2.

Marketing environment

includes the actors and forces outside marketing that affect marketing
managements ability to build and maintain successful relationships with
customers. (Kotler & Armstrong, 2010)1

2.1 Microeconomic Environment

consists of the actors close to the company that affect its ability to serve
its customers, the company, suppliers, marketing intermediaries,
customer markets, competitors, and publics.2

2.1.1 The companys Microenvironment

Include collaboration between department in the P&G , P&G in designing

marketing plan takes into account other department such as top
management , finance, purchasing and HR, marketing managers puts
marketing plan based upon the mission and vision and objectives Put by
top management ,all departments in P&G works at harmony manner.

2.1.2 Suppliers

According to kotler Provide the resources to produce goods and services,

Treated as partners to provide customer value (Kotler & Armstrong,
2010).

Suppliers of P&G Egypt have good related with their suppliers they
import raw materials from Tunis or Ukraine.

2.1.3 Market intermediaries

Help the company to promote, sell and distribute its products to final
buyers. (Kotler & Armstrong, 2010)3.

P&G Egypt contract with companies distribute its product like Al-Amir ,
Good service. Contract with distributor according geographical or
segmentation.

1
Kotler, P., & Armstrong, G. (2010). Chapter 3 Analyzing The Marketing Environment . In P. Kotler, &
G. Armstrong, Principles Of Marketing (p. 94). Pearson .

2
Ibid p94
3
Ibid p96
P&G use reseller to find customers such as project called ( Van ) that
project promote customers to purchase P&G product in villages and in
upper Egypt.

P&G use marketing companies to promote for P&G products. P&G deal
with financial intermediaries such as HSCB and NSGB to collect its debt
account from larger retailer or whole seller.

2.1.4Competitors:

Firms must gain strategic advantage by positioning their offerings against

competitors offerings (Kotler & Armstrong, 2010)4.

P&G have many competitors in Egypt such as Persil and O2 and other
egptian manufacturer like lang.

2.1.5 Public

Any group that has an actual or potential interest in or impact on an

organizations ability to achieve its objectives such as ,Financial publics,
Media publics Government publics, Citizen-action publics, Local publics,
General public ,and Internal publics (Kotler & Armstrong, 2010).5

2.1.5.1Financial publics

P&G deal with bigger investment houses in the world and Egypt such as
Hazim Hassan, EFG herms.

2.1.5.2 government public

P&G in Egypt take in account change in government development P&G

lease all building , P&G use big lawyer in Egypt and consultant about
type of its advertising and product safety.

2.1.5.3 Citizen action public

P&G deal with international and local standards of environment , and

have good relationship with consumer organizations .

2.2. Macro Environment

4
Ibid p98
5
Ibid p99
Macroeconomic Forces: Economic growth affects P&G to some extent.
Specifically, in mature markets like the USA, a recession impacts P&Gs
sales/earnings growth, as consumers tend to completely trade-down and
only purchase lowest-priced, heavily-discounted goods.

2.2.1Demographic Forces: Especially in more Mature markets, the

population is increasingly aging, providing more opportunities for
products which cater to Baby Boomers. In Emerging/Developing
Markets, a growing number of new consumers with disposable income
spell significant opportunities for P&G. Many new markets though have
large number of low-income consumers.

2.2.2Global Forces: Economic Growth in countries like China, India,

Russia and Brazil afford new markets for P&G products. The opening up
of new regions offers P&G the opportunity to operate in more countries.

2.2.3Social Forces: With heightened awareness of wellness/well-being

and quality of life issues, along with increasing disposable incomes, the
market for Beauty/Feminine care has extended greatly, and is gender-
neutral given the growing demand by male consumers for Beauty
products. Furthermore, there is a greater demand for products made form
Natural/Organic Ingredients.

2.2.4Technological Forces: Given how capital-intensive the

beauty/feminine care industry is, it is imperative for P&G to stay ahead of
the curve in terms of the most advanced technological breakthroughs, as
the company requires highly mechanized assembly lines designed both
for long production runs and flexibility. The proliferation of Internet
users also opens up further market opportunities for P&G to market its
products.

3. Consumer behavior

&G states that consumer behavior changed during the downturn and that
P&G responded to this change in behavior and changes in their rivals
behavior by changing the types of products they currently product and
introducing similar products.

P&G have different family branding policies is that Krafts products are
homogeneous (they are all food products) and P&Gs products are not.
Thus, it would not make sense for P&G to attempt to apply the same
name to the whole variety of products it markets. Another reason for
P&Gs branding strategy is the companys penchant for bringing out
different brands in a particular product category, such as detergents, in
order to satisfy different market segments and broaden its market share.

