Because of the vastness of the variety of products produced by Procter and Gamble, they have several different competitors, although of course these competitors do not compete in all the same industries. The industries that P&G compete in include food, personal care, business services, commercial cleaning and facilities management services, consumer products manufacturers, and cleaning products.
For example, P&G makes Pringles, whose competitors are basically any chip products, including the local Egyptian company Chipsy, as well as any other chips producers.
Although Chipsy only makes different variations of chips, while P&G makes several different products, they are direct competitors. This gives Chipsy a direct advantage, as they are able to put all their efforts and focus into the production of just one product, while P&G spreads their resources and produces many different and extremely unrelated products.
Chipsy is just a simple example of course, as Pringles is not even P&Gs main focus, however it expresses the point of how some competitors could be putting all their focus and efforts on producing just one product and trying to perfect it, while P&G produces so many different products, and produces them all without compromising the quality of one for the other, as all P&G products are definitely excellent quality.
However there are other competitors, some who do compete in several different industries simultaneously as does P&G.
An example of this is Unilever, who competes in many different products, including hygiene products, self care, and others. Of course being a multinational corporation means that the company will have competitors both locally, as well as all around the world. In addition there are local market competitors, who produce their products locally, and compete only for local markets, while some are other multinational companies competing for local market share.
In Egypt, the main competitors are L’Oreal, Kimberly Clark, Henkel, Johnson and Johnson, which are all multinational competitors, as well as the local competitors sparkle and Oxi, however of course many of its competitors compete in other countries, but do not necessarily compete in Egypt. Procter and gamble has the largest variety of products in the household and personal care industry with twenty-four different billion-dollar brands, with another eighteen products with sales between 500 million to 1 billion dollars. P&G generates revenues almost forty-three percent higher than even its closest ompetitor, Unilever, while also having a much higher operating income margin than any of their competitors. The company’s main advantage is its innovation and continuous creation of new products, while enhancing the older existing products. The company invests over two billion dollars each year in research and development expenses, which is nearly twice as much as the one point three billion Unilever, its biggest competitor invests each year. This two billion plus is actually near the same amount invested by all its other major competitors combined (global), excluding Unilever of course.
This list includes Avon, Clorox Company, Colgate-Palmolive Company, Energizer Holdings, Henkel, Kimberly-Clark, L’Oreal, and Reckitt Benckisser. Clorox is one of the main competitors who produce household products, competing specifically in the household cleaning products. Although it is a main competitor, it is not a complete direct competitor. This is because P&G still competes in some products that Clorox does not produce, for example beauty products, which are one of the largest sectors P&G deals with. Kimberly-Clark competes in household products as well, but items different than those Clorox produces.
Kimberly-Clark specializes more in tissues, paper towels, diapers and feminine products, all mainly categorized under paper or tissue products. The main products Kimberly-Clark produces include huggies diapers, Kotex feminine products, Scott Paper Towels and Kleenex tissues, which compete with the P&G products including Pampers, Always, bounty, Charmin and puffs. Colgate-Palmolive produces several products, almost all of which overlap with P&G products. The majority of Colgate-Palmolive’s sales in 2006 came from its oral care segment including toothpaste, toothbrushes, mouth rinses and other oral hygiene products.
The rest of its revenues came from the sale of home care products such as laundry detergent, cleaning products etc, as well as the personal care products, including mainly soaps and shaving products, as well as various other hygiene products. The direct competing products produced by P&G include Gillette, owned by P&G, as well as Camay, Olay, safeguard and zest soaps, Braun, crest and oral-B dental products, as well as laundry detergents and cleaning products, including cheer, bounce, downy, febrile air fresheners and tide. L’Oreal competes with P&G in the beauty products market only.
L’Oreal is not a diversified producer, and produces only beauty and cosmetics companies, including skincare, hair care, make-up and perfume products, as well as various other beauty and cosmetics products. L’Oreal is able to compete with P&G because of the fact that P&G competes in so many markets, and does not go into only one in depth, allowing L’Oreal to explore in great depth all the different aspects of beauty and cosmetics products, being able to find see great products, as the industry itself allows for higher margins then several of the other industries P&G competes in.
This means that even though L’Oreal is focused on one industry, it is one where high profits are expected due to the high margins, while P&G only has certain products in this industry, including herbal essences, max-factor, Clairol, and Pantene as well as many others, while also competing in other industries where such high margins are not possible. Henkel is another competitor which competes both internationally and locally. In Egypt, the main products produced by Henkel which compete with P&G products are Pril and Persil, cleaning and household care products, one being a laundry detergent and the other, a dish soap.
