The intense international competition necessitates the companies, especially the multinational companies to maintain huge product portfolios. The companies manage and develop their portfolios so that the products are at different stages of their lifecycles. This allows the companies to reap competitive advantages from the market. Well managed product portfolio management have emerged as a very important component of marketing mix and have proven to be strength of their owners, the companies. Extensive product portfolios with products in different stages of PLC allow companies to allocate their human, financial and material resources. They help them to exploit and explore the business environment and deal with the competitive challenges in the market. Extensive portfolios allow the companies to offer a large variety of products, each having several components. Procter & Gamble (P&G), for example manufactures Pantene and Head and Shoulders shampoo which are available in multiple variants as a part of its portfolio. This allows P&G to meet more specialised needs of consumers through niche marketing and be a market leader. These product portfolio management and PLC strategies allows the company to earn high revenue and ensure high return to the shareholders. It also allows it to benefit the stakeholders and the society as a whole. The extensive portfolio helps the company to market its products both in the digital markets and on the internet platform.
Procter & Gamble(P&G) is an American multinational companies which has its presence in several countries in Europe, America, Asia and Oceania. The company has its vast array of products divided into four portfolios, namely, baby feminine and family care, beauty, fabric and home care and health and grooming. The company owns brands like Ariel, Olay, Pantene and Gillette which are used by millions of people all over the world. The company carries out continuous innovation and research towards improvisation of the existing products and introducing new products. The company has presence all over the world and encounters various macroeconomic conditions. P&G has global supply chain which ensures supply of raw materials at economic costs which allows it to offer its products at affordable prices. These characteristics are the strengths of the P&G which allows it to deal with markets threats and convert them into opportunities.
Product folio refers to offering of various kinds of products by a single company which caters to a wide range of consumer base. The companies manage their product portfolios and offer several products under each portfolio. The product portfolio of P&G is divided into four divisions, baby feminine and family care, beauty, fabric and home care and health and grooming. The baby feminine and family care segment has products like Always for ladies, Dodot children pads and Bounty toilet paper range. Olay cream, Pantene shampoos and Old Spice are parts of the beauty care portfolio. The company manufactures Ambi Pur, Ariel and Tide as parts of its fabric and home care portfolio. Gillette men’s grooming accessories and Oral B oral care products belong to the health and grooming division of portfolio (Us.pg.com 2017). The portfolio management has several business advantages which enables generation of huge revenue and attracts investment from investors all over the world.
Product Portfolios of P&G
A PESTLE analysis of P&G shows it works in diverse political, economical, social, technological, legal and environmental conditions which impact its operations including deciding its product portfolio. The company has to comply with several government policies in order to operate in its host countries. These policies pertain to the economical, legal, technological, social and environment. P&G has to comply with the Supply Chains Act 2010 which requires the company to ensure that its supply chain network does not involve in illegal trafficking and slavery in any of its market. The company while using the human resources in its host counties should comply with U.S. Department of Labor’s Bureau of International Labor Affairs (ILAB) “List of Goods and Countries”(Dammert et al. 2017). The environmental laws require P&G to source materials from sustainable supply chains and manufacture eco-friendly products (Kumar, Jain and Kumar 2014). The product portfolio of P&G has wide range of products manufactured using expensive sustainable methods. These products sell worldwide, thus generating huge revenue which helps the company to maintain its competitive market position and comply to laws and policies simultaneously. Thus, product portfolio management helps companies to take advantage of the business environment and generate huge profit.
Product life cycle (PLC) refers to the stages starting from introduction of a product and ending with the withdrawal of a product from the market. The four stages of PLC are introduction, growth, maturity and withdrawal. Product lifecycle management is an important tool companies use to retain their market position. This tool is often combined with product portfolio management and impacts the strategies like marketing mix, competitive strategies and so on. The companies like P&G manages their products all through their lifecycle in order to earn maximum revenue from their sell. PLC is done both for individual product and for the portfolios (Stark 2016) (Appendix 1). Product life cycle management(PLM) has emerged has a strategic tool backed by technology which includes the stages of conceiving the product idea, designing, developing, engineering, manufacturing, growth of product line and withdrawal of the products from the market(Fichman, Nambisan and Halpern 2014).
The PLM helps the companies to distribute the business and earn maximum profits. The top brands of P&G like Ariel detergent powder and Oral B are in the growth stage which enjoy huge market share. These products require minimum investment for promotion because the consumers are already aware of them. The sales of these products earn huge revenue which the company can use to fund and manage the lifecycle of new products. According to Forbes Magazine, Gillette has a brand value of $20.2 billion as on May 2016 commanding 65% share of the global razor market (Forbes.com 2017). Downy Upstopables and Febreze Car, a ranges of fresheners introduced by P&G in 2015 and 2012 together earned revenue of $300 million (Fortune.com 2017). An analysis of these two articles shows that Gillette generates a sale of $7 billion while the two new products can generate $300 million together. The two new products need more investment in marketing so that they can generate high revenue. Gillette on the other hand generates high revenue being in the growth stage and is expanding its own product variants. Procter & Gamble can use the revenue generated from Gillette to market the two new products. Thus, a long product line with products in various stages of PLC allows the company allocate its resources over its portfolio to develop the products and earn higher revenue.
