Porter’s Five Forces Model of Procter & Gamble

People around the globe are using different domestic products made by Procter and Gamble. This is the reason why Procter and Gamble is considered as one of the primary source of producing customers goods. The products which are made under the label are further divided into six different categories that are: Paper wares, feminine products, laundry and cleaning, food and drinks, health care and beauty care. Oil of Olay, Pantene, Ariel, head and Shoulder, Sunny delight are the leading brands of Procter and Gamble (Wherrity, 2006).

These brands are responsible for half of the sales for the company. With the successful deployment of Porter Five forces model, the industrial environment and marketing success of the company can be analyzed.

Porter’s Five Forces Model

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.