016). Web.

Scherer, F. M. (2001). The link between gross profitability and pharmaceutical R&D spending. Health Affairs, 20(5), 216-220.

US Hair Care & Colour Market Competition. (2016). Web.

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