P&G Company

Originated in 1837 Procter & Gamble is one of the biggest nondurable consumer goods companies in the world, nearly 100,000 employees worldwide. It is equipped with the subsidiary company in the global more than 80 countries. It operates more than 300 brand products best-selling in more than 160 countries and area, including shampoo, hair care, skin care products, cosmetics, baby care products, womens hygiene products, medicine, food, beverages, fabric and home care and personal cleaning supplies. In 1988 P&G has been founded in Guangzhou as Chinese first joint venture P&G Company in Guangzhou. Since then, P&G investment from the beginning of the 16-year history of the Chinese market. In order to actively participate in Chinese market economy development and the building, P&G Company has started in Guangzhou, Beijing, Chengdu, Tianjin and other places with more than 10 joint ventures, wholly-owned enterprises. For 16 years, P&G Company carries out living close to and beautify the life the enterprise objective, has produced many first-class quality, popular products by consumers. P&G Companys Rejoice, Head-Shoulders, PANTENE, Safeguard, Olay, Whisper, ARIEL, Tide and Crest have become well-known brands. So far, P&G Companys total investment in China becomes more than 1 billion U.S. dollars, and has about 4,000 employees. P&G Company built 20 large-scale technology research centers in the world, which has 7,500 or more titles with a doctorate researchers. The company research spending investment above 1.7 billion U.S. dollars, an annual average of 20,000 applications for patents over. In China, in order to have greater technical development, P&G Company and Tsinghua University, co-founder of the worlds 18 major research centers in Beijing formally completed in April 1998. This will ensure that the use of P & G's global technology, research and development of advanced technology products, designed to create more suitable for Chinese consumers need products.

P&G Strategic Environmental Analysis

1. The External Environment 1.1Political/Legal Forces Chinese current consumption tax items, tax and related policy adjustments have removed the skin and hair care products consumption tax, skin care and hair care products belonging to the original scope of the tax included in the high-end skin care cosmetics lines, the high-end skin care products Consumption tax rate from 8% to 30%. Adjustment of consumption tax so that foreign cosmetics brands depth development of the Chinese market resistance decreases, at the same time, high-end cosmetics were levy high taxes, forcing the original near-monopoly market of high-end foreign brands improve the product line, toward the low-end market. China today is

still an agricultural country, building a new socialist countryside, is still the future national economic and social development of key content. Therefore, to the businessmen, the countryside is a great market. 1.2Economic Forces Chinese market potential is big, Chinese consumer market before 2020 will become the world's third-largest consumer market, in the global consumer market's growth aspect, Chinese market has played a very important role, moreover, the Chinese every year's growth regarding international market's growth was also very important. But Chinese information technology is not very common, such as in the United States, P & G the key to success lies in the fact that investment in information technology to strengthen the company's core values, such as access to retail sales data, and for shops to provide realtime inventory and cash flow information retail Chain system, its goal is to help retailers increase sales, automatic replenishment, reduce retailers out of stock losses, but also for their further inventory control, to achieve a win-win situation. These technology investments in line with P&G has always thinking. In China, this technology investment by the formation of competitive advantage can not be fully performance. 1.3The Industry Environment Porters Five Forces Model of Competition 1) Potential Entrants Following France's VICHY, LRP, AVENE, URIAGE, Japan, FERZEA, KANEBO, and other renowned international pharmacy sales professionals Make-up brand to China one after another battle drug cosmetics goods market, domestic pharmaceutical enterprises to get involved in the field of cosmetics, "heat" is also on the rise. Wang Laoji medicine in the first half of last year launched a topical treatment of acne products - "Qudou gel," "Pathfinder" medicine cosmetics goods market, good response, the firm into its cosmetics market confidence; King Xiu Tong Pharmaceutical formally announced in September last year into the field of traditional Chinese medicine cosmetics industry, in more than 500 million for medicines and cosmetics of the GMP certification of equipment, introduced the cover of the Mask, cream paste, essential oils, cosmetics kits, and other types of more than 70; At the same time, also founded the first "medicine cosmetics shop" flagship store, and absorb a large number joining, the rapid expansion. All these markets are indications that China's pharmaceutical enterprises, especially enterprises enter the Chinese medicine or to get involved in the field of cosmetics have built trend. The first is the functional needs of consumers, in accordance with the relevant laws and regulations on cosmetics, traditional cosmetics is modified or used to protect the skin appearance, the skin can not change the structure or function, we can not meet consumer demand for functional maintenance, but the use of drugs, Also requires a doctor's prescription and instructions, while the potential side effects and risks, not suitable for general public use. Amy consumers they

