Procter & Gamble's International strategy Essay

Procter & Gamble's International strategy - Essay Example After the Second World War, P&G had started its international and global expansion in manufacturing and sales. In 1954 P&G has started its international activity in Europe leasing a detergent manufacturer.In 1980 P&G became a global company, and after a period of successful mergers and acquisitions with such brands as Noxell, Max Factor and Ellen Betrix, P&G expands its global presence. In 1993, the 50% of sales came outside the USA (P&G history, 2003). Recent years, P&G has shifted its global focus to core brands and price reduction measures. This strategy has helped P&G to maintained high-speed growth through continuous optimization of its product mix and constant technological innovation. For instance, "Procter & Gamble were able to secure a significant amount of unhindered time to capture sales whilst Hindustan Lever was scrambling to adjust prices on its newly released stocks" (Executive summary, 2005). Today, P&G follows a differentiation strategy and ensures that the higher price it charges for its higher quality is not priced too far above the competition or else customers will not see the extra quality as worth the extra cost. According to company's executive P&G's main business strategy include: Focusers help P&G to achieve better differentiation or lower cost in ... cent of profits - and on our leading retail customers (Lafley, n.d.). Focusers help P&G to achieve better differentiation or lower cost in separate market segments (Latin America), but they also lose to broadly targeted competitors when the segment's uniqueness fades or demand disappears. Changes to one area of the value chain has knock-on effects in other parts of the business. P&G "shut down under-performing businesses and exited non-strategic businesses and discontinued product lines like Olay Cosmetics and geographic expansions like tissue/towel into Asia" (Lafley, n.d.). This strategy helps to concentrate on core brands and create customers loyalty. The global strategy is to aim at a particular target (international) market. One of the main functions of global and international promotional activity is of course to influence the perceptions of the consumer. P&G maintain policy of product standardization in order to sell them around the world under the same brand. The business strategy of P&G is "value pricing strategy" during which it boosted advertising while simultaneously curbing its distribution channel deals (in-store displays, trade deals), and significantly reducing its coupon promotions" (Thomas, Bollen, 2004). The stronger each of these forces is, the more P&G is free in its ability to earn greater profits. This strategy was successful because the bargaining power of buyers had a strong influence upon the business. P&G, producing differentiated products, is brand loyal, and potential new entrants encounters resistance in trying to enter the industry. Value pricing strategy is also an important factor in increasing the costs for customers of switching the products of new competitors. Value pricing strategy had the following impact: