Thursday, March 29, 2012


Factors driving market expansion include new product formats, gener-specific products and technological developments. Companies are focusing on new products and extending established product lines, with innovative offerings for product applications and formulations. An example of an emerging company is the household products industry, is JHS Svengaard Laboratories Ltd., the country’s largest oral care products manufacturing company, has tied up with Proctor & Gamble, the world’s largest FMCG manufacturer, to manufacture detergent exclusively for it. JHS Svengaard is currently one of the top financial performers. Indian personal care products are making a recent emergence in the industry. India has faced a revolution literally in all wakes. With the rise in dispensable income, there is high consumerism in the country. With opening up of the emerging markets, the cosmetic companies are broadening in response to the vast diversity of populations. The Indian face wants to look good. The Indian Women are no longer limited to their homes, but have come out & are walking with the same pace as the men. Hence they are more conscious of their looks & are widely opting for the cosmetics that is available in the market. It is not only the female section of the society, who use beauty & cosmetic range but the Indian men too are worried about their looks. There are lot of products specially designed for men too. The cosmetic companies not only produce the traditional makeup items like compact, mascara or lipsticks, but are rapidly adapting themselves to the changing demands of its customers. Today the markets offer a wide range of cosmetic products to choose from. There are smart products like anti-aging solutions, concealers which has taken a lady’s beauty to a new level. Fragrances, body lotions, hair products, hand & foot care products, you name it & you have it. Some emerging Indian companies include Ayur, a Herbal Cosmetics business since 1984. Ayur provides a wide range of beauty cosmetics strictly prepared with herbal components. The products are made from herbals. The cosmetic products range from hair oil, shampoo, natural henna & conditioner to sunscreen, face pack & cleansing milk. The popular products are Tulsi neem soap, rose water, fairness bleach, wax, body lotion, cold cream, face pack & scrub, moisturizer, skin toner, hand care & foot care products. Shahnaz Hussain, India’s leading company in the field of natural beauty and anti-aging treatments. It started in the 1970s by Shahnaz Husain in New Delhi. It has a chain of over 400 beauty centers worldwide. The group has activities as diverse as beauty training institutes, herb plantations, retail stores & products. The company is very popular for its specialized clinical treatments and therapeutic products for specific problems like acne, pigmentation, scars and blemishes, skin-sensitivity, dandruff, hair loss and alopecia. The product range has over 350 products in 20 different categories for skin, hair & body care. All the products are sold under the brand name of Shahnaz Hussain.

Wednesday, March 28, 2012

Who have been some influential leaders (Founders, CEOs) in the industry over the past 20 years?

To discuss this question, I have chosen two different leaders within the industry. The first is Bob McDonald, the CEO of the leading company within the industry, Procter and Gamble. The other, Bobbi Brown, is the founder/CEO of a sub-brand of Estee Lauder, one of the industry's leading companies.

Bob McDonald CEO and Chairman of the Board of Procter & Gamble 

Bob McDonald began his career as CEO and Chairman of the Board at P&G in July 2009. Since assuming his position, he has strived to to achieve the strategy of, "touching and improving more consumers' lives, in more parts of the world, more completely."  During his time as CEO, the company has experienced significant gains in its sales, despite the economic downturn. 

His goal of extending the presence of P&G into new markets is exactly what P&G needs to accomplish to stay on top of the industry. The well-established markets of the United States and Europe are stable and not experiencing significant growth. Targeting new customers in new markets, like those in Asia, Africa, and South America, coincides with McDonald's vision. 

McDonald is currently in the stages of making this vision a more immediate reality. Recently, McDonald announced a $10 billion spending cut. The cut includes laying off 4,000 workers, reducing spending for their maketing budget and packaging, and developing a more efficient supply chain. This spending cut save the industry giant exorbitant amounts of money and will allow the company to allocate that money to penetrating into new markets.  

Bobbi Brown Founder and CEO of Bobbi Brown Cosmetics 

Bobbi Brown Cosmetics began simply because Brown, a make-up artist, believed that women want make-up that makes them look natural and fresh. Her make-up line began in 1991 as a collection of 10 lipstick shades only being sold at Bergdorf Goodman. Four years later Bobbi Brown Cosmetics was acquired by Estee Lauder Companies in 1995. The cosmetic brand is now sold in 56 countries and territories all over the world. 

