The Procter & Gamble Company (PG) Under Serious Pressure: Unilever plc (ADR) (UL)

Page 1 of 2

The Procter & Gamble Company (NYSE:PG)Traditionally, The Procter & Gamble Company (NYSE:PG) has been a leading player, and the company to beat in the beauty and hair products category. The company primarily offers a large variety of shampoos, creams and fragrances. It consists of an impressive portfolio of brands and some of the most popular ones under The Procter & Gamble Company (NYSE:PG) are Olay and Pantene. These brands are front runners in their respective categories, and pull in large volumes of cash for P&G.

Quick Summary

The global market share of the company is under immense pressure with competitors such as Unilever plc (ADR) (NYSE:UL) offering high quality products at cheaper prices.

The consumer confidence has been dropping considerably, leading to dip in overall sales

Restructuring in product pricing and improvisation with product packaging and quality will enable P&G to still remain dominant and competitive

Competitive landscape

Other than Unilever, P&G competes with in the skin and hair care segment. The company is a massive player in this space with a market cap of $93.5 billion. It generates approximately 33% of its total revenue through hair care products, followed by skin care (26%), makeup (20%) and other small categories. Similarly, Unilever is another huge player in this space with a market cap of $123 billion. It generates revenue through skin and hair care products. The company has managed much deeper penetration in the emerging markets relative to both The Procter & Gamble Company (NYSE:PG) and L’Oreal. Although, both companies are much smaller in size relative to The Procter & Gamble Company (NYSE:PG) in terms of market cap, they present a stiff challenge to the company in the skin and hair care space.

Recent troubles

Heavy dependence on mature marketsHistorically, P&G always held a dominant position by focusing on developed markets, in contrast its main competitor Unilever primarily concentrates on market penetration of emerging economies. This is reflected in the figures reported by the two giants for 2012. P&G reported a contribution of approximately 30%, where as Unilever reported a 50% contribution from the emerging markets. The consumer demand in the developed region such as Europe and North America has fallen considerably in the past few years due to weak economic conditions. The beauty segment of The Procter & Gamble Company (NYSE:PG) struggled to post any like for like growth in the first six months of the previous year. Like for like sales were down by 2%, in contrast Unilever continued to report growth as the demand from emerging markets continued to drive sales for the company. The personal care segment of Unilever reported a robust 7% growth.

Weak pricing strategy - In addition to falling demand in the developed region, the pricing strategy of P&G is not ideal. P&G’s top line of products is targeted to the premium end of customers. Considering the weak economic environment, consumers are turning away from buying expensive beauty products. This benefited more economically positioned brands of Unilever to a large extent. Unilever is positioned in a slightly lower bracket and provides a higher value for money, thus the penetration rate in emerging markets has been phenomenal.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!