want a psychological force not only as cosmetic drugs as safe and as effective as the "intermediate" there. But the traditional Chinese medicine is also our country tradition the national essence, in the minds of consumers represent the "natural, plant, no side effects" concept. Thus, between cosmetics and medicines between the Chinese cosmetics there will be a broad demand for its prospects. Followed by pharmaceutical companies are now operating difficulties process in recent years, China's pharmaceutical industry because of changes in pharmaceutical distribution, GMP identified replacement, raw materials prices, the policy of price cuts, bidding and purchasing, and other factors, industry profits continue to decline . Chinese medicine production enterprises in particular, the loss of as much as 30 percent. And the related report showed: Although China's beauty trade has maintained a 15 per cent of the rapid growth in output value over 180 billion RMB, but comparison with the developed countries, China's per capita consumption of beauty is also a very low level, there are an even more enormous room for growth . It is estimated that by 2010, China's beauty trade value will be over 300 billion RMB. This one is an anti-contrast, making many medicine company to seek new economic growth points of the eyes lock in "medicine cosmetics products" market. Re-cosmetics products industry "low threshold, high profits", compared with the pharmaceutical industry, beauty products than the profits of drugs a lot of high and relatively low threshold of access. This is a professional technical equipment and strong financial strength of the medicine company, and it is very tempting. 2) Suppliers As the giant of the Daily Chemical Industry, P&G Company has absolutely advantage in it, because P&G Company itself is a big manufacturer. 3) Customers In the domestic cosmetics market, P&G, L'OREAL, SHISEIDO, and other foreign brands in the occupied part of the high-end, as a national brand of poetry, and other mining enterprises Although accomplish something, but in market share is difficult to match; in the low-end mass market On the many brands, the balance of power brands, fierce competition. Foreign brands will not only on price but also in the media on the domestic big brands blocked. And its ultimate purpose is to seize the 23 markets, China's capture in lowpriced market. At present, the international cosmetics brand sales of cosmetics in China has accounted for about 60 percent of sales, more sales accounted for about 90%. China today cosmetics market to Europe and the United States brands as fashion, in fact, the Asian, European and American cosmetics There was a clear difference between Eastern and Western culture because there is a mentality and ideology of different people in Europe and the United States and physical, temperament, color, soil and water, and other congenital factors and falls far short of Asians, making Europe and the United States can not fully display brand of quality and characteristics of Asians. "People should use their own skin for the skin cosmetics." So P&G Company

should accelerate the pace of localization in China to keep the competitive advantage. 4) Substitutes P&G Companys products are the major brands: Head-Shoulders, Rejoice, PANTENE, VS, CLAIROL, SK-II, Covergirl, Olay, Pampers, Whisper, Crest, Safeguard, Zest, ARIEL, Tide, Pringles, Gillette, DURACELL, BRAUN etc. Substitutes for major brands are SLEK, Hazeline, SDEW, Puyen, EXTRACT, LaFang, ARCHE, TOBABY, Amyway, AVON, MARY KAY, MININURSE, MAYBELLINE, Caisy, MAXAM, SOFTTO, Johnson, Nice, Colgate, Zhong Hua, Liby, Keon, OMO, Lays, NANFU and so on. 5) Industry Competitors On the brand, P&G Companys principle is: If a certain type of space is also available in the market, the best of those "other brands" is also P&G Companys products. So P&G Companys multi-brand strategy in all industries, it has a high market share. For example, in the U.S. market, P&G has eight kinds of detergent brands, six kinds of soap brands, four kinds of shampoo brands and three kinds of toothpaste brands, each brand's aspirations are not the same. So P&G implementation of the multi-brand strategy, and will not cause vicious competition within the pattern. 1.4The Competitor Environment 1.4.1Local Competitors LONGLIQI Biological Technology Limited liability Company, now LONGLIQI is the most biggest scale in China, the most advanced technology snakes health products, on product research, development and production and sales base. From the 5S: site management, zero defect, quality management, human-based management to exposes shortcomings the type transparent management, and benefit from such advanced thinking and decision-making awareness of the LONGLIQI Since 1996, sales Has been an annual rate of more than 40 percent of the rate increase. LONGLIQI is one of the most important competitors of P&G Company. Competitor Analysis 1) Future Objectives To be P&G of China, and be LONGLIQI of the world. 2) Current Strategy In the international capital market occupy the mainstream of the economic environment, persist in localization, the difference of the core competitiveness, snake oil for the difference, at a low price strategy launched the encircling the cities from rural areas the revolution. Quickly create brand, established throughout the country terminal, the establishment of a sound marketing network, to be held from time to time special answer consumers through various activities to promote the brand. 3) Capabilities LONGLIQI has advanced management modes: respect for human beings and to explore, good and proper business strategy and created a rich

