INTRODUCTION OF THE COMPANY Proctor and Gamble of Pakistan is a subsidiary of Procter and Gamble USA established in1990 and started production in 1991.The P&G Company were founded in 1837 in Cincinnati, Ohio and from the very beginning have been a leading manufacturer and marketer of the consumer goods. Company sells more than 250 brands in more than 130 countries and its operations are in more than 70 countries. It is therefore also rated in the top 25 of the FORTUNE 500 companies. Procter and Gamble is actually the name of two persons William Procter and James Gamble. Both of them wives were sisters and their father in-law asked them to become partners. In the start Procter’s business was candle making and Gamble’s business was soap making. The Partnership year 1837 was a difficult time to start the business although Cincinnati was a bustling market place; the nation was gripped by financial panic. Hundreds of banks were closing around the country. In the 1850s, despite rumors of an impeding civil war in the US, they built a new plant to sustain their growing business. Later they pioneered one of the nation’s profit sharing programs and were among the first in American industry to invest in the research laboratory. By 1890, the fledgling partnership between the Procter and Gamble had grown into multi million dollar corporation .Television in USA introduced in 1939and P&G is the only company that commercialize its product just after five months .With the passage of time P&G acquire different other companies to enhance the business. In 1980, as it approached its 150 th anniversary, P&G was poised for a most dramatic period of growth in its history. Company serves 106000emloyees allover the world. P&g is a recognized leader in the development, manufacturing and marketing of superior fabric & home care, baby care, feminine care, tissues & towel, beauty care, health care, and food. PROCTER & GAMBLE, GLOBAL FIRSTS The first branded products The first profit sharing program The first vegetable oil The first market research department The first company to introduce brand management The first company to introduce the concept of soap operas advertising Crest, the first toothpaste with fluoride P&G literally invented the disposable diaper category Company is divided into two geographic entities United States International MANAGEMENT STRUCTURE: CEO: Mr. Edwin L Artz General Manager in Pakistan: Mr. Hans Peter Heissien Brand Manager: Mr. Tahir Malik Human Resource Manager: Ms Ghazala Nadeem PROCTER AND GAMBLE IN PAKISTAN: P&G started its operations in Pakistan in 1991. First it introduces its brand of Head& Shoulder After that it gave brand of Vicks and Olay oil. Now company has eleven brands in Pakistan .The yearly sales consistently doubled during the past three years. P&G Pakistan establish local manufacturing base. BRANDS IN PAKISTAN: Head & Shoulder Pert Plus Vicks Pentene Rejoice Camay Safeguard Pampers Always Ariel TOTAL SALES OF P&G IN PAKISTAN: In 1991 =1.1Billion Rs In 2001= 12 Billion Rs Employees: There are 300 employees with 12 managers serving on 150,000 stores in Pakistan. And all over the world the no of employees is 106,000. EYES ON THE FUTURE: P&G's growth achievement include: Doubling unit volume every years Achieving share growth in the majority of its categories Delivering total shareholder return that ranks P&G over time among the top third of its peer group. Most importantly, P&G's goal is to continue to provide products of superior quality and value to the world's consumers. As a result, P&G's business, people, shareholders and the communities in which they live and work will prosper. SAFEGAURD & P&G P&G is the world’s renowned manufacturer of different kinds of detergents. The company first introduced tide detergent in 1947 after years of research to determine how to make a cleanser work well in hard water. Since that time, they have introduced variety of laundry and cleaning products with respect to demand and environment of different countries. After a thorough research, the Company introduced/launched its Safeguard brand in Pakistan in 1995. Safeguard is differentiated from other products. Safeguard has captured the remarkable market share in soap industry since it has been launched. Safeguard has also got share from soap market by shifting the beauty s users to the safeguard users. SIZE AND PRICE Safeguard is available in two sized in the market i.e. * 75 grams (Price Rs. 14) * 125 grams (Price Rs. 21) VISION of P&G “To be a leading consumer goods company and to improve the lives of world consumers by providing valuable and innovative products”. Ten years ago Procter and gamble started the journey to improve the lives of Pakistani consumers by providing them with world famous quality brands. P&G want to be an outstanding organization with a passion for winning that would felt by everyone everyday; in the office, in the field every where P&G vision is to lead business growth by proactively identifying opportunities and positively contributing to volume growth. MISSION STATEMENT We will provide products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. These are the Principles and supporting behaviors, which flow from their Purpose and Values. They show respect for all individuals The interests of the company and the individual are inseparable. They are strategically