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Industry Overview

The consumer goods industry is a very broad, large industry that focuses on all products intended for consumers, more than individual, specific products. Companies that comprise the consumer products industry design, manufacture, and/or market apparel, cleaning products, hand and power tools, home furniture, house wares, linens, consumer electronics and appliances, and personal care products.

The market environment of the consumer products industry is highly competitive, with both global and local competitors. Many of the markets and industry segments face competition against other branded products, as well as retailer and private-label brands. Additionally many segments are differentiated by price (referred to as premium, mid-tier and value-tier products). Most of the globally established companies in the industry manufacture premium and mid-tier products.

Competitors in the Personal Consumer Products Industry

Procter and Gamble

Unilever

Kimberly Clark

Colgate Palmolive

Johnson and Johnson

Avon

Bath and Body Works

Body Shop

Because the industry is highly segmented and a wide range of products classes are offered an analysis of the industry without being specific to segments is very complex. However, some trends have developed in the industry over the last 25 years:

 Discount channels are gaining ground and may reach 30-40% market share in the years ahead.

 Manufacturers are focusing on fewer brands

 Manufactures are struggling with low growth rates in the industry

 New forms of cross-industry collaborations are forming

Competitive Profile Matrix: Consumer Goods Industry

Critical

Competitive Variables Procter & Gamble Johnson & Johnson Unilever Colgate Palmolive Bath &Body Works

Wt. Rank W*R Rank W*R Rank W*R Rank W*R Rank W*R

Branding .15 4 .6 3 .45 4 .6 4 .6 4 .6

Go-to-market capability .12 4 .48 3 .36 4 .48 3 .36 2 .24

Innovation .12 4 .48 4 .48 4 .48 4 .48 4 .48

Economies of Scale .12 4 .48 4 .48 4 .48 4 .48 2 .24

Quality .10 4 .4 3 .3 4 .4 4 .4 4 .4

Customer Loyalty .10 3 .3 3 .3 3 .3 3 .3 4 .4

Competitive Pricing .09 3 .27 4 .36 3 .27 4 .36 2 .18

Financial Position .11 4 .44 4 .44 4 .44 4 .44 2 .22

Global Share .09 4 .36 3 .27 4 .36 4 .36 1 .09

Totals 1.0 3.81 3.44 3.81 3.78 2.85

The results of the Competitive Profile Matrix indicate that the consumer goods industry is highly competitive and largely based on innovation and branding. The cumulative scores of the companies with a global position are very close which indicates that although companies are market leaders in terms of certain brands, there is no clear overall market leader in the industry. Scores are also very well above average which means that companies are fighting to maintain high market shares as all companies except Bath and Body Works are performing extremely well. Branding, innovation, and go to market capability are the most critical competitive variables in the industry. Most consumers are brand conscious and companies, with the exception of Johnson and Johnson, use various forms of branding such as brand and line extensions to push their products. Innovation is also extremely important in the industry. Companies in this industry are constantly introducing new and improved products proven to improve cosmetic appearance and overall health. The stiff competition of branded products makes packaging innovations important as well. Lastly go-to-market capability is important to companies within this industry. Go-to Market capability is how well the company uses its channels to connect with customers from initial contact to fulfillment.

Based on the scores of the CPM matrix, P&G and Unilever scored evenly and ranked the highest. For P&G this means that they share the top of the market with Unilever and must develop strategies to push more of their brands and products to best in the market success. P&G also scored exactly the same within in the Critical Success Factor scoring 3s (minor strength) in customer loyalty and competitive pricing. The scores were lest than perfect because in this industry, customers are loyal to certain products but there are many other substitutes to choose from. Furthermore, competitive pricing in this industry is very important but consumers are typically willing to pay more with the quality associated with the P&G company name. Colgate Palmolive also scored just below P&G, further signaling the intense competition in the industry and Johnson and Johnson also scored well above average. Bath and Body works is a competitor to P&G but not necessarily a threat because they are still considered to specialize in high end consumer products.

In order for P&G to maintain its top position in the industry it must continue to further develop its core competencies which have been identified as branding, innovation, go to market capability and scale (www.pg.com). The company must also continue its aggressive strategy of having a number one brand it every category of production.

Industry Analysis

Intensity of Rivalry

Ð'* Intensity of Rivalry- HIGH

o The industry is highly competitive because most manufacture the same base products. The products are also easily substitutable so companies compete in terms of brand names and innovation of new and improved base products. Most companies also have brand leadership in some categories but are trying to establish leadership in all categories of production. Innovation, Brand Awareness, and Go to Market Capacity are the key success factors in this industry and the two leaders P&G and Unilever have mastered them equally.