Diversification: Product diversification with about 300 products. The diverse product mix includes personal and beauty items, household products, health and wellness, Baby and family and pet care and nutrition.
Research and development: P&G invests 3 - 4 % of Net outside Sales in research and development (R&D). This amount easily exceeds their leading competitors, among consumer products companies. They also have more Ph.D.s working in labs around the world than the combined science and engineering faculty at Harvard, MIT and Berkeley.
Innovation: In fiscal year 2004-05, P&G was granted 27,000 patents globally. P&G has produced a number of new products like diapers; shampoo and conditioner in one; toothpaste that prevents osteoporosis. Its diversified product mix helps in connecting technology across categories and brings innovation to the product.
Fat profit margins: P&G announced net sales for the April - June quarter to $21.3 billion, the growth of 10%. This is the seventh year and 24th consecutive quarter in which P&G delivered top-line growth above the company's targets.
Strong brands: P&G has 13 Billion-Dollar Sales Brands such as: Always, Ariel, Bounty, Charmin, Crest, Downy/Lenor, Folgers, Iams, Pampers, Pantene, Pringle's and Tide. The total sales of these thirteen ‘billion dollar brands’ taken together, would make a Fortune 100 company in itself.
Brand building: Advertisement expenditure of P&G is twice than the next company on the list of companies which spend highly on advertising. Their idea of promoting product during weekday daytime slots when mostly housewives would be available helped in building the brand in a big way.
Wide distribution network: P&G markets its products in 160 countries with manufacturing capacities in 40 countries.
Leading market position: P&G is the world's largest consumer products company. P&G is the global leader in all its 5 broad business segments.
Non-profitable products: Running products which may not be profitable but still had to do it because of keeping up with the market presence strategy. Few such products are Crest as toothpaste, Always hygiene pads, Dawn dishwashing bar.
Inadequate quality control: With large number of product profile, the quality control of all the products has deteriorated. In September 2006, P&G suspended sales of the cosmetics in China after they were found by the authorities to contain the banned substances, chromium and neodymium. The case of Rely tampon also establishes this fact.
· Mass appeal products at premium price: Some mass appeal products like Pringles are priced very high as compared to its competitor’s products.
Developing markets: The economies of China and India are growing at a very fast pace. The company currently competes in only about 10 of its top 25 categories in most developing countries. This provides P&G with an opportunity to enhance its market share as well as expand its presence in other categories.
Growing bottled water market: Bottled water is a fast-growing segment in the world’s food and beverage market owing to increasing health concerns. In May 2007, P&G launched PUR Flavor Options, a product that allows consumers to choose flavored or unflavored water from their home water filter. P&G could leverage its position in the bottled water segment to capitalize on the growing demand for packaged and flavored water.
Growing healthcare industry in the US: There is a growing opportunity for disinfectant manufacturers in the healthcare industry in the US. The aging US population would lead to increased healthcare spending in the US. P&G is well positioned in the prescription drugs and healthcare segments and can leverage this trend to boost both its revenues and market share.
· Changing consumer preference: With the consumer preferences and choices, P&G because of its huge R&D base and Connect + Develop program is well placed to come up with new and innovative products that may suit the customer needs.
New regulations: Due to increasing public pressure, the US Food and Drug Administration (FDA) are expected to impose stringent quality norms on cosmetic products. New regulations may delay launch of new products and result in higher product development expenditure. These regulations may impose new liabilities or increase operating expenses, either of which could result in a decline in profitability.
Competition from local low cost players: P&G faces competition from local, low-cost manufacturers in developing countries.
Customer concentration: A significant portion of the revenues from the sale of products is derived from a few customers. Sales to Wal-Mart Stores, Inc. represent approximately 15% of its total revenue in 2007. The company gets more than billions of dollars from seven retail customers. The loss of any of these customers will lead to a sharp decline in its revenues.