personality and passion of the Chinese-style marketing mode. Now, LONGLIQIs health care products in China, and large areas of product brand image has been established, and is more extensive context of the domestic and international recognition. At present, many foreign brands of the Chinese occupation of much of the cosmetics market share, many of our manufacturers of cosmetics production equipment and raw materials technology and the quality of foreign brands is almost the same, but the price difference of at least several times over. The lack of unique brand culture, brands, culture is used to support the brand and the core competitiveness of the high-end product image. 1.4.2Global competitors P&G Companys global competitors, such as LOREAL SHISEIDO AVON, is quickly developing in China, Native place brand vast similarly possibly P&G submergence. Such as SLEK, EXTRACT, LaFang, Puyen, SOFTTO, ARCHE, TOBABY, Liu Shen, Keon. These brands from different areas, different levels of market segmentation P&G, and P&G is also not show weakness. 2. The Internal Environment 2.1SWOT Analysis 2.1.1Strengths: P&G Company has a high-level management team and systems, an excellent team of direct marketing, the most advanced technology, a successful case, the right to use trademarks and patents and abundant funds. 2.1.2Weaknesses: Sales management system is imperfect, market coverage is not comprehensive, development of new technologies for long time in less than a certain experience, the patent to expire, and slow cash flow. 2.1.3Opportunities: Global market share can also increase, the scale of our competitors is not so big, comply with the standards of cooperation can enhance the competitiveness of products, adequate labor, economic development will increase demand for a new government, and other preferential policies. 2.1.4Threats: Market is nearly saturated, strong competitor research and development capabilities to meet the new standards to increase cooperation costs, and personnel flows, the unemployment rate would reduce the growth of demand, the new policy also stimulate new competitors adding. 2.2Analysis of Internal Resources 2.2.1Resources: P&G Company has excellent cash flow, strong balance sheet, superior past performance, superior CEO characteristics, experienced managers, well-trained, motivated, loyal employees, special skills and learning, excellent reputation, superior technology development, excellent structure and systems, high-performance culture, etc.

2.2.2 Core Competence: The first core competence of P&G is the strongest ability of research and development, and the second is Brand Management. 2.2.3Competitive Advantage: The differentiation of products characteristics is the competitive advantage of P&G.

P&G Strategic Planning

1. Business-Level Strategy 1.1Cost Leadership Strategy and the Five Forces of Competition Cost leading enterprises in cost control should have a comprehensive, unified plan, and not just focus on the production areas. In each of activities, are likely to affect the cost of enterprises, such as staff training and the cultivation of team spirit, if done well in this regard, we can mobilize their enthusiasm and enterprises to inject vitality, efficiency can be Increase, the cost advantage it has been strengthened. 1) Industry Competitors Globally, P&G's competitors are Unilever, Kao, L'Oreal, while in China, P&G's competitors in LONGLIQI as the representative of the enterprise. In China, the cost can be reduced, therefore, between the various companies can not avoid a price war. 2) Suppliers The purchase of raw materials, a need to bargain. If their capacity in this area are not inferior to the lowest price you want, so that competitors in raw material costs on the lead. However, P&G did not spend too much energy in the bargain, but with suppliers to build alliances and cooperative relations, not only the stability of the lowest costs, but also indirectly dealt a blow to rivals. 3) Potential Entrants P&G and on the lower reaches of the establishment of strategic alliances, this relationship to a certain extent, some want to enter the business of the industry inhibited. 4) Customers P&G and advertising companies also established a strategic alliance, not only to reduce the cost of advertising, but also to customers of P&G's products a basic understanding. 5) Substitutes P&G implement multi-brand strategy, so that other companies of similar products in the market shrinking. Alternative to the relatively small market share. 1.2 Differentiation Strategy 1.2.1 Product differentiation P&G in Chinese research and development team specifically developed for the Chinese people to use the products, in China there is six shampoo brands, and the six brands have their own personalized targeting, in order to achieve the shampoo industry remarkable achievements. 1.2.2 Brand differentiation