PESTLE Analysis of P&G
An article by Anthony, Viguerie and Waldeck (2016) lays emphasis on the need of the companies to reinvent their product lines in order to sustain the stiff international competition. The article says that most of the big companies take to disruptive innovation to retain their competitive advantage. P&G in order to explore new business opportunities and expand its consumer base takes to disruptive innovation. Tide is one of the iconic products of P&G which earns revenue over billions of dollars. The company is launching new products like instant cloth freshners and dry cleaners. The company as discussed earlier can use the revenue from Tide to finance the PLCs of the new products. Thus, an established product portfolio with products in different stages of PLC helps companies to carry out disruptive innovation. It leads to creation of new product trends and disrupt existing products.
Extensive product lines and PLM enable the multinational companies to deal with the five forces in the market. The huge array of products like diapers, shampoos, razors and laundry detergents allow the companies like P&G to cater to a wide range of consumers. They can introduce better versions of their existing branded products using innovative and research to retain their consumer bases. This increases their competitive strength and power to deal with market rivalry. P&G owns the anti-aging cream range Olay which faces the threat of substitution from products like Ponds and Lotus. The company has introduced Olay Total Effects moisturiser/BB cream to expand into the market of moisturisers (Forbes.com 2017). This extension of the product line helps P&G to deal with the threat of substitutes. The product line helps the company to opt for product differentiation to counter the threat of new entrants. Thus, it can be pointed out that product portfolio and PLM help P&G to counteract market threats mentioned in the Porter’s model (E. Dobbs 2014).
Product portfolio management and product lifecycle management help the global companies to penetrate new markets through niche marketing. P&G manufactured low water variants of soap, diapers and greener laundry detergent to adapt to the recession in Brazil. The products were environment friendly and required less water compared to their competitors. This niche technique used by P&G plummeted its sale in Brazil during the period. The launch became so successful that the low water variants spread to Australia and Europe as well (Finster and Hernke 2014). One of the biggest brands owned by P&G is Head and Shoulders which is an antidandruff shampoo. The shampoo is available in more than ten variants and caters to the hair care needs of both men and women. This allows P&G to penetrate deeper into the market and cater to the needs of the consumer to greater extent. Thus, product portfolio with individual products available variants helps the company to take to niche marketing to achieve deeper market penetration.
Product Life Cycle Management (PLM)
Product portfolio management and PLM help the companies to sell their products to a huge consumer base to earn maximum revenue. Brands like Tide, Oral B and Pantene ProV are among the top brands which enjoy high market position and earns high revenue for the company. They are considered as stars according to the Boston Consulting Consulting Group matrix (BCG matrix). The company sells products like Ace and Align which are dogs as per the same matrix using various methods like online marketing in order to generate as high revenue possible from these products. This technique of selling weak products with more concentration on inventory is called tail marketing. A product line consisting of several high value products helps P&G to build the market position which allow it sell its new or not so famous products (Fulgoni 2016).
The product portfolio is a very important component of the marketing mix of the companies, especially the multinational companies like P&G (Kotler et al. 2015). The product line of P&G consists of a wide range products like shampoos, creams, oral care products and shaving products. The company is the largest consumer goods manufacturer in the world and carries out continuous innovation. These allow the company to introduce new products and improve existing products (Chesbrough 2013). The wide range of products caters to a global consumer base which creates continuous demands for them. The company in order to satisfy this high demand for its products has increased its presence in both physical market and digital market (Johnston and Marshall 2016). The extensive network of distributors, wholesalers and retailers ensure the availability of the products of the company at affordable prices. The products of P&G are consumed all over the world which earns high profit. This encourages the wholesalers and the retailers to stock and sell them at economical prices (Pei and Yan 2015). The product portfolio having a mixture of wide ranges of existing and new products helps the company in pricing and promotion of the products.