focused in their work. Innovation is the cornerstone of their success. They are externally focused They value personal mastery They seek to be the best. Mutual interdependency is a way of life GOALS Think globally act locally Build major global brands through strong programs based on local understanding. Improve the environmental quality of its products, packaging and operations around the world. Produce quality products at very competitive costs. Build superior relationships with all the parties who contribute to fulfilling their corporate purpose, including their customers, suppliers, universities and government. OBJECTIVES Bring together transactional activities such as accounting and order management in a single organization to provide services to all p&g units at best in class. Remains on the cutting edge of the industry. To be a thought leader within each corporate function. To be the first consumer goods company in Pakistan. Be competitive with other high quality companies in order to help, attract, motivate and retain the talent needed to lead and grow P&G’s business. Strive to be best in all areas of strategic importance to the company. ANALYSIS OF VALUES & PRINCIPLES Organization’s culture is a pattern of basic assumption invented, developed by a given group as it learn to cope with its problem of external adoption and internal integration. Values, principles, policies, and structure of the organization are the main miles stones to analyze the company’s strength. CORE VALUES P&G is its people and the Core Values by which they live. P&G PEOPLE: They attract and recruit the finest people in the world. They build their organization from within, promoting and rewarding people without regard to any difference unrelated to performance. They act on the conviction that the men and women of Procter & Gamble will always be their most important asset. LEADERSHIP: They are all leaders in their area of responsibility with a deep commitment to deliver leadership results. They have a clear vision of where they are going. They focus their resources to achieve leadership objectives and strategies. They develop the capability to deliver their strategies and eliminate organizational barriers. OWNERSHIP: They accept personal accountability to meet the business needs, improve their systems and help others improve their effectiveness. They all act like owners, treating the Company’s assets, as they’re own and behaving with the Company’s long-term success in mind. INTEGRITY: they always try to do the right thing. They are honest and straightforward with each other. They operate within the letter and spirit of the law. They uphold the values and principles of P&G in every action and decision. They are data based and intellectually honest in advocating proposals, including recognizing risks. PASSION FOR WINNING: they are determined to be the best at doing what matters most. They have a healthy dissatisfaction with the status quo. They have a compelling desire to improve and to win in the marketplace. TRUST: they respect their P&G colleagues, customers, and consumers and treat them, as they want to be treated. They have confidence in each other’s capabilities and intentions. They believe that people work best when there is a foundation of trust. PRINCIPLES These are the principles and supporting behaviors, which flow from their Purpose and Core Values. They show respect for all individuals. The interests of the Company and the individual are inseparable: They are strategically focused in their work: Innovation is the cornerstone of their success They are externally focused: They value personal mastery: They seek to be the best: Mutual interdependency is a way of life: ENVIRONMENTAL ANALYSIS NATURE OF THE ENVIRONMENT P&G Safeguard is operating in a complex and stable environment, complex because there is a number of factors in its environment, about which less information, stable, because the changes in these factors is predictable factors, which makes its environment complex are: RETAILERS A group having strong influence over the opinion of the consumers regarding which soap should be purchased. This group is becoming more and more concern to their own incentives/margin. LOCAL PRODUCERSS Small soap manufacturing units, having no or very low overhead charges, under fix tax system or hidden units evading tax and growing like mushroom, involve in the low price soap war, exploiting consumers through retailers. REFERENCE GROUP People having social influence on their neighbors also affect on the sale of soap. TECHNOLOGY Moderate changes in the technology of soap manufacturing decrease the PLC of soap. URBANIZATION Increase in rate of urbanization especially in Pakistan has made the environment more complex of soap industry. PEST ANALYSIS POLITICAL AND LEGAL FORCES Rapid changes in the political scenario of the country along with the uncertain policies of the Government have made the whole business community as uncertain. Also there is terrorism prevailing in the important cities of the country like Karachi and Afghan War, which are affecting the business activities. Policies about taxes are changing continuously due to changing government. ECONOMIC FORCES Increasing inflation in the country, persistently reducing the purchasing power of the people and dropping people from high price soap to low price soap and