4. Market segmentations

Procter & Gamble has identified at least eight important laundry

detergent segments, along with numerous subsegments, and has
developed a different brand designed to meet the special needs of each.
The eight P&G brands are positioned for different segments as follows:6

Tide "helps keep clothes looking like new." It's the all-purpose
family detergent that is "tough on greasy stains." Tide with Bleach
is "so powerful, it whitens down to the fiber."

Cheer with Triple Color Guard is the "color expert." It guards

against fading, color transfer, and fuzzy buildup. Cheer Free is
"dermatologist tested . . . contains no irritating perfume or dye."

Bold is the detergent with built-in fabric softener. It's "for clean,
soft, fresh-smelling clothes." Bold liquid adds "the fresh fabric
softener scent."

Gain, originally P&G's "enzyme" detergent, was repositioned as

the detergent that gives you clean, fresh-smelling clothes. It "cleans
and freshens like sunshine. It's not just plain clean, it's Gain clean."

Era has "built-in stain removers." It's "the power tool for stains."

Oxydol contains "stain-seeking bleach." It "combines the cleaning

power of detergents with the whitening power of nonchlorine
bleach, so your whites sparkle and your clothes look bright." So
"don't reach for the bleachgrab a box of Ox!"

Dreft also "helps remove tough baby stains . . . for a clean you can
trust." It's "pediatrician recommended and the first choice of
mothers." It "doesn't remove the flame resistance of children's
sleepwear."

6
http://gmx.xmu.edu.cn/ews/business/pmarketing/chapter07.htm#case
 Ivory Snow is "ninety-nine and forty-four one hundredths percent
pure." It "gently cleans fine washables and baby clothes . . . leaving
them feeling soft." It provides "safe and gentle care in the gentle
cycle."

Within each segment, Procter & Gamble has identified even

narrower niches. For example, you can buy regular Tide (in
powder or liquid form) or any of several formulations:

Tide with Bleach helps to "keep your whites white and your colors
bright," "kills 99.9 percent of bacteria."

Tide Clean Rinse "goes beyond stain removal to prevent dingy

buildup on clothes."

Tide Mountain Spring lets you "bring the fresh clean scent of the
great outdoors insidethe scent of crisp mountain air and fresh
wildflowers."

Tide High Efficiency is "formulated for high efficiency top-loading

machines"it prevents oversudsing.

Tide Free "provides all the stain removal benefits without any dyes
or perfumes."

5. Market targeting:

The Procter & Gamble Company (P&G) embarked on an ambitious

growth strategy in recent years to reach More Consumers in More Parts
of the World, More Completely.1 The goal is to reach and acquire a
billion more consumers by penetrating the emerging markets with the
most populous and developing countries of India and China. This
purpose-inspired growth strategy that would be key to its profitable
future, growth and sustainable development seems to be working well so
far. In the most recent quarterly earnings statement published August 5th,
P&Gs net sales grew 10 percent to $20.9 billion for the fourth quarter
and five percent to $82.6 billion for fiscal 2011.2 Organic sales, which
exclude the impact of acquisitions, divestitures and foreign exchange,
grew five percent for the quarter and four percent for the fiscal year2.
As one of the worlds largest consumer products company with the
largest lineup of leading brands, P&G has been experiencing stagnant
growth in most of its leading markets in developed countries. Rising
commodity prices, low single digit growth due to market contractions and
market saturation have challenged P&Gs long term growth strategy.
Investments in emerging markets present P&G with unparalleled
opportunities for acquiring new market share, expanding its existing
operations in more places with more growth and revenues. However, the
challenges of emerging markets in most of the developing nations, also
present significant issues P&G must identify and solve, sometimes even
at the expense of margins.

6. Differentiation and positioning:

Competitive 5 Forces Analysis

6.1.Buyer Power (Mixed-Strong Buyer Power from Retailers). P&G faces

weak buyer power because customers are fragmented and have little
influence on price. But if we consider the buyers of P&G products to be
retailers, rather than individuals, then P&G faces very strong buyer
power. Retailers like Wal-Mart and Target are able to negotiate for
pricing with P&G because they purchase and sell much of P&Gs
products.

6.2 Supplier Power (Low). A co-dependent relationship exists between

P&G and its suppliers. In order to generate above average revenues, the
Company needs various quality materials for product production at the
best prices available. Suppliers of these materials also need key
customers like P&G for profitable revenue generation but will most likely
have little bargaining power because of its size.

