Procter & Gamble

Business Logic

Presentation
The Procter & Gamble Company (P&G) is an American multi-
national consumer goods corporation headquartered in downtown
Cincinnati, Ohio. It is founded in 1837 by British-American William
Procter and Irish-American James Gamble.

It specializes in a wide range of personal consumer health, personal

care and hygiene products. These products are organized into several
segments including Beauty; Grooming; Health Care; Fabric & Home
Care; and Baby, Feminine & Family Care.
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 OUR PURPOSE
We will 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. 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.
Success Story

English-born candlemaker William Procter and Irish-born soap manufacturer

James Gamble immigrated to the United States from the United Kingdom.
They initially settled in Cincinnati, Ohio, where they first connected through
their marriage to sisters Olivia and Elizabeth Norris. Procter & Gamble was
founded in 1837 after their father-in-law, Alexander Norris, convinced them
to be business partners.
Success Story
During the American Civil War, the company supplied soap and candles to
the Union Army, and after the war, it sold even more of these products to the
general public. Introduced in 1879, Ivory soap, Crisco shortening (1911),
Tide (1946)—the first synthetic laundry detergent—and Joy (1949), the first
synthetic liquid detergent, were some of its initial offerings.

The business expanded its product lines over years that followed to include
baking mixes, toothpaste, coffee, and tea. Procter & Gamble was marketing
products in a number of significant categories by the early 21st century:
house and home (cleaning products, detergents, paper towels, coffee, and
snack foods); personal and beauty (fragrances, deodorants, cosmetics,
shaving supplies, and hair color); baby and family (diapers and tissue,
cleansing products, and moisturizers); and pet care, including meals for pets.
 Business Model
Research and Development
Distinct knowledge centers of first-in-class experts uncover new technologies and cutting-edge capabilities based on current and future consumer
needs. Harnessed by scientists, designers, and engineers to constructively disrupt the status quo.

Testing and Quality Control

Before marketing a new product, they go beyond regulatory compliance to ensure every ingredient’s safety through a four-step, science-based process.
P&G uses the same process as regulatory agencies around the world, like the US FDA, EPA, the EU, the WHO, and others.

The 4 Step Process

Step 1: Doubt
Step 2: Define
Step 3: Determine
Step 4: Diligence
 Business Model
Manufacturing
P&G Manufacturing is all about safety, quality, and productivity. P&G manufacturing facilities include state-of-the-art robotics, automation, zero-
touch systems, and even “zero waste to landfill” capabilities.

Packaging and Design

The teams of designers, material scientists, and innovators work hand in hand to create new packaging solutions to reduce plastic, reduce
transportation emission, consumers with disabilities, and reuses materials while providing an incredible usage experience. In fact, these innovators
around the world are working towards 100% recyclable or reusable packaging.
 Business Model
Acquisitions
Procter & Gamble has made acquisitions across sectors such as Beauty & Personal Care Products, B2C E-Commerce, Consumer Digital - US and
others. Some of these are Billie, Tulla, Walker & Company, Wella, and Max Factor.

Connect + Develop
P&G/s global team searches for trailblazers outside the company. Then, the company creates and nurtures partnerships with these inventors, patent
holders and other innovators—ultimately leading to new solutions in every area of business, from supply chains to products and technologies to in-
store and e-commerce experiences.
 How it Achieved Superior
Profitability & Growth

Procter and Gamble’s key resources are its product portfolio, strong brand reputation, research and development
capabilities, and global supply chain network. These resources enable them to maintain high quality standards and efficient
production processes. This diversification of the product portfolio reduces business risks and helps to maintain a consistent
revenue stream.

The company's commitment to research and development has also helped it to launch innovative products and maintain its
competitiveness in the rapidly changing consumer goods market.

The business uses a variety of marketing and promotional initiatives to keep its good reputation with customers. These
marketing initiatives foster a sense of loyalty and trust that leads to enduring connections with clients. In order to guarantee
satisfaction and handle any issues, they also put a lot of effort into providing outstanding customer service and support
 How it Attained Competitive Advantage
and Superior Performance

Differentiation Cost Leadership

Differentiation involves improving the A strategic goal based on the cost leadership
uniqueness of the business and its products in generic strategy is to develop Procter &
order to attract target customers. Gamble's competitive advantage through
cost-cutting measures. Pantene hair care
products, for example, are priced lower than
competitors such as Unilever's Dove hair care
products.

Maintain Effective Marketing

Strategies that Highlight the Automation
Uniqueness of Products

Pricing and promotional activities are

Automation is increasingly being used to
determined by the uniqueness of the product.
reduce costs and increase efficiency in
These factors are incorporated into Procter &
Procter & Gamble's operations management
Gamble's four-part marketing mix.
and manufacturing processes.
 Distinct Competitive Advantages

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

P&G is the innovation leader in the industry.
capabilities.

P&G is also the brand-building leader of its industry P&G has also established significant scale advantages.
 Why Shareholders Invested
P&G's global reach, spanning more than 180 countries, serves to reduce the risk that comes
with operating exclusively in one area or market.

In the 2023 Fiscal Year P&G Annual Report Organic sales for the year grew 7%. Core earnings per share grew
2%. Currency-neutral core earnings per share were up 11%. Adjusted free cash flow productivity was 95%. This
was the second consecutive year of 7% organic sales growth and fifth consecutive year of 5% or better organic
growth — starting in fiscal 2019: 5%, 6%, 6%, 7%, 7%.