providing more fuel for expansion of local Producers. Increased import duties on the finished goods and raw material have increased the price of the product, along with this, increasing inflation in the country have made it difficult for soap industry to transfer the whole increased cost at the consumer, thus forcing the industry to operate at a very low margin. Sanctions imposed by the developed nations on Pakistan due to nuclear experimentation create the uncertainty in business activities. SOCIAL The greater the tendency towards urbanization in Pakistan, the living standard which is forcing the people to use standardized product and people are diverting from the beauty soap to anti bacterial soap. TECHNOLOGICAL No major and rapid breakthrough in the technology of soap and their manufacturing process, but innovations is required so that the product does not become obsolete. SWOT ANALYSIS STRENGTHS Heavy and impressive promotional plan for safeguard. Strong social & corporate image of P&G. Strong financial position of company. More concern towards total quality management. Highly health caring product, safeguard gives protections against germs. Direct contact with customers. P&G’s good relations with the supplier. Strong emphasis on environmental prosperity. Worldwide research and technology, engineering and manufacturing. Well-established and renowned distributors. Highly enthusiastic sales team of the company. They identified directly influence group such as wives and children in their target market. Fifth-lowest Injury/Illness Rate for employees. Fourth-lowest lost Workday Rate for employees. Fifth-lowest property loss. WEAKNESSES Safeguard is available in limited pack sizes; only two sizes are available. One is 125 gm and other is 75 gm. Unwilling to serve low-income market. Price is especially very high towards lower income groups. Due to limited manufacturing facility, they cannot reduce production cost of the safeguard. But now expansion is being made in hub plant to increase production of safeguard. One Plant start production since 10th of April. OPPORTUNITIES According to the information obtained by Chamber of Commerce and Industry Lahore, the soap market is growing at an annual rate of 9.8%. The main reasons for this growth are: Rapid growth in population, High urbanization Increase in awareness among people about new advancements. Due to this growing market, there are lots of opportunities for P&G to exploit this growing market by introducing new soaps. P&G has a good corporate image among consumers. Therefore, they can get maximum share from the soap industry by introducing multiple brands of soaps because they have already different soaps in their international health and beauty care product line. Due to rising awareness among people, switching trend toward health care soaps is high. Therefore, it is a good opportunity to capture this segment through efficient marketing practices. THREATS Increasing market share of local Producers. The local Producers are playing an important role in soap industry, because they are providing low price soaps and try to penetrate in their local market by replacing the branded products. Threat of new entrants is also present. As Lever Brothers is a potential threat in soap industry, because they are already involved in different related businesses and providing raw material for soap production to different manufacturing companies like Colgate Palmolive, etc. Increasing inflation in the country is also a major threat of P&G because it is reducing the purchasing power of consumers. STRUCTURAL ANALYSIS PORTER MODEL Structural analysis helps to analyze the competitive process as well as the sources of competitive pressure. In the structure analysis, certain questions like what are the strengths of these pressures, what type of competition is prevailing and what future competitive conditions will be included. Generally, there are five forces which affect the competitive position in an industry and these forces are as follows:- 1) Competitive rivalry 2) Buyer’s power 3) Supplier’s power 4) Threat of new entrants 5) Substitute products COMPETITIVE RIVALRY Competition is concerned with the degree of rivalry within the industry. Danger of rivalry is greater when the competitors are of equal size. In the soap industry, the competitors are; Lever Brothers Pakistan Limited Colgate-Palmolive Ltd., Reckit Benckiser So competition is very tight. Rivalry is greater between these three firms due to their equal sizes. Soap industry shows growth rate, which is 9.8% per annum. It seems that it offered very lucrative business opportunities but these opportunities also carry threats with them. Because to capture the high market share, an organized distribution channel is required for this industry which carry heavy cost. THREAT OF NEW ENTRANTS It is generally said that the industry where the threat of new entrants is low, the industry is considered to be secure and attractive. In the case of soap industry, the barriers to new entrants are large initial capital requirements and product differentiation as well. Also the available soaps have a strong image among consumers and it is very difficult for new comers to break that image. Due to these reasons, the threat of new entrants is low but not zero. Because, there are chances that ICI may enter into the soap