PROCTER & GAMBLE COMPANY PROFILE – SWOT
ANALYSIS
October 2012
SCOPE OF THE REPORT
Scope
 All values expressed in this report are in US dollar terms, using a fixed
exchange rate (2011).
 2011 figures are based on part-year estimates.
 All forecast data are expressed in constant terms; inflationary effects are
discounted. Conversely, all historical data are expressed in current terms;
inflationary effects are taken into account.
Oral Care
US$39.7 bn
Microwaves
Refrigeration
Home
60,669
Appliances
Laundry
Large
Cooking
Home Laundry
Confectionary
144,010
121,107
Appliances
Appliances
132,745
121,107
US$185,477 mn
Beauty and Personal
Care
US$425.7 bn
Microwaves
60,669
Deodorants
US$20.4 bn
Small
Appliances
Jewellery
1,724,022
Bath and Shower
US$37 bn
Baby Care
US$13.6 bn
Hair Care
US$73.7 bn
Men’s Grooming
US$32.7 bn
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies’ opinions, reader
discretion is advised.
Procter & Gamble is the global
leader in beauty and personal
care. Its key brands here include
Olay, Gillette and Pantene. The
company has however
underperformed some of its
rivals including Unilever and
L’Oréal, which have made
significant gains in the Chinese
market to Procter & Gamble’s
detriment. Procter & Gamble
may suffer from being too mid
range for premium-focused
China, while too premium for
lesser developed emerging
markets such as India.
PASSPORT 2
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
STRATEGIC EVALUATION
Procter & Gamble grows despite erosion of market share
 Procter & Gamble was the number one ranked
player in beauty and personal care in 2011 at
the global level underpinned by first place
ranking in hair care, depilatories and men’s
grooming following its 2005 acquisition of
Gillette.
 The company's share of BPC products has
declined since 2006 as it faces competition in
both Western and emerging markets. L’Oréal
toppled Procter & Gamble from the leading
position in skin care in China owing to a wider
range of products across various price points. In
Western markets, the company’s product
launches in some of the categories have not
been as frequent as some of its rivals.
 Procter & Gamble at the corporate level boasts
24 billion dollar brands including Gillette and
Olay which have been the ongoing focus for its
investment and marketing. The company
pursues premiumisation of its brands, but it
could consider increasing its coverage in the
more economy range particularly in emerging
markets in addition to tapping into the less
traditional distribution channels.
© Euromonitor International
Procter & Gamble Co, The
Headquarters:
Cincinnati, USA
Regional involvement:
Global
Category involvement:
Hair care, men’s grooming,
oral care, skin care
World BPC value share
11.5%
(2011):
World BPC value
growth (2011):
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
5%
PASSPORT 4
STRATEGIC EVALUATION
Price increases help to drive net sales but hit volumes in 2012
 Procter & Gamble’s beauty sales increased 2%, while
grooming increased 1% between 2012 and 2011
financial years, mainly on the back of volume growth
and price increases. Although a positive growth trend,
sales growth was partly dampened by unfavourable
geographic and product mix. This was more prominent
in Q4, when these segments reported negative growth
rates over Q4 2011.
 Despite economic recession, the company has been
initiating price increases on the back of value addition
contributing to its overall annual sales growth in 2012.
Although price increases enabled the company to
overcome the impact of unfavourable geographic and
product mix during the financial year, it was unable to
do so in Q4, which could indicate the company needs
to increase its focus on innovation to justify its
premium pricing strategy and/or increase its coverage
in the economy price range to boost volume sales
growth.
 Procter & Gamble’s objective to invest in the 20 most
profitable innovations is a move in the right direction in
light of its financial results.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 5
STRATEGIC EVALUATION
SWOT: Procter & Gamble Co, The
STRENGTHS
Leading brands
WEAKNESSES
Global exposure
 Procter & Gamble has
 Procter & Gamble has
strong brands to its
wide global exposure.
name. The company
Its products are sold in
boasts 24 billion dollar
180 countries through
brands. It also claims 50 wide-ranging distribution
leadership brands that
channels including mass
contribute 90% to its
merchandisers and
overall sales and profit.
grocery stores.