What makes Bobbi Brown unique as a founder and CEO of her own company is the hands on involvement with her brand. She is continually working on developing new products that would enhance the natural beauty of women. She still also works as a make-up artist for high-end fashion shoots and events, further helping her understand what consumers are looking for trend-wise. 

In addition, she also has two prominent causes that her company strongly advocates. The Bobbi Brown Cosmetics company places a strong emphasis on its mission to, "do what we can to help improve the lives of those in our community and beyond." The two selected causes are Dress for Success and the Broome Street Academy. Not only is this a great reflection of CSR on Bobbi Brown Cosmetics, but both of Brown's causes are highly promoted, showing her dedication and passion for this vision. 


On another completely unrelated note I wanted to share, an interesting trend I noticed while researching the major players of the Household and Personal Products Industry. I noticed that the majority of the CEOs were appointed around the years 2008 and 2009, coinciding with the United States' economic downturn and recession. For example, Bob McDonald of P&G was appointed in 2009, Kasper Rorsted of Henkel in 2008, Paul Polman of Unilever in 2009, and Fabrizio Freda of Estee Lauder in 2009. I found this to be interesting because it surprised me that each of these companies had a change in leadership all approximately around the same time and during the recession.  

In what areas of the industry are there opportunities for innovation?



In one area of the Household and Personal Products Industry where there is opportunity for innovation is in understanding and developing the type of relationship buyers has with a brand. This includes the ways used to attract costumers. For example, Lancôme has a particular relationship with costumers in comparison with it main competitors such as Avon, Estee Lauder and Clinique. Lancôme relationship with costumers is based on exploration and experimentation. This means that this relationship makes women to discover their selves with creativity making them put aside the ordinary elements and have adventure in their lives. Lancôme products make women want to explore their self-identity with originality.
This video is an example of a Lancôme advertisement based on exploration and creativity calling the attention of women.

In another area of the Household and Personal Products Industry where there is opportunity for innovation is in the large-scale application of digital technology and advanced analytics across every aspect of a company operations and activities.

In a third area of the Household and Personal Products Industry where there is opportunity for innovation is in the marketplace. It consists in expanding to new markets. “Marketplace Innovation is all about developing new ways to reach and delight the customer in engaging new ways.” This can include everything from reaching new costumers to developing new methods of operation. “By coming up with unique modifications for products, services, and delivery methods, its aim is to have a positive impact on people’s lives.” Most of the key players of this industry have began to expand to new markets. Expansions have been beneficial for the key players in capturing the market. Although companies in this industry are already doing this. There are going to be more opportunities for them to continue to do this and to modify their operations to success and increase costumers.

How has the competitive landscape changed as a result of leading entrepreneurs in the industry?


In general entering into the Household and Personal Products industry is tough. Reason being, as most of the products are soap, detergent, toothpaste, and cosmetics; consumers have long been purchasing these products so there is little incentive to actively seek out different products from purchase to purchase. Additionally, the barriers to entry within the industry are rated medium but increasing. This keeps competition from entrepreneurs low because of the difficulty in entering the market. One of the largest barriers is the high costs entering the Household and Personal Products Industry. Though it is easy to launch small businesses within the industry because of the minor technological skills and financial resources required and because the ingredients used to produce the products are common, the costs of manufacturing, marketing and distribution are high. This results in large corporations dominating the industry. Specifically, cosmetic and beauty products manufacturing requires a factory and production equipment, which can add up to a substantial cost. Acquiring the financial means to start production and continue at a profit is increasingly difficult. Clorox Company states that newly introduced products face intense established competition and, as such, requires substantial advertising and promotional resources. This is very true with the most well-known brand names belonging to this industry which serves as a large deterrent for new entries.  
Recently, however, there is hope for more entrepreneurs to enter into the industry. This is due to the new “green” trend. The search for more environmentally friendly products with natural ingredients is increasing in demand. A great example of a successful entrepreneurial entry into the industry is Rockin' Green, a maker of eco-friendly laundry detergent and cleaning products. The company’s founder, Kimberly Webb, was named “Best Entrepreneur” and the company named the “Fastest-Growing Company of the Year.” Though there are some instances of entrepreneurial success the numbers are small. The development of new innovative products, the maintenance and improvement of existing products or the extension of an existing product range are the major demands within this industry thus it is very hard to accomplish for new entrepreneurs who lack capital to mass produce, market, and distribute. Therefore the competitive landscape has not changed much due to leading entrepreneurs.