The core earnings per share growth of 2% overcame a 24 percentage-point headwind from higher materials costs
and foreign exchange. P&G increased the dividend by 3% and returned over $16 billion of value to shareowners
with $9 billion in dividends and over $7 billion in share repurchase. Over the past 10 years, P&G have returned
$145 billion to shareowners through dividends and share repurchase. P&G has paid a dividend for 133
consecutive years, raising the company’s dividend for 67 consecutive years. Only seven U.S. publicly traded
companies have paid a dividend more consecutive years than P&G, and only three U.S. companies have raised
their dividend more consecutive years.
(Data was sourced from the Procter and Gamble 2023 Annual Report)
Effects of the Characteristics of the Industry to the
Performance of a Company
Geographic Scope

P&G’s corporate structure offers the global benefits of an international company and
the integrity and relevancy to consumers in more than 180 countries where P&G
products are sold.

Boundaries of the Industry

The company focuses on delivering superior products with the best performance, in
every price tier in which they compete.

The company remains committed to the strategy that give focus on daily use categories
where performance drives brand choice, superiority (of product, package,
communication, go-to-market execution and value), productivity, constructive
disruption, and an agile and accountable organization structure and culture — all in
pursuit of sustainable, balanced growth and value creation.
Effects of the Characteristics of the Industry to the
Performance of a Company
Procter & Gamble focuses on continuous market research and product development which
affects the performance of the company. In 1921, P&G started market research and was
joined by D. Paul "Doc" Smelser, a Ph.D. economist from Johns Hopkins University. He
collects statistical data breaking out consumers by income and background, making
Procter and Gamble the first company to conduct deliberate, data-based market research
with consumers.

Procter & Gamble ensures the safety of products, packages and operations for the
employees, consumers and the environment. The company considers this to be a
requirement for conducting responsible business, and an essential element of building and
maintaining public trust in the products. They carefully evaluate the safety of all products
and ingredients before releasing to the market, using well-established risk assessment
methods to understand both hazards and potential exposures.
Strategies it Adopted to Build Barriers to Entry

The company benefits from high process efficiencies and high cost-effectiveness linked to
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its organizational size. Also, P&G maintains a high-efficiency global product distribution
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network. This network involves company-owned facilities
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product competitiveness. This
allows the company to meet consumer demands and respond quickly to changes in the
market.

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Procter & Gamble Company (PG) is a leading household and personal
efficitur care manufacturer
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around since 1837. The company has had a significant amount of time to create a brand image. For
example, Tide and Pampers are household names that contribute to consumer loyalty and P&G’s stable
Brand Loyalty market share.

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P&G's strategy that involves consumers' brand loyalty is the “Point Loyalty Program.” Consumers find
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P&G incorporates many of the usual loyalty program features and they use it to track consumer behaviors
at key transition points (e.g., change in diaper size) in the overall product usage life-cycle. In that way,
they can send special offers and targeted messages to keep consumers loyal and mitigate switching
behaviors at critical junctures.
Strategies it Adopted to Build Barriers to Entry

P&G also has an efficient distribution system which allows it to distribute its products in
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various regions of the globe at a lower cost than its competitors. P&G also collaborates
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Advantages This allows P&G to save costs associated with huge inventories
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Also, P&G owns and operates almost 115 manufacturing facilities across 80 countries
around the globe. This Is a great asset of the company which provides it with the capability
of saving on the cost of shipping products from one region to another.

Switching costs in the industry are quite low. It does not cost anything for a consumer to buy one brand of
Customer Switching shampoo instead of another. This external factor enables new entrants to exert a strong-intensity force
against the company. However, the moderate capital costsLorem limitipsum
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Strategies it Adopted to Build Barriers to Entry

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P&G’s Global Government Relations & Public Policy (P&G GGRPP)
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of view in Washington, D.C., in U.S. state capitals and odio odio.country capitals around the world. Working
in key
with the businesses, P&G GGRPP focuses on legislative and public policy issues that impact the
Company’s bottom line and long-term business interests.

Government Where permitted by law, P&G GGRPP engages and educates policy-makers and key stakeholders on issues
that impact our business; facilitates the exchange of information between key decision makers and public
Regulation policy organizations in the United States and abroad; and leads Company actions on policy matters both
unilaterally and in industry coalitions and associations.

P&G complies with all U.S. federal and state laws, including
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 Conclusion

Lessons Learned
To conclude, Procter & Gamble's business model has demonstrated resilience and innovation over the years, making it an
outstanding example of sustainability, adaptability, and innovation in a fiercely competitive industry. P&G's success story
provides valuable insights into the importance of research & development, brand management, consumer-centricity, global
expansion, cost management, strategic partnerships, talent management, adaptability, and sustainability. These lessons can be
valuable for businesses across various industries aiming for long-term success.
 Conclusion

Recommendation
It is clear from P&G's ongoing evolution that they will continue to dominate the consumer goods sector for a very long time by embracing new opportunities and
continuously adjusting to the ever-changing market.

• E-commerce Strategies: Given the rise of e-commerce, invest in robust online strategies. Enhance the digital presence, optimize online shopping experiences,
and leverage e-commerce channels to reach a broader customer base.

• Continuous Innovation: Maintain a strong focus on innovation and R&D to stay ahead of market trends. Regularly assess the competitive landscape and
invest in developing new products or improving existing ones.

• Risk Management: Continuously assess and manage risks, both internal and external. Develop robust risk management strategies to navigate uncertainties in
the business environment.