OPPORTUNITIES
Emerging markets
 The company continues
to rely heavily on mature
markets. The emerging
markets will outperform
mature markets over the
forecast period putting
Procter & Gamble in a
vulnerable position.
Market share erosion
 The company has seen
its market share eroded
in a number of key
categories. Unilever in
particular has been
pulling ahead in bath
and shower and
deodorants. This trend
will need to be reversed.
THREATS
High-growth markets
 Emerging markets are  Procter & Gamble is
well positioned to take
expected to produce
strong growth in beauty advantage of growth in
hair care and skin care
and personal care.
where it has a strong
Procter & Gamble can
position and which will
benefit from the shift of
lead growth in absolute
consumption to the
value terms.
emerging markets.
© Euromonitor International
Mature market reliance
Global/local competition
Chinese skin care
 Unilever remains a
significant threat in the
developing markets in
some categories such
as bath and shower.
Local players will also
compete fiercely with
Procter & Gamble.
 L’Oréal threatens to
overthrow Olay as the
number one brand in
Chinese skin care. China
is set to lead globally in
skin care growth and this
would be a major setback
for the company.
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 6
STRATEGIC EVALUATION
Procter & Gamble: Focuses on core businesses
Focus on core operations
 To accelerate growth Procter & Gamble is
implementing three key changes which it refers to
as 40/20/10. The company aims to focus resources
on the 40 largest and most profitable businesses,
accounting for 50% of sales and 70% of net
earnings. Next change includes focusing on the 20
most profitable innovations accounting for most of
the portfolio revenue and the third change involves
investing in 10 emerging markets most critical to
the company’s growth.
Brand rationalisation
 Instead of launching new brands or making
acquisitions, the company focuses on extending
existing brands into sub-ranges, eg Gillette Fusion
as part of its “billion dollar” brand strategy. It has
discontinued Max Factor in the US market. This
rationalisation may save on costs but may limit the
company from pursuing opportunities at both the
premium and economy ends as the company
crowds into the mid-range price segment.
© Euromonitor International
Focus on billion dollar brands
 Procter & Gamble’s objective has been to focus on
billion dollar brands. The company has 24 billion
dollar brands spanning across a number of
categories including skin care, laundry care and so
on with a strong global presence. The billion dollar
brands each generate between US$1 billion and
over US$10 billion in revenue. According to the
company, investing in the already well-established
billion dollar brands has a greater potential to
generate returns than brands with limited presence
and less familiarity.
Improving productivity
 Procter & Gamble has announced a US$10 billion
productivity programme to enhance the company’s
performance. The programme includes funding
topline growth, ensuring consumer value
propositions are superior, overcoming macro
headwinds and delivering better bottom line
growth.
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 7
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
COMPETITIVE POSITIONING
Procter & Gamble retains number one position
© Euromonitor International
11.5
L'Oréal Groupe
2 2 2 2 2 2
9.7
Unilever Group
3 3 3 3 3 3
7.8
Colgate-Palmolive Co
4 4 4 4 4 4
3.8
Avon Products Inc
6 7 7 5 5 5
3.2
Beiersdorf AG
7 6 5 6 6 6
3.1
Estée Lauder Cos Inc
5 5 6 7 7 7
2.9
Johnson & Johnson Inc
9 9 8 8 8 8
2.8
Shiseido Co Ltd
8 8 9 9 9 9
2.5
Kao Corp
1 1 1 1 1 1
0 0 0 0 0 0
2.1
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
2010
1 1 1 1 1 1
2009
Procter & Gamble Co, The
Company
2008
%
company
share
2011
2007
2011
Beauty and Personal Care: Top Global Companies by Value
2006-2011
2006
 While Procter & Gamble has seen its
market share decline over the 2006-2011
period, it remained the number one ranked
player in beauty and personal care in
2011. L’Oréal Groupe has seen its share
increase in large part due to strong growth
in some developing markets, notably
China.