Sources:

Tuesday, March 27, 2012

What workforce trends is the industry experiencing?

The household and personal products industry relies heavily on innovation as well as cheap manufacturing to keep companies competitive. As a result, a good portion of the industries will invest in Research & Development as a major part of their annual spending. Innovation becomes a critical part of household and personal products industry, largely because research is not something that is allotted within one year. Research can take anywhere from five to fifteen years. As a result, companies need to constantly be investing and evaluating projects throughout the years while maintaining spending. Innovation also becomes a way to keep developed markets growing.

The emphasis on research and development is most evident in companies annual reports as well as in their letters to stockholders. For example, just looking at P&G, in the notes of their annual report, they mentioned spending approximately $2 billion on research and development alone. In their annual letter to stockholders, they emphasized the fact that they spend close to 60% more than their competitors on research and development. The evidence of their constant dedication to innovation is clear in their constant need to create new products. Just recently, their new Tide Pods line of detergent was launched after eight years of development. In addition to that, in 2008, four of the top ten new consumer products were launched by P&G. By constantly trying to stay ahead of the competition, they lose the risk of becoming irrelevant, which means greater profits in the long run. It also keeps their brand names in the spotlight, which is important for a large industry such as household and personal products.
On the cosmetics side of the industry, L'Oreal also puts huge emphasis on the need for innovation and creation. In their 2011 annual report, they announced a total 613 new patents since 2010. They also reported investing approximately €721 million ($961 million) in research. What makes L'Oreal innovation unique is the fact that even though their main selling point is cosmetics, they make innovations in the field of science as well. The 2011 report discussed the discovery of the LR2412 molecule, which helps prevent aging. This then become a selling point when the products containing this molecule hit the market because it's something only L'Oreal can claim to have. They have 17 patents regarding this discovery alone, leaving other companies in the dust.

Thursday, March 22, 2012


The profit and loss statements of a company and the balance sheet must be prepared in order to arrive at a clear picture of the company’s financial stability. It is vital to note that the two refer to very different statements of financial information, with significant differences in the data recorded in each. However, the two are related to in each other in that the balances recorded in the balance sheet are directly affected by changes in the financial information recorded in the profit and loss statement. The balance sheet is a statement of financial position. Sales in North America increased 2.3%, declined 4.6% in Western Europe, and increased 6% in the rest of the world year over year. Sales in all divisions except consumer products decreased. Consumer product sales increased 1.5% to €8.5 billion. Active Cosmetics reported the steepest decrease in sales of 4.3% from 2008. Western Europe experienced -6.3% like for like growth as a result of poor performance in Spain and in retail travel. North America reported -3.4% like for like growth due to tough economic conditions. The professional products division did have a good year in gaining market share in the region. The Rest of World regional segment experienced strong growth with double digit growth in China, South Korea, Argentina, Chile, India, and South Africa. Of all L'Oreal's divisions, consumer products had the biggest sales increase of 3.2%. This was due to larger invoices in skin care and in particular by the Garnier and Maybelline brands. Luxury products was the worst performing division with -9.0% like for like growth. The weakness of the perfume market and the economic conditions in Western European market in which the division's brands are leaders affected performance. The Body Shops ended the year with 0.7% like for like growth with retail sales growing by 1%. Comparable store sales were down 0.6%.