This is the key point of the difference. P&G has a strong research investment, strong product development and the support of a strong economic base to support. Brand differentiation is the establishment of the knowledgebased P&G ads used the way for customers to understand their products. P&G Companys advertising use of law and comparative law expert. Experts law is adopted to raise questions, some experts have answers, and the use of P&G Companys products can solve the problem, get the trust of consumers. Compared with P & G is the law of the products and similar products to contrast and highlight the outstanding products company P&G, P&G Companys brand enjoys popular support. Therefore, the difference between brand image has become a major P&G Companys competitive edge and to the P&G has brought greater competition space. 2. Corporate-Level Strategy: Diversification Strategy Diversification Strategy and the Five Forces of Competition 1) Potential Entrants Some diversified business enterprises turned on the industry: The liquor jiantWuliangye launched the sizi brand; Wahaha Group research children cosmetics, healthy medicine and Jinan Dongfeng joint development of new pharmaceutical skin mites Ling family. Some experience and strength of the dealers began to establish their own brands, such as the Group of JIUXIN create the "mite-ting" brand. For most potential entrants, their access to pose the greatest obstacle to the smooth access to distribution channels. As distribution capacity constraints and the risk aversion, distributors are reluctant to marketing new products manufacturers and new entrants must take great efforts to building a new sales network, which will reduce its profit levels. 2) Industry Competitors For the whole industry, the product of the same issues have become increasingly prominent. Procter & Gamble in product research and development invested heavily to improve their product competitiveness, while domestic enterprises, "market weight, light R & D," the idea is more serious. In recent years the Chinese of all sizes on the increase in the number of enterprises, Guangdong Province alone, there is all the more than 3,000 enterprises, and thousands brands the intensity of competition can see reflected. Of the industry, relatively low market concentration, a lot of strength of our competitors, and strengthen the level of confrontation. Many enterprises and professionals to join the OEM manufacturers, the emergence of serious excess industry capacity, particularly in shampoo products, P&G, Unilever and other industry giants competing price cuts, so that the business environment for the survival of aggravated . 3) Substitutes Drugs: the main functions of supplies for the health and conservation function, due to the homogenization of products tend to serious, many people in the industry can not afford to even think that as long as the negative effect

is a good product, even if there are effects of the products also need to use a long time , And the effectiveness of drugs and medicines become relatively immediate Phase alternative seems to have become a necessity. Instruments: People now have developed a number of auxiliary beauty of equipment, such as the previous hot-selling "re-young" beauty mask, but with the advances of science and technology, through equipment to improve the appearance of the skin may soon become a reality. 4) Suppliers Some of the more advantage of the bargaining power of suppliers greatly enhanced. On a single supplier, the procurement of enterprises account for the proportion of its total sales to determine their size is the key to the extent of concessions. Some new, not of raw materials for goods or conversion cost is too high or too dependent on corporate suppliers of technology and services. Japanese enterprises can only accept the supplier's terms and prices. Suppliers of forward integration capabilities can also increase their bargaining power. 5) Customers Enterprise customers are buying products or services, could include individuals, families, can also be organized institutions and government departments. Japan and enterprises, our customers are mainly downstream sectors - retailers (such as direct marketing products such as the exception), grasp the bargaining power of customers and their buying behavior and characteristics is the basis of business success. Customers - the bargaining power of retailers depends on several factors: 1, the size of retail outlets, sales of washing products in the total number. 2, the level of conversion costs, whether or not easy to find alternatives. 3, products The degree of difference. The advantages of multi-brand, obviously, it can be functional or the difference between the price of products, such enterprises to occupy more market share, in the face of more demand for the consumers; competition between the seemingly relations, but In fact very likely strengthen the overall competitive strength and increase the overall share of the market; avoid the impact of product performance, health supplies such as the expansion of the brand to food, consumers psychologically, it is difficult to accept. Moreover, the multi-brand can spread the risks, some of the problems of goods, to avoid affecting other commodity. P&G Companys principle is: If a certain type of space is also available in the market, the best of those other brands is also P&G Companys products. So P&G Companys multi-brand strategy in all industries, it has a high market share. For example, in the U.S. market, P&G has eight kinds of detergent brands, six kinds of soap brands, four kinds of shampoo brands and three kinds of toothpaste brands, described the characteristics of each brand is different. To shampoo as an example, we are familiar with Rejoice to compliance for long, "Pantene", a comprehensive nutrition to attract the public; Head-Shoulders has a good wash-away-

dandruff effectiveness; VS stressed is bright. Different consumers in the shampoo on the shelves are free to choose, but are not out of a P&G Companys products. P&G Companys strategy is not only in different kinds of goods on the use of different trademarks, even in the same commodity, due to the different functions also use a different trademark. Of course, she also paid a high for this market and administrative costs. However, we can not help but say, Procter & Gamble is successful, nearly 170 years of glorious history, its about 300 brands, can not help but say it in the brand strategy has created a miracle.

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