 Unilever was an early mover into emerging
markets. Acquisition of the Alberto-Culver
brands including TRESemmé in 2011 has
helped to drive growth as well. The
company had previously added the TIGI
brand to its hair care portfolio in 2009. As a
result of organic and acquisition-led
growth, Unilever was strongest performer
among the top 10 BPC companies in
CAGR terms over the review period.
 Procter & Gamble has been comparatively
quiet in terms of acquisitions with no major
ones to report over the review period. It
has instead focused on building its billion
dollar brands which in beauty and personal
care include Gillette, Pantene, Head &
Shoulders and Olay.
PASSPORT 9
COMPETITIVE POSITIONING
Procter & Gamble falls below global growth
A: Procter & Gamble
marginally underperforms the
global market for beauty and
personal care owing to its
relative reliance on the mature
markets, notably North
America where its sales in
2008/2009 contract by almost
2%.
© Euromonitor International
B: As the economy starts to show
signs of recovery, Procter &
Gamble’s sales begin to rebound.
The company focuses on highmargin oral care, skin care and
razors and blades to drive
growth. Procter & Gamble is also
driving strong sales growth in
Latin America.
.
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
C: Procter & Gamble’s global
share of beauty and personal
care declines in 2011 across
most of its key categories. In
mature markets, consumers
trade down, while increasing
competition in emerging
markets means the company
benefits less from growth here
than some of its competitors.
PASSPORT 10
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
MARKET ASSESSMENT
Two speed global market in beauty and personal care
 North America followed by Western Europe were Procter & Gamble’s largest markets by value sales in
beauty and personal care in 2011. These regions are expected to see CAGRs of 1.6% and 0.3%,
respectively, over the forecast period. Latin America was the company’s third most important market by
value sales and the outlook here is brighter with a 5.2% CAGR expected, meaning this region will lead
growth in CAGR terms over the forecast period, although Asia Pacific will lead in absolute value terms.
 Procter & Gamble is trying to tap into the mature Western markets by introducing value-added products.
For example, Procter & Gamble is targeting oral care in North America and Western Europe through a
range of professionally-positioned products under Oral-B and Crest. In addition, it attempted to reverse the
decline of Pantene sales in Western Europe and North America through the launch of the Nature Fusion
range, positioning Pantene as a more premium product. Procter & Gamble enjoys a strong presence in
emerging regions such as Latin America, Asia Pacific and Eastern Europe, but in each of these regions it
has underperformed Unilever over the review period.
Opportunity Zone
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 12
MARKET ASSESSMENT
Procter & Gamble maintains number one position
 Procter & Gamble ranked number one in beauty and personal care globally in 2011. The company’s market
performance in 2011 was undermined by competition from Unilever and Colgate-Palmolive in bath and
shower. In skin care, another key category for the company, Olay’s market share fell in the US and China,
two of its most important markets by value sales. A shift to premium products saw other brands out-perform
Olay. In these markets, Clinique, Estée Lauder and Lancôme were some of the biggest winners. In men’s
grooming, Procter & Gamble’s share fell marginally from 33.4% to 33.3%. Strong gains were made by
Beiersdorf and Unilever in men’s toiletries in 2011, while Procter & Gamble’s share remained flat.
Additionally the success of Gillette Fusion led to some cannibalisation of the Gillette Mach3 brand in razors
and blades. In the US market, a shift towards premium colour cosmetics benefited L’Oréal and Estée
Lauder over Procter & Gamble.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 13
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
CATEGORY AND GEOGRAPHIC CATEGORIES
FURTHER SCOPE FOR GROWTH FOR THE
WORLD’S LEADING COMPANY
Procter & Gamble has a diverse global presence but there continues to be good
growth opportunities. In terms of emerging market expansion, it suffers from lack
of brand coverage in economy ranges where some of its rivals have an edge. In
addition, it needs to tap into less developed, but high growth categories in its
existing markets as well as tap into non-traditional channels such as digital
media.