Johnson & Johnson, another competitor produces brands including band-aid, Tylenol, Neutrogena skin and beauty products, clean and clear facial wash, and of course Johnson and Johnson baby shampoo and conditioners (no tears). Oxi is a product produced by Arma, a company which produces mainly food products, including oils and fats, as well as soap and detergent products, mainly Oxi detergent. It is a locally produced product which competes only locally.
It is a product sold to the masses in Egypt, as its costs are lower, and target is the lower income groups who do not focus as much on the brand names as they do on the affordability. Sparkle is another competing product, which represents hair oils, and shampoo for normal and oily hair. It is a locally produced and sold product, also targeted to the masses, who will base their purchases on affordability rather than on quality or brand recognition. Unilever is P&Gs main competitor both locally in Egypt, and globally. Unilever is P&G’s main competitor mainly because of the nature of the company.
Both companies are diversified in the production, not being tailored to one industry, but rather tapping into most if not all main industries, although of course some more than others. They both compete in most of their products, although of course some products are produced by one company and not the other, or some are given more focus or higher priority than the same product in the other company. Some of the main products produced by Unilever which compete with P&Gs main products include Omo detergent, Lux soap, Sunsilk hair products, rexona / sure deodorant, axe, and dove soap.
Of course these are the main products which Unilever competes with P&G products, however there are of course so many more, however as they are not sold in Egypt’s market they will not be discussed, although they do directly compete with each other in many other products as well. Something I found quite surprising is that some companies may sell products in one country, while their competitors may sell the same brand name in another. For example, Unilever sells Persil in some countries, while it belongs to Henkel in the others.
Another strategy used by the big multinational companies is to have a line of production, with a main product, and a secondary tier product in the same country. For example, in the detergent sector, the company markets detergent products internationally and uses individual sub-brands to segment those markets. This strategy is used by both Unliever and P&G in many different markets and different countries where brands are recognized differently, as they are initially advertised and portrayed as different products of different quality, depending on the image the company intends for them in a given market or country. 2008 financials available for CLX, PG. All others are 2007. The table above shows that P&G sees much higher Revenues and Net Income than that of all its main competitors. It also does show however the amount of investment in research and development, which as previously mentioned is a much higher amount spent by P&G than any of its competitors. It does prove that P&G spends almost double what Unilever spends on research and development, and also that If you combine the amount spent by all the other competitors, excluding Unilever, you will get a number very similar to that spent by P&G.
I think that the larger amounts spent on research and development is not coincidentally coming from the companies showing the largest revenues, I think it is the cause. The amounts spent show how much the company is willing to spend on creating new products, or modifying already existing ones, to ensure they meet the requirements or desires of the consumers, to ensure they sell the products they are creating, while innovating to meet the new market demands, which constantly change due to echnology, or changes in consumers desires which can happen for any reason ranging from boredom with a product, to new interests, or new technological influences changing demands or desires. Basically I think that the more you spend, the more you will gain, as long as you are spending on ways to enhance your products. Like they say, you gotta spend money to make money, right? Although L’Oreal did spend a significant amount of money on research and development, relative to their revenues, it is still significantly less than that of Unilever or P&G.
Also another reason for the smaller amount of revenues is because of the industries competed in. L’Oreal is a specified producer, which focuses on one main industry, beauty and cosmetics, while P&G competes in so many different industries, giving an advantage over the specified products, as it is primarily a bigger company with larger variety, as well as not being affected by changes in a single market, as if spending in one industry decreases, the others will support it to ensure high revenues still prevail.
The size of the company is also a main reflection of the revenues, and P&G is by far a much larger company than most, if not all of its competitors, including the complete, partial, direct, and indirect ones. P&G believes to have a unique competitive advantage over other companies, which cannot be copied. This is their people. They believe that while being inspired and working together they are unstoppable. They believe that the level of “inspired performance” is crucial to their ability to sustain consistent growth over time.
They put great efforts into hiring only the best people by investing in talented people and further developing them to allow them to be their potential best, and help the company sustain its reputation while continuing to grow within its markets. Basically P&G believes that their main advantage over other companies is their actual manpower. At the end of the day, the real difference between one product and another is how it is made, which will differ depending mainly on who is making it.
With this in mind, P&G makes sure to hire only the people who will allow them to continue creating and enhancing products, to suit the developing consumer needs, and the market needs as well. The idea is to try to figure out what new products the consumers are going to need, before they really do need them, so they will be available when the market is ready for them. The people behind this must be able to see clear future ideas and be creative and talented, because you can’t ask people what new technology or product they are going to need next, because they don’t know.
P&G knows this and tries to work with this in mind, always coming up with new ideas that the consumers will appreciate once available, as their goal is to “provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come”, while expecting in return from their consumers “leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper. ”
Cite this Business Review of Procter and Gamble
Business Review of Procter and Gamble. (2018, Feb 15). Retrieved from https://graduateway.com/p-competition/