industry. Anyhow, it is very difficult for new comers to enter into the soap industry. THREAT OF SUBSTITUTES Substitute means a product which can perform the same functions as the original product can perform. Substitute of the anti bacterial soap is beauty soap. Since the quality of these substitutes is not comparable. So there is low threat of substitute to the soap. But due to rise in inflation in the country, threat of the substitute of high price soap like Safeguard is gradually increasing. BUYER’S POWER When there are a few number of buyers those purchase the large portion of a company’s sale, then in this case, they have maximum power. But in the case of soap industry, the buyers are the distributors, to whom bulk amount of products is sold and this sale is maximally on the cash basis. So the buyers have no handsome power to interrupt or interfere in the Soap industry. SUPPLIER’S POWER Supplier’s power is less because they are having support from their parent company for raw material and technological assistance. COMPETITOR’S ANALYSIS Competitors of Safeguard can be categorized into two segments:- 1. Competitors in organized sector 2. Competition with local Producers COMPETITORS IN ORGANIZED SECTOR One other major competitor is doing excellent business in soap industry along with safeguard that is direct competitors of Safeguard. LEVER BROTHERS LIMITED Lever Brother Limited is the oldest company in Pakistan. It is operating in Pakistan since its independence. They introduced soap with the name Lifebuoy Gold 1997, which became the lot selling soap. Their target market is upper class, middle class and lower class. They have produced products for each class with respect to different prices. For example, lifebuoy with 95gms is a lower price product for lower income people, while lifebuoy 140gms is high price quality product for upper class. Lever Brothers Limited emphasizes on the direct approach to the consumer and they have well-established sales force, and distribution channel. Mostly they are following Pull Strategy. They company offers 6% profit margin to retailers on retail price. No bonus is given to retailers. Also no discount is available on bulk purchases. There is no scheme for retailers of any kind. Distributor’s full force reaches almost every retailer irrespective of the size and delivers the product to him or her. Distributors also distribute the products to villages also after taking into consideration the budget as well as the business level of that village. There is a campaign started by company in order to cover the rural population, as most of the population lives in the villages. For this purpose, they have made rural cluster zones. They have heavily advertised their products on mass media. They display their product brochures at every retailer. The company has strong financial background and has much excess budget for launching a new product, because their market share is maximum in soap industry and they are carrying marvelous profits. COMPETITORS IN LOCAL MARKETS As local Producers of the soap industry, there is large number of producers and each producer has a minor share in total share of the local Producers. So, it’s difficult to isolate the major firms of this segment. Therefore, instead of this, we can see the overall characteristics of this segment. They are successful in exploiting domestic customers on behalf of price sensitiveness. Low overhead expenditures due to unorganized production operation. These are the firms under the protective tax policy of the government and even most of them are not paying tax. Local based brands activate more sales. By using promotional tools, which cannot be used by the firms in organized sector, they are offering small monetary incentive to the retailers, etc. INTERNAL RESOURCES AUDIT MARKETING RESOURCES Marketing resources are very critical for every organization because it leads to the performance of a company. An organization with worthwhile marketing resources can fetch high sales and profit. Marketing resources include following ingredient: - Breadth and depth of product line Market share Marketing information system Distribution channel Market coverage Company image P&G is doing concentrating efforts on the best quality growth opportunity in the whole soap market. BREATH AND DEPTH OF PRODUCT LINE P&G has launched one soap in the market of Pakistan in 1997, named safeguard. It is available only in two weight sizes. * 75 grams Rs. 14/- * 125 grams Rs. 21/- Therefore, they have different product depths are available providing by P&G as compared to their competitors in case of soap. In the depth they have:- Safeguard pink Safeguard green Safeguard white Safeguard Beige HUMAN RESOURCES P&G Pakistan is determined to create a way of working that release the energy and talents of everyone in the company and strips away everything that stifles creativity. It aims to be a company in which very employee knows what is expected of them, has the freedom to take initiatives, is accountable for the results and is properly rewarded for success. At present more than 300 employees are employed in P&G Pakistan, and in order to enable their employees to achieve what is expected of them, the company has a well established program for the training and a system for the measurement of their performance. Human Resources ensure that P&G has the