Strategic Fit With the Industry Environment Assessment

Diversification is one key area I outlined previously as an area of concern for P&G. Adopting a multi-brand approach does mean that P&G is practically everywhere in everybody’s lives – that has its advantages, as evident in P&G’s strong numbers in many markets. However, being everywhere at one time could well dilute P&G’s identity in the eyes of the consumer. To the average consumer, P&G is remembered as a multinational conglomerate that “makes many household items we use”. The sheer number makes it difficult for one to associate brands with P&G. The lack of identity may lead to low brand equity, with consumers failing to understand the values of the P&G brand positioning. Huge diversification has resulted in P&G’s market leadership in many markets, but with that it has lost the ability to build a strong, singular identity.

 

Being a market leader with such a diverse portfolio, P&G has been inflexible due to the size of its organization and extensive bureaucracy in shifting to emerging markets. This ill-timed shift in focus means that P&G forgoes the opportunity to engage in either a market development strategy (selling existing products to new markets), or a diversification strategy (new innovative products brought into new and growing markets). To make up for this strategic product-mix mismatch, P&G has to reposition their products and increase decentralization of management, ensuring that they have the required marketing intelligence, in order to better understand and customize for the local needs and preferences of each emerging market. Despite efforts that have been made to penetrate these markets, with sales developing from markets making up 37% of P&G total sales in 2012.  Lack of price sensitivity also hampers the company’s long term growth, most fiscally conscious consumers will begin to look for the same product from a cheaper competitor.