The vast product line divided into portfolio with products in different life stages act as driving forces behind allocation of financial and human capital. P&G owns wide range of products like diapers, tooth pastes, shaving accessories and so on. The operations of the company are so vast and extensive that the managers in various departments are continuously faced with the challenges of financial and human resource allocation. The managers of the company use the portfolio to decide the allocation of the financial resources. They use tools like pie charts to show present and target profits broken down as per products. These charts reveal the flaws of current allocation of human and financial resources. They help the managers to allocate resources according to the products and PLCs (Cooper 2016). Human factors or employees are strategic assets of the companies and their appropriate allocations decide the operation standards. The companies use product portfolios to allocate human resources in several areas of work like finance, marketing and so on (Jani 2014). New Product Development (NPD) has emerged into strategic area of improvement for the multinational companies and demands continuous involvement of human resources. Allocation of human resources according to the portfolio ensures planned business strategies towards product development. The management of companies like P&G provide consider their product portfolio crucial while making strategies. The management of P&G allocate the human resources in a planned way based on portfolios and PLMs. This ensures continuous innovation and research towards NPD and improvisation of the existing products (Jugend and da Silva 2014). For example, more innovation is required to bring about new products which require continuous engagement of scientists. Again, the new products also require more marketing to create and increase their demands in the markets. Thus, P&G allocates more research and marketing personnel for new product lines. Again, the company needs to carry on innovative on its existing product line to compete in the market. The company needs to allocate human resource strategically towards improvement of the existing products. Products in growth and maturity stages need less promotion because they already have strong market share. Thus, less marketing personnel have to be allocated towards existing top products. Hence, the managers of P&G need to consider the product portfolio and the stages of product life to allocate resources.
Reinventing Product Lines: Disruptive Innovation
The product portfolios having a vast range of products with different lifecycles help the companies to attract investment. Gillette, Oral B and Tide are some of the products which are consumed all over the world. The company is present is over one hundred and eighty companies and has various strategic departments. The company uses cross function integration principle to integrate its product strategies and bring about continuous innovation. P&G concentrated its local presence by catering to local markets according to integrated product strategies confirming to uniform quality parameters. The product portfolio consists of products which cater to requirements of the different market segments thus generating huge revenue for the company.
Most of the transnational companies are public companies having presence in several countries and listed on stock exchanges in the host countries. For example, Procter and Gamble is listed on New York Stock Exchange in the United States of America and P&G Australia and New Zealand is listed on the Australian Stock Exchange (Phelps 2017)(Appendix 2). They issue shares in the stock markets in these nations and generate huge capital from the markets. The capital generated by the subsidiaries contributes the capital resources of the parent company. The company paid dividend of $11.9 billion in the fiscal year of 2014 to its shareholders (Cervantes et al. 2015). The investors judge the security factor before making investment in companies considering the return on investment, market share and profitability. The portfolio of products offered by P&G is consumed all over the world due to their high standard and affordable prices. P&G is also famous for bringing out new products and innovative versions of the existing products. These factors create a strong goodwill for the company in the markets. P&G is the largest consumer product manufacturer and marketer in the world having a high market share and goodwill (Akoijam and Meitei 2013). The company due to its global presence and consumer base is able to generate high profits. This capability to earn high profit by the virtue of strong product portfolio acts as a security for the investors all over the world. Thus, a powerful product portfolio with products in different stages of their market lives helps the company to attract investment from the investors.
It can be summarised from the study that product portfolio and product lifecycle management play a very important role towards the market position of the companies, especially the multinational companies like P&G. The study of product portfolio and PLM of P&G as an example shows that these two features decide the competitive power, strengths and marketing mixes of the companies. They even have profound effect on the resource allocation and capital strength of the companies. A number of recommendations can be made after the in depth study of the portfolio and PLM of P&G products.
Extensive Product Lines and PLM: Dealing with Competitive Forces
The company must try to strengthen its regional and local presence to ensure better market penetration. The company should concentrate on sustainable supply chain management to acquire raw materials in these markets.
P&G has huge presence in the personal care products markets like shampoo, cream and diaper. However, the company has weak presence in the food market with commodities like desserts and health drinks. It can be noted that Nestle, one of its biggest competitors has a svery strong presence in the food market but very weak presence in the consumer care market. Unilever, another strong rival has strong presence in both the markets and has extreme good market penetration. Unilever owns top consumer care brands like LUX and Clear and food brands like Kwality Walls and Bru coffee. Considering these two competitors, it can be recommended strongly that P&G must expand its product line. This will allow the company to offer stiffer competition to these two rivals.
Procter and Gamble in order to expand its product line should acquire new companies. This will allow P&G to expand into new markets and increase its competitive power. The company should takeover fashion brands and use these brands to promote its products. Unilever own Lakme, a premium fashion and beauty brand associated with glamour. The company must acquire such big brands which will help it to promote its products. This will give the company a stronger competitive position in the international market.
The company must strengthen its subsidiaries in various host countries. Their financial and strategic growth will add to the growth of the mother company, P&G.
PLM is the business activity of managing, in the most effective way, a company’s products all the way across their lifecycles; from the very first idea for a product all the way through until it is retired and disposed of. PLM manages both individual products and the Product Portfolio, the collection of all of a company’s products. PLM manages products from the beginning of their life, including development, through growth and maturity, to the end of life. The objective of PLM is to increase product revenues, reduce product-related costs, maximise the value of the product portfolio, and maximise the value of current and future products for both customers and shareholders.
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