Procter And Gamble

procter and gamble

The objective of Porter Five Forces Model is to beat the competition of market by overcoming the challenges offered by rival companies. The five forces model was analysis developed by Michael E. Porter in 1979. According to this model the five forces that can affect the profits of company and can help to determine the prevailing competition in market are:

• New competition threat

• Threat due to substitute services or products

• Bargaining Power of suppliers

• Bargaining Power of Buyers

• Threat of established rivals

From the above mentioned factors three are part of horizontal competition that are marketing threats of rivals, new entrants and of substitute products. However, bargain power of customers and suppliers are vertical competition factors. Various companies use this model as checklist for developing any marketing strategy and also use “Value Chain” along with this model.

Threat of New Entrants

Due to the vast range of Procter and Gamble products, it is very hard for a new company to come and participate. However, the company holds considerable shares of market and also has established reputations therefore, no new entrant can compete with the company without heavy amount of capital and complete marketing strategy based on comprehensive research. Though small companies with specialization in particular products can offer competition to Procter and gamble in specific areas.

Bargain Power of Supplier

The bargain power of supplier is coped with mutually dependent relationship of company with its suppliers. Procter and Gamble request some good materials in order to produce products of good quality and sell them at sensible price. Likewise, suppliers in market are always in search of reputed clients that can help them to generate good amount of revenue. The standard reputation maintained by Procter and Gamble offers advantage to the company in this regard. Therefore, the prevailing crisis of credit and fluctuation in interest rates do not affect the terms of company with suppliers.

Bargain power of Consumers

As with the bargaining power that is alarmed by the costumers, Procter and Gamble can deal with it easily. The wide range of household products produced by company maintains the revenue of company even in time of recession. It is due to the type of various products and the demands of products in everyday life of consumers, that this company plays an effective role in reducing rate of recession in economy of US.

Threat of Substitute Products

Although Procter & Gamble has to deal with the presence of various substitutes in market nowadays, however quality offered by P&G in its all products ensure the sustainability of company in market all over the world. In this regard company has adopted variety of collaboration strategies with their customers in order to develop better understanding of consumer demands and their response.

These factors allow the industry to know about their buyers that are they happy with Procter and Gamble products or will choose some other brand

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