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
More global opportunities for Procter & Gamble
 Procter & Gamble has a diverse geographic presence in
beauty and personal care but the US market still
accounts for almost one quarter of its sales. There are
markets where it has the opportunity to further expand its
presence. For example, in hair care, Brazil will lead
growth in absolute value terms. Brazil made up only 6%
of Procter & Gamble’s BPC sales in 2011. In hair care,
while Procter & Gamble ranked number three in Brazil, it
sits far behind leader Unilever. In skin care, Procter &
Gamble has come up against a vibrant direct sales
channel in Brazil where the two best-selling brands are
both sold in this channel. This has undermined attempts
to launch the Olay brand, but direct sellers are on the
decline.
 Procter & Gamble’s main thrust has been behind its
global brands. Its top 10 brands accounted for 73% of its
sales in 2011 led by Gillette, which made up 24% of
global sales, according to Euromonitor International’s
Passport database. Gillette was the number three ranked
brand in beauty and personal care globally in 2011. In
pursuing a global brand strategy with a premium focus,
arguably Procter & Gamble has lost out among lowerincome consumers in the developing world.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 16
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Unilever benefits from economy strength in emerging markets
Top Five Brands: Unilever and Procter & Gamble, Price Positioning
and Emerging Market Exposure
Rexona
Positioning/
Emerging Market
Exposure
Premium-Mid/High
in Latin America and
Asia Pacific only
Economy/High
Lux
Economy/High
Unilever
Brand
Dove
Axe/Lynx/E Mid/High in Latin
America only
go
Sunsilk
Economy/High
Procter & Positioning/
Gamble
Emerging Market
Brand
Exposure
Premium-Mid/Low
with exception of
Gillette
Latin America
Pantene Premium-Mid/High
Premium-Mid/High in
Olay
Asia Pacific only
Oral-B
Premium-Mid/Low
Head &
Premium-Mid/High
Shoulders
 Procter & Gamble’s closest competitor Unilever is clearly stronger at
the economy end of the price spectrum, which gives it a broader
reach into emerging markets. Among Unilever’s top 10 brands, a
number are economy hair care and bath and shower brands
including Rexona, Lux and Sunsilk. Procter & Gamble meanwhile
has continued to focus on driving consumers farther up the value
chain with premium launches such as Pantene Nature Fusion in
2011.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 17
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Catering products to regional taste
 Brazil will lead growth in hair care over the forecast period. The Pantene brand has made strong gains here
in 2011 growing its market share from 3.5% in 2010 to 4.5% in 2011. This was in part the result of the
November 2011 launch of Pantene Pro-V Fusão da Natureza (Fusion of Nature). Its company share rose
from 9.6% to 10.7%. Unilever however remains the market leader and announced in 2011 its single largest
investment in Brazilian hair care history launching 80 new products between November 2011 and
December 2012. Keeping up to date with the latest trends is crucial in this fast-moving market. Argan oil
has emerged as the latest trendy ingredient. Unilever quickly launched Dove with argan oil in 2011 to
benefit from this trend. To date Procter & Gamble has shown less haste in bringing new products to market
to respond to consumer demands.
 China is another key market and here Procter & Gamble leads with a 36.5% market share. The Head &
Shoulders, Rejoice and Pantene brands underpin its presence here. Rejoice is a regional brand present
almost exclusively in Asia Pacific, and China is by far its largest market by value sales. The regional focus
for the brand has allowed new product development to be led by local tastes, such as Eva the Rejoice
range inspired by Chinese herbal medicine.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 18
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Tap into high-growth, less-developed categories in existing markets
 Going forward conditioners will lead growth in absolute value terms. Much of this growth will come from the
emerging markets as women adopt more complex hair care regimes and look beyond 2-in-1 and shampooonly regimes to include conditioners, styling agents and colourants. In conditioners, Brazil followed by India
will lead global growth while in colourants these two countries will again lead growth.
 India remains a relatively underdeveloped market and one with considerable potential for a player such as
Procter & Gamble. Unilever is the market leader here currently with an 18% market share but its share
suffered in 2011 as it faced tougher competition from local players as well as L’Oréal. Procter & Gamble is
not present in key categories such as colourants and conditioners and should rectify this immediately. The
strongest growth prospects are in these categories and Procter & Gamble has Head & Shoulders and
Pantene in the shampoo category already giving it a strong consumer profile. Focusing on trial sizes to
keep retail prices down to capture share among the large rural population, through its large network of
direct sellers in India (shakti women), has been Unilever’s key to success. Procter & Gamble will need to
employ similar tactics to drive sales in conditioners.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 19
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Tap into more prospective distribution channels
 Procter & Gamble’s absence from the Brazilian market is notable given the strong growth anticipated here
over the forecast period. However, Unilever has remained absent from this market as well. In part the
difficulty here for foreign players is the strength of direct selling, driven by Natura Cosméticos and Avon.
Procter & Gamble has focused on the parapharmacies/drugstores channel but has not managed to make
significant in-roads. Direct sales as a proportion of skin care however has been in decline over the review
period and this trend is expected to continue. One of the healthiest channels in Brazilian skin care is
parapharmacies/drugstores. Procter & Gamble should consider developing variants of the Olay line which
are suitable for this channel and invest in a marketing campaign to back a launch of Olay.
 There has been strong growth at the premium end of the spectrum in Brazil with premium skin care posting
a 17% CAGR over the 2006-2011 period in contrast to a negative 1% CAGR for mass. As a masstige brand
Olay could benefit from trading up in this market if it invests in a strong marketing campaign and develops
products specifically with the Brazilian consumer in mind.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 20
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Diversifying distribution channel to help regain lead in China SC
 Procter & Gamble has begun to fall behind L’Oréal in the Chinese skin care market. Second-placed Procter
& Gamble saw its share fall from 10.8% to 10.2% in 2011 while L’Oréal gained 60 basis points to reach
16.4%. Driving this divergent performance has been L’Oréal’s strength in facial moisturisers and anti-agers.
These categories respectively made up 39% and 31% of total skin care sales in China in 2011. Procter &
Gamble was also absent from body care, although this category is not a significant one in China.
 Premiumisation in skin care benefited L’Oréal disproportionately given its host of premium brands including
Lancôme which performed strongly in 2011. SK-II, Procter & Gamble’s own premium skin care range gained
20 basis points but remained a modest brand in this market although in the wider Asian region the brand
enjoys good consumer awareness. However, even the L’Oréal Paris brand, which is masstige like Olay,
gained market share largely at Olay’s expense suggesting the loss of market share is not just due to trading
up. The Olay brand will need to gain a stronger presence in growing channels; internet retailing and beauty
specialist retailers should be priorities. L’Oréal also benefits from a wider choice of price points and a wider
distribution network with Vichy in pharmacy, and its premium brands in department stores while Garnier
enjoys a broad presence from hypermarkets to health and beauty retailers.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 21
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Well placed in men’s grooming but more room for growth
 Procter & Gamble performed well in men’s grooming, witnessing a very strong growth in the emerging
markets. In Brazil its sales growth has remained in the double digits since 2008 and in China, sales growth
reached 17% in 2010-2011. Both Brazil and China are projected to be the top two markets, respectively, to
lead growth in the category. Even though the company has been performing well in emerging markets,
there is room for more potential growth in men’s toiletries where its presence is relatively smaller.
 Procter & Gamble has managed to capture a large part of the Brazilian market through its brand Gillette in
shaving, which remains the leading category in men’s grooming. Razors and blades are projected to drive
growth in men’s grooming, but there is good growth scope for deodorants too, the second leading category
projected to drive growth in Brazil in men’s grooming. In men’s deodorants in Brazil, there has been a clear
trend towards the more expensive roll-on format.
 Procter & Gamble’s relationship with FIFA has been a long-standing and profitable one. It is likely and
recommended that Procter & Gamble become a key sponsor of the 2014 World Cup, to be held in Brazil.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 22
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Invest to establish market for non-traditional men’s grooming
 Skin care remains a relatively small category in men’s grooming compared with razors and blades and
deodorants, however the outlook is very positive with a CAGR of 6.8% expected over the 2011-2016
period. Growth in men’s skin care will be led by China where Procter & Gamble made a major push with the
Olay brand capturing 4.2% of market sales in 2011 launching Olay Men in that year. That said, L’Oréal
continues to dominate in Chinese men’s skin care.