6.3Threat of New Entrants (Moderate). The sheer scale of products that

are distributed under Procter & Gamble's name creates a challenge for
new entrants. Since the Company has a significant amount of many
market shares around the world, a company without the capital for heavy
marketing or research and development, would hardly be able to compete.
However, there is concern about firms that specialize in specific markets.
This type of company could become a threat to P&Gs corresponding
business segment. A small manufacturer could develop a superior product
and compete with Procter & Gamble. The real test is whether the small
manufacturer can get its products on the shelves of the same retailers as
that of its much larger rivals.

6.4Threat of Substitutes (High). There are considerable substitutes for all

of P&G's product offerings, creating an intense competitive environment.
In order to differentiate itself, the firm must continue to provide new,
innovative products and branding to the customer. Furthermore, the
pricing power of brands can be eroded with substitutes such as store-
branded private-label offerings. In fact, some of these same store-brand
private-label products are manufactured by the large consumer-products
firms. The firms believe that if they can manufacture and package a
lower-price alternative themselves, they would rather accept the marginal
revenue from their lower-priced items than risk completely losing the sale
to a private-label competitor.

6.5Degree of Rivalry (High). While P&G enjoys exceptional brand name

recognition and commands a considerable market share, the truth is that
switching costs in the industry are quite low. It does not cost anything for
a consumer to buy one brand of shampoo instead of another. That,
combined with the size of other competitors such as Unilever, makes this
a highly competitive industry. Significant Competitors include: Unilever,
Colgate-Palmolive, Playtex, Avon and Estee Lauder.

P&Gs formidable success to date is attributable to a number of distinct

competitive advantages:

P&G is the innovation leader in the industry. Virtually all the organic
sales growth P&G delivered in the past years comes from new brands and
new or improved product innovation. P&G spends almost twice as much
on research and development spending as its closest competitor. In
addition, the Company multiplies its internal innovation capability with a
global network of innovation partners outside P&G. More than half of all
product innovation coming from P&G includes at least one major
component from an external partner.
P&G is also the brand-building leader of its industry. The Company has
built the strongest portfolio of brands in the industry with 23 Billion-
dollar brands and 20 half-billion-dollar brands. These 43 brands account
for 85% of sales and more than 90% of profit. Twelve of the billion-
dollar brands are the #1 global market share leaders of their categories.
The majority of the balance are #2. As a group, P&Gs billion-dollar
brands have grown sales at an average rate of 11% per year (P&G 2009
Annual Report).

P& G has also established industry-leading go-to-market capabilities.

P&G is consistently ranked by leading retailers in industry surveys as a
preferred supplier and as the industry leader in a wide range of
capabilities including clearest company strategy, brands most important
to retailers, strong business fundamentals and innovative marketing
programs.

The Company has also established significant scale advantages as a total

company and in individual categories, countries and retail channels.
P&Gs scale advantage is driven as much by knowledge sharing,
common systems and processes, and best practices, as it is by its size and
scope. These scale benefits enable P&G to deliver consistently superior
consumer and shareholder value (P&G 2009 Annual Report).

By leveraging these core strengths - consumer understanding, brand-

building, innovation, go-to-market capability and scale - P&G can
execute its growth strategies. These strengths create significant
competitive advantage for P&G.
 7. Recommendation

The Recommendation is to go for a combined Low-Income segment and

New Natural Product strategy as this facilitates P&Gs need to capture a
greater slice of the Low-Income consumer market both in Mature and
Developing markets, which also capturing a greater slice of the Natural
Ingredient market and the growing Mens Market. Unlike in the case
study, the author advocates New Natural Ingredient product development
in multiple segments, and not just confined to the Skin Care segment of
the Beauty /Feminine Care segment. Such a combined Strategy will
require the creation of new products and the expansion of existing ones,
combined with Related Diversification via Acquisition if suitable
Acquisition targets are identified and can be purchased at an attractive
price. P&G can well afford this combined approach, and is sitting in an
elevated position given its financial clout and ability to cherry-pick
potential Acquisitions.

8. References
Kotler, P., & Armstrong, G. (2010). Chapter 3 Analyzing The Marketing Environment . In P.
Kotler, & G. Armstrong, Principles Of Marketing (p. 94). Pearson .

Mockler, Dr. Robert J. (2007). Case 27. Proctor & Gamble: The
Beauty/Feminine Care Segment of the Consumer Goods Industry.

Proctor & Gamble 2009 Annual Report.

Proctor & Gamble Company. Wikinvest. Retrieved from:

http://www.wikinvest.com/stock/Procter_&_Gamble_Company_(PG).

http://gmx.xmu.edu.cn/ews/business/pmarketing/chapter07.htm#case