employees, organizational design and work culture to deliver business productivity and to continually improve consumer, employee and shareholder value. RESEARCH AND DEVELOPMENT “It is our policy to continue pushing the envelope when it comes to developing, validating, and using new alternative test methods so we can reduce our need to do animal testing, and our ultimate goal is to eliminate it.” SHARE HOLDERS Shareholders are important stakeholders at P&G. P&G has 1.3 billion shares of stocks outstanding. Large institutions and mutual funds, retirement programs, individual investors and employees throughout the world own these shares. Individuals hold approximately 50 percent of their shares, with nearly 20 percent held by employees and retirees. They work to increase the value of P&G stock for all their shareholders in a variety of ways, including growing the company’s sales and earnings each year. They measure for tracking their success for shareholders is total shareholder Return (TSR). TSR measures how much value their investors receive as a result of owning P&G stock. They track TSR against 29 companies in similar industries, such as consumer, health care and beauty products. P&G tracks performance to compensate key managers based on how well they increase shareholder value. Their Shareholder Relations team is available every day to answer questions, listen to shareholder feedback and provide perspective on Company decisions. MARKETING INFORMATION SYSTEM Success of marketing plan depends upon the marketing information system of the organization. In this way MIS servers as a critical resource of any organization. P&G has developed a marketing information system. with the help of this system, P&G gets market information, which leads to better marketing planning. Moreover, sales force of P&G is served as source of information about the market in different segments because its sales force has direct contact with the customers. DISTRIBUTION CHANNEL Distribution channel of a company is a very important for its survival, and especially in soap industry, they have to make it excellent, because if they will not make it easily available to the consumer, all is useless. So providing needs, satisfying goods at the right place is very important. P&G itself has no distribution channel for safeguard rather they are distributing the safeguard through International Brands Limited (IBL), which is a renowned distribution company in Pakistan and they have their distribution network in all major cities of the country. COMPANY IMAGE P&G is a multinational company and is using its corporate image as a marketing resource. So this is beneficial for the safeguard in each segment. At present, P&G is famous for its quality product, but it has implemented different strategies to improve its image in future. Because just providing quality products are not enough. They have to show concern for their Society Customers Employees P&G has adopted all its ways to achieve this aim, which will lead to a better corporate image of the company in future. If they got a chance to see the advertisement of P&G’s safeguard customer satisfaction and environmental safety are emphasized. For environmental safety, they have the motto of cleanliness and protection from the germs. As explained above that company image can be used as marketing resource. Due to the image, people are attracted to P&G. That’s why market helps the sales force to persuade the customers. In this way, P&G is using corporate image as a marketing resource. MARKET COVERAGE As far as safeguard is concerned, P&G is emphasizing only on urban areas, while rural areas are neglected, because their target market is middle and upper class and this class is mostly located in urban areas. Therefore, due to their product features, their market coverage is better. PROMOTION AND ADVERTISEMENT P&G has launched a new promotional program for safeguard. For this purpose, they followed two methods. i) Health education programs in schools. ii) Seashore protection. i) HELATH EDUCATION PROGRAMS IN SCHOOLS According to this program, P&G hires doctors who go to schools and address children regarding cleanliness and germ protection through safeguard. ii) SEASHORE PROTECTION PROGRAM According to this program, P&G personnel take children to the seashore and arrange different amusement programs and deliver lectures how to dispose waste and how to promote cleanliness in the environment. RESEARCH AND DEVELOPMENT With respect to R&D, P&G Pakistan has a strong back from the P&G worldwide network of research and development P&G’s innovations is a major competitive strength and is driven by the market place. The company sets out to deliver the customers the right science with the right processes at the right place. It must be seen to provide a quality of service, which is the best in the market. P&G is spending millions of dollars in R&D worldwide, while they have R&D cells in the countries in which the operations of business are going on. These R&D cells are responsible to identify the technological breakthrough, taking place in these countries. They are mostly customer oriented for which they test the products in the market and then introduce it to the whole target market. FINANCIAL RESOURCES The safeguard business accounts contribute nearly 6.3% of the company’s profit. The impressive growth