 In Brazil, where Procter & Gamble enjoys a commanding lead in men’s grooming at 46.2% in 2011, men’s
skin care sales remain negligible. This should not deter Procter & Gamble from pursuing this market
however. The Gillette Fusion range has seen extensive growth in other markets well beyond razors and
blades and includes skin care products including a facial moisturiser. The marrying of a well-accepted
brand such as Gillette with skin care may go some way to overcome male reluctance to use skin care
products.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 23
CATEGORY AND GEOGRAPHIC CATEGORIES
PRODUCT DEVELOPMENT DRIVES GROWTH
IN ORAL CARE
Procter & Gamble has benefited where it has been proactive in product
development. It has made a number of key launches in oral care, which have
seen good growth in the market.
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Strong performance in oral care from Procter & Gamble
 While local tastes shift, such as the
renaissance of Chinese herbal medicine in the
Chinese market, which benefited the Yunnan
Baiyao brand in oral care in 2011, Procter &
Gamble continues to see strong growth for
both its Oral-B and Crest brands.
 Strong product development including Crest
3D in toothpaste has helped to propel growth
for the brand in China. Braun Oral-B brand
toothpaste including Oral-B Pró-Saúde Clinical
Protection (gum line care), Oral-B Pró-Saúde
Clinical Sensitive (sensitive teeth) and Oral B
Pró-Saúde with seven benefits have helped to
drive sales in the Brazilian market.
 Procter & Gamble’s oral care sales in the US
were driven by Crest 3D White Line - a full oral
care regimen consisting of an Oral-B pulsing
toothbrush, a paste-gel hybrid toothpaste, an
alcohol-free whitening mouth rinse and
whitening strips. Lateral brand expansion
through moving into related product categories
has long been a cornerstone of Procter &
Gamble’s strategy in oral care.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 25
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Trading up in power toothbrushes
 Procter & Gamble is a significant player in
power toothbrushes, growth of which will be
underpinned by trading up in mature markets.
The US followed by Japan will lead here
posting absolute growth of US$222 million and
US$107 million, respectively, over 2011-2016.
Oral-B is Procter & Gamble’s focus in power
toothbrushes.
 Power toothbrushes are heavily promoted on
the basis that they remove more plaque and
tartar than manual toothbrushes and more
closely approximate a professional clean.
 There has been a drive to continually upgrade
in this category. One of the brand’s latest
launches the Oral-B Professional Care Triumph
5000 uses wireless technology to advise users
when they are not brushing correctly. Its
strategy is working as the Oral-B brand grew its
market share of power toothbrushes from
45.3% to 47.9% in 2011 consolidating its
position as the number one brand in the
category.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 26
CATEGORY AND GEOGRAPHIC CATEGORIES
ROOM FOR POTENTIAL DIVESTMENT IN
COLOUR COSMETICS
Procter & Gamble has been streamlining its portfolio to release resources for its
core assets. There is room to further streamline its portfolio. For example, it is
operating in a very crowded colour cosmetics market. Divesting colour
cosmetics could release resources for further expansion in other core
categories.
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
A new strategy called for in colour cosmetics
 Procter & Gamble may wish to reconsider its
strategy in colour cosmetics. Its difficulty is a
crowded marketplace and the strength of L’Oréal’s
brands at both premium and mass levels.
Following discontinuation of the Max Factor brand
in the US market, its presence in the US is largely
dominated by Cover Girl, which saw its market
share fall in 2011 from 10.3% to 9.6%. A move
towards more premium brands was in large part to
blame. Those who did not migrate up to brands
such as Mac or Lancôme remained with
Maybelline. Cover Girl did not sufficiently excite
the US buying public.
 The company’s premium presence is dominated
by SK-II which enjoys a strong presence in Asia
Pacific but which has never managed to gain
much of a foothold in the North American market.