recorded by the soap industry enabled it to make this contribution. This is due to increase in sales of safeguard in 1999. SALES VOLUME (Rs. in 000) Year 1999 2000 2001 Sales 276,558 308,915 358,525 A financial analysis for the last three years is: Year 1999 2000 2001 6.2% 6.7% 5.9% Operating Profit Margin Asset Turnover 8.3 times 8 times 6.6. times Return on Assets 35% 34.4% 32% Increase in Sales 60% 50% 112% Increase in Assets 120% 125% 128% Along with this internal resource generation, corporate name is at its back as sound credit worthiness for any borrowed fund. PROBLEM STATEMENT P & G is facing the problems in the following areas: There is gradual increase in the substitution of Safeguard due to its higher price. There is also great competition in the local Producers due to low price soap and also great competition in the organized sector due to equal size of the competitive organizations. As far as safeguard is concerned, P&G is emphasizing only on urban areas, while rural areas are neglected. P & G is Unwilling to serve low-income market. Other competitors in the soap industry are serving in each class with respect to different prices & their target market is upper class, middle class and lower class, each class with respect to different prices. Safeguard’s Price is especially very high towards lower income groups. P&G itself has no distribution channel for safeguard rather they are distributing the safeguard through International Brands Limited (IBL). This is also the reason for the high price. EXISTING STRATEGIES OF P&G for SAFEGUARD P&G is following different strategies in different marketing practices for safeguard. MARKETING STRATEGIES PROMOTIONAL STRATEGIES P&G gives high emphasis on direct approach to customers. Its sales teams visits schools after schools along with the medical practitioners and demonstrate experiments of hand and face washing in comparison with other soaps. They involve children and house wises in their campaign and then asks them to give comments. This way they create awareness and demand for the safeguard. They try to satisfy the customer at the spot and then sell a small size of 75 gm pack for trial basis. They also advertise these practices on television, often sponsors famous plays on dramas on TV. P&G gives high media coverage to Safeguard. Regarding the commercials on TV, they follow the policy that their commercials will not be executed right before and after the commercial of competitors. DISTRIBUTION STRATEGIES As described earlier that P&G is distributing safeguard through International Brands Ltd., distribution network which is a renowned distribution company. In each IBL office, there is an Area Sales manager of P&G who is responsible to watch the activities of IBL regarding distribution of Safeguard and make direct contact with customers to obtain the complaints. PRICING STRATEGIES P&G always emphasizes safeguard as quality product and they try to differentiate it as compared to competitors. But they have set the price of 125 gm of Safeguard Rs. 21 which is equal to the major competitor product Detol soap having price of Rs. 21 for 125 gm pack. Therefore, we can say they are somewhat following competitive price strategy. PRODUCT STRATEGIES Safeguard is quality product as described earlier and P&G do not compromise on quality. Therefore, in product strategy, they are following differentiation strategy. There are the marketing strategies of safeguard but there are a group of strategies, which determine the strategies of company regarding a product. BOSTON CONSULTANT GROUP MATRIX Market Share High Low High 100 Safeguard STAR QUESTION MARK Market Growth Low CASH COW DOG 10 1 0.1 Market share The BCG Matrix tells about the position of the products either as star, cash cow, question mark or dog. The two dimensions of this matrix are the relative market share and on y –axis industry growth rate. The market share of safeguard (P&G) in soap industry is lower than their competitors because of price sensitivity and its market share is increasing. Second, the market growth rate of soap business is faster than general economy, which is 9.8% per annum. This is due to increasing population and urbanization in the country. The above analysis shows that safeguard is a question mark in soap industry. It is recommended for question mark to follow growth-oriented strategies and more investment. P&G have resources to move it towards star. For growth strategy, company should seek out new opportunities. So they are now spending $ 3 million to expand the Hub plant where safeguard is manufactured. From the 10th of April another production unit has started production for safe guard to meet the expanding marketing needs. GENERAL ELECTRIC COMPANY MATRIX General Electric Company (GEC) Matrix uses the dimensions of industry attractiveness and business strengths to identify the current position of the company and suggests which type of strategy should be used. To measure each dimension, certain factors are selected. In soap industry, following factors are applicable: BUSINESS STRENGTHS Rating Weight 1=High Score Factors .5=Medium 0=Low Company’s relative market 25 .50 12.5 share Price competitiveness 15 .60 9 Financial strength 30 .90 27 Knowledge of customers and market 15 .60 9 Technological Advancement 15 .70 10.5 Total 100 70 INDUSTRY ATTRACTIVENESS Rating Weight 1=High