 Procter & Gamble may wish to consider divesting
its mass colour cosmetics brands to more strongly
back the SK-II brand in Asia Pacific or consider
launching Cover Girl into new markets. While
Brazil may be particularly competitive given the
strength of direct selling, the Indian market shows
considerable promise.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 28
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Indian market has potential for colour cosmetics
 Unilever dominates in this market helped in part by its
extensive distribution network in rural as well as urban
India. Direct selling is also rapidly growing as a
distribution channel with players including Oriflame India
Pvt Ltd, Avon, Modicare and Amway all making strong
gains.
 As a new entrant to this market Procter & Gamble would
need to invest heavily in marketing campaigns and
ensure it has a strong distribution network. Stand-alone
kiosks in shopping malls are a new trend in colour
cosmetics distribution with Future Capital Holdings Ltd,
owner of the Faces brand, using these to drive sales.
 The SK-II brand currently has virtually no presence in this
market and while the premium segment accounted for
only 5.8% of colour cosmetics sales in 2011, it is rapidly
growing with a 56% CAGR over 2006-2011. A wellbacked launch is recommended. Considerable work
would have to go into either the Cover Girl or Max Factor
brands if they are to be launched for an Indian audience
including reformulating pigments and responding to local
tastes and preferences.
 Although India offers potential for expansion, the issue to
consider is the likelihood of greater returns on investment
from other categories .
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 29
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
BRAND STRATEGY
Gillette brand enjoys broad geographic reach
 Gillette is Procter & Gamble’s leading beauty and
personal care brand and the world’s number three
beauty and personal care label. It is one of the
company’s billion dollar brands, with sales of
US$11.6 billion in 2011. Gillette is among Procter
& Gamble’s most diverse brands in terms of
geographic profile. It ranked number one in every
regional men’s grooming market in 2011. The US
remains its single largest market by value sales.
However, Brazil ranked a close second. Given
that the Brazilian market will lead growth in men’s
grooming this puts the Gillette brand in a very
favourable position.
 The Gillette brand is positioned as mass,
however Procter & Gamble has been branching
out to premium men’s grooming with the Art of
Shaving, which it expanded in 2011 and is
considering launching in the UK. The Gillette
brand itself has seen considerable expansion into
new categories to create a “family brand”
including skin care, hair care, deodorants and
fragrance. Global growth for the brand reached
5.6% in 2010-2011.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 31
BRAND STRATEGY
Procter & Gamble aims for more premium image for Pantene
 Pantene is Procter & Gamble’s leading hair care
brand and the world’s number two hair care label.
It is one of the company’s billion dollar brands,
with sales of US$5.2 billion in 2011.
 Pantene has been something of a problematic
brand for Procter & Gamble of late, thanks in part
to an overweight portfolio and confusion over its
positioning. Moves to push the mass brand
upmarket have been undermined by significant
price cuts in core markets. However, Procter &
Gamble has relaunched the brand with improved
formulation and packaging, which drove growth in
shampoos.
 The Nature Fusion range has been rolled out in
2011 and 2012 to new markets including
Thailand. The brand relies heavily on celebrity
brand ambassadors including most recently US
actress Zooey Deschanel. In keeping with Procter
& Gamble’s global aspirations however it has
enlisted Indian personalities such as Padma
Lakshmi. In 2011, Procter & Gamble switched to
plant-based PET for its Pantene Nature Fusion
bottles to maintain a consistent “natural” image
for the brand.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 32
BRAND STRATEGY
Procter & Gamble looks to cross-category branding
 Olay is one of Procter & Gamble’s billion dollar beauty and personal care brands, with sales of US$4.1
billion in 2011. It generates almost 90% of its revenue in skin care, where it is the world’s number two brand
underpinned by its number one position in facial skin care.
 Hence, the brand provides a strong base for innovation, and has met with notable success through antiageing extensions, such as Regenerist, Definity and Pro-X Intensive.
 Procter & Gamble has begun to leverage the strength of the Olay brand in other key brands. It launched
the Venus & Olay razor in a high-profile marketing campaign. It also continued to extend Cover Girl with
Olay as part of the Simply Ageless line.