Score Factors .5=Medium 0=Low Market size and growth rate 30 1 30 Intensity of competition 20 .90 18 Profitability 10 .60 6 Capital requirement 15 .70 10.5 Opportunities and threats 15 .75 11.25 Barriers to entry and exit 10 .50 5 Total 100 80.75 SPACE MATRIX Strategic Position and Action Evaluation Matrix is useful for determining the current strategic position of the organization with reference to its environment and helps deciding the strategy profiles for the company. In the context of P&G, the factors considered and intensity of their influence is given below: - COMPETITIVE ADVANTAGE Rating - 6=Low Factors 0=High Market share -4 Product quality -1 Customer loyalty -3 Control over distributors and -2 suppliers Promotional activities -1 Product price -3 Technical know-how -1 TOTAL -15 Average -2.14=-2 ENVIRONMENTAL STABILITY Rating - 6=Low Factors 0=High Technological changes -3 Rate of inflation -2 Barriers to entry into market -3 Competitive pressure -1 Demand variability -5 Price elasticity of demand -3 Total -17 Average -2.83=-3 INDUSTRY STRENGTH Rating 0=Low Factors +6=High Growth potential +5 Profit potential +3.5 Financial stability +4 Technological know how +5 Resources utilization +2.5 Ease of entry into market +4 Total +24 Average +4 SCORE ON X=AXIS Competitive Advantage = -2 Industrial Strength = +4 Total Score on x-axis = -2(+(+4)=+2 SCORE ON Y-AXIS Financial Strength = +5 Environmental Stability = -3 Total Score on y-axis = -3 +(+5) = +2 Coordinates (+2_+2) The direction vector points towards the aggressive quadrant. Therefore, the suitable strategies for P&G safeguard are:- Market penetration Market development Product development MARKET PENETRATION Market penetration means to exploit the available consumer efficiently to achieve high market share. This is probably done for a product, which is at the growth stage. Market penetration can be done through heavy advertisement and by providing products of different sizes and types for different consumers. For this purpose, highly extensive distribution channel should be used. MARKET DEVELOPMENT In market development strategy, organization should find the new uses of product, new segments and entering into new geographic areas. Still safeguard is being used for germs protection purpose, focusing on urban areas and more emphasis on middle and upper class. Therefore, they should identify the new such as for crockery purpose and explore the new and potential customers. PRODUCT DEVELOPMENT For product development, development of internal resources is emphasized. Therefore, P&G should acquire one more product or manufacturing plant for the production of safeguard to capture the wide market. For safeguard P&G is intensifying the efforts to increase the market share in growing industry because soap industry is growing with an annual rate of 9.8%. Therefore, we can say they are following consolidation strategy for safeguard, because they are intensifying their efforts on advertisement and promotional activities. PROPOSED STRATEGIES The practice of incomplete market coverage should not be followed because you cannot hijack other company’s customers and new customers as well. All these problems require following strategies: MARKET DEVELOPMENT STRATEGY P&G is emphasizing on urban areas while it has neglected the suburban areas, which is also a big market for soaps like safeguard. For this purpose, they should efficiently utilize their Marketing Information System to collect information about the demand and attitudes of the people in these areas. By using this strategy, safeguard can fetch the customers of competitors and will be successful in building new customers. PRODUCT DEVELOPMENT STRATEGY It describes to develop new products or modify the existing products with respect to size, color, packaging, etc. Safeguard is a well-perceived product among the customers, and at this moment, it is available in two sizes; 75gm and 125gm, which cannot satisfy the demand of every segment. While the products of the competitors are available in multiple sizes which provide abundant choices for purchases to customers for example Lifebuoy Gold has 140gm and 95gm and Medicame has 80gm soap available in the market This provide an opportunity to the customer to have multiple choices. It can be a threat for the market share of safeguard. On the other hand, in case of safeguard the choice to customer is very limited. This is what they have analyzed through market survey. Therefore, it is necessary that safeguard should be available in maximum possible sizes to meet the selection criteria of the customer. As far as launching of new product is concerned, it is not necessary for P&G at this moment, but in future, they will require taking this step as well because they have some other soap like ivory, and zest which are very famous in international market. MARKET PENETRATION STRATEGY It describes that a company tries to sell more of its product by introducing new supplementary uses. Safeguard is that product, which contains such chemicals useful for beauty care as well. This characteristic, we have analyzed through its product formula. Therefore, it is more useful to supplement this idea with existing safeguard or introduce safeguard into different pack sizes especially for capturing the female customers.
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