 Olay however is coming under strong competitive pressure in key markets such as China, where its
competitors are expanding their distribution coverage including pharmacies/drugstores. Procter & Gamble
could consider launching a similar line and consider expansion into key markets such as India and Brazil.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 33
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
OPERATIONS
P&G operates global distribution and manufacturing
 Procter & Gamble’s distribution strategy is extensive and multi-tiered. Procter & Gamble sells its products
primarily through mass merchandisers, grocery stores, membership club stores, drugstores and “high
frequency stores” - neighbourhood stores which serve many consumers in emerging markets.
 The company’s largest customer is Wal-Mart, which accounted for 15% of its sales in 2011 and 16% in
2010 and 2009. Procter & Gamble aims to extend its distribution to reach more consumers through underserved channels, such as e-commerce. Again, the investment in e-commerce is a significant feature of the
company’s efforts to develop its operations in emerging markets, expansion in which is a central growth
strategy.
 Packaging is a key distribution strategy and Procter & Gamble has recently launched eco-friendly
packaging for the Pantene Nature Fusion range with plant-based PET bottles.
 The company has been engaging in a divestment programme which most recently included the sale of its
Pringles brand to Kellogg’s. Previous divestments have included its global pharmaceuticals business to
Warner Chilcott Plc in 2009 and its coffee business through the merger of its Folgers coffee subsidiary into
The J.M. Smucker Company.
 Procter & Gamble plans to add 20 new manufacturing facilities, almost all of which will be multi-product
category facilities, to its production infrastructure by 2014.
 Notably, almost all the company’s new facilities will be in emerging markets, enabling the company to
lower costs and facilitate its efforts to make its brands more available and affordable to low-income
consumers in such markets.
 There are plans for new plants in China, Colombia, Malaysia, Vietnam and Ukraine, and it began operation
at a new plant in the Philippines in 2012 producing nappies. Plans are also in place to expand its Missouri,
US plant in a project worth US$300 million.
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 35
OPERATIONS
P&G emerging market manufacturing sites by country 2011
Western Europe:
Turkey
Eastern Europe:
Russia, Czech
Republic, Romania
Asia Pacific:
China, India,
Philippines, Vietnam
Middle East & Africa:
Egypt, Lebanon,
Morocco, Saudi Arabia
Latin America:
Argentina, Colombia,
Mexico, Brazil,
Guatemala, Peru,
Venezuela
© Euromonitor International
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 36
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
CATEGORY AND GEOGRAPHIC
OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
RECOMMENDATIONS
Procter & Gamble needs to reconsider emerging markets strategy
Tap into non-traditional distribution channels
Reconsider colour cosmetics strategy
 Procter & Gamble is at risk of allowing L'Oréal to
topple its skin care brand Olay from the leading
position in skin care in China. This is a strategic
market as it will be the leading market to drive
growth in beauty and personal care. In addition,
Shiseido is also increasing the pressure. Both
L'Oréal and Shiseido are developing a presence
across different distribution channels and Procter &
Gamble could consider doing the same.
 Colour cosmetics is one of its smaller operations,
but needs immense resources as competition is
driven by companies with a dedicated focus.
Investing resources in colour cosmetics can divert
resources from its larger categories where it holds
industry-leading positions. Alternatively it will need
to consider expanding the Cover Girl and/or Max
Factor brand to the emerging markets, eg India.
However this will require considerable financial
resources and commitment.
Products to match affordability in emerging
markets
 In order to succeed in emerging markets, Procter &
Gamble will need to adopt successful strategies
employed by its competitors including Unilever.
Procter & Gamble’s current focus may be too
premium to gain a broad presence in markets such
as India. The company has already begun to offer
sachets to keep prices down in this market.
However, further work will be required to build a
distribution network. Procter & Gamble remains
overly reliant on conventional retailers and has not
gained sufficient penetration in rural areas.
Expand into new categories in emerging markets
© Euromonitor International
 Procter & Gamble has scope to expand into new
product categories. While present in hair care it is
absent from colourants and conditioners in India. It
should also launch its Gillette Fusion range more
fully in Brazil and attempt to build a market for
men’s skin care. Its Gillette brand has the potential
to overcome male reluctance to use these
products.
BEAUTY AND PERSONAL CARE: PROCTER & GAMBLE
PASSPORT 38
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