Current Events in Accounting


            A little over a month ago, key player Procter & Gamble announced their new plan to cut costs and reach $10 billion in savings by 2016. The plan calls for a major overhaul and restructuring of many of the company’s various departments. To shave $10 billion off of their bottom line P&G CEO Bob McDonald laid out the multi-faceted plan, affecting many areas of the balance sheet, in late February 2012.
The first order of the plan calls for approximately 5,700 jobs to be cut from its nonmanufacturing work force by June 2013. These cuts will initially lead to savings of $800 million by 2014, rising to savings of $1 billion by 2016. The company plans to make adjustments to their marketing budget to save another $1 billion. To save $6 billion in their expenditures, P&G also plans on using less expensive materials for packaging, developing a more efficient supply chain, and altering products to be more concentrated. To achieve this multistep plan of $10 billion in savings will eventually cost the company close to $3.5 billion in restructuring costs.
In addition to the cuts within more their more stable markets, P&G is setting its sights on expansion in emerging markets in Africa, Asia, and South America. Expansion into these new markets includes opening 20 new manufacturing plants by 2015. Overall, the main goal of expansion is to increase revenues and add to their bottom line, while simultaneous cutting costs to create a larger profit margin.
Investors and analysts welcomed these extensive cuts to P&G’s budget. Many investors had been deterred by P&G’s inability to operate at more efficient costs, especially when sales growth in well-established markets, like the United States and Europe, has not been as strong as it once was. Upon announcement of the plan, stock rose 3%.
P&G’s budget cuts and new market expansion represents the company’s repositioning within the industry’s market, affecting its competitors. As P&G attempts to increase its market share by earning more, it inevitably takes away from fellow companies in the industry. This strategy also demonstrates what’s expected of a company from investors. Investors are looking for efficiency and future expansion. P&G is catering to what investors expect through the implementation of their four-year plan. 

Comment on revenue, profit and loss of key industry players


Revenue
Procter & Gamble is the company with the greatest revenue compared to its closed competitors. This company is generating significant revenues through licensing some of its brands and technologies to other firms. Procter & Gamble net revenue was of $9.8 billion over its trailing twelve months. Kimberly-Clark revenue over its trailing twelve months was of $ 1.5 billion. Johnson and Johnson revenue over its trailing twelve months was of $9.6 billion. The last company operates mainly in the health sector but has an assortment of family care, grooming and hygiene products to challenge Procter & Gamble and Kimberly-Clark.

Unilever has well balance sources of revenue. One third of its revenue comes from Europe. The second third comes from North and South America. The other third comes from Africa and Asia including Russia. 46% of Unilever’s revenue comes from developed countries and 56% comes from developing and emerging nations.

Profit
The gross profit margin for Johnson & Johnson is really high at 72.40%. Regardless of this company high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, Johnson and Johnson net profit margin of 1.30% is significantly lower than the same period one-year prior.

Unilever’s operating profit in 2011 was 6.4 billion Euros ($8.4 billion), up from 6.3 billion Euros ($8.3 billion) in 2010. Unilever's underlying operating margin for 2011 was 14.9 percent, down slightly from 15 percent in 2010. This decrease can be caused in part by inflation and the depressed consumer demand seen in developed countries.

Loss
Unilever shares fell 1.9 per cent to £20.50 being the number four company in the list of biggest fallers.

Avon’s North American sales fell 20 percent to $2.11 billion last year from 2007. The decline pushed the North American unit to an operating loss in 2011. The company is worth only  $8 billion today, down from $21.8 billion in June 2004. People say that the caused of this can be Avon’s direct sales model because in these days most Americans buy their cosmetics in stores.

Sources:





Wednesday, March 21, 2012

Which companies are sharing good news in their financial reporting?


Which companies are sharing good news in their financial reporting?

Procter & Gamble, Avon, Unilever, and L’Oreal are all companies sharing good new in their financial reports. Some highlights examined in the income statement and balance sheet of these companies show: low cost of sales, high shareholder equity, and increased debts.
Low Cost of Sales
Avon’s cost of sales are low while revenue remains high, expressing increased profits. The same can be said for P&G, who have record high net sales and comparatively low sales cost. Investors might want to pay close attention to L’Oreal, however. Currently, L’Oreal reports a negative cost of sales. This can be attributed to the fact that L’Oreal owns most of the supply chain thus the cost of sales comes from within the company itself. This is a great company to invest in because as a result of no cost in sales, total profits are very high and contributes to the high shareholders’ equity.
High Shareholder Equity
Shareholder equity is very important when considering investing. As you look at the income statement, comparing the shareholders’ equity to see if it is increasing or decreasing can make or break an investment deal. P&G has one of the best shareholder equity. In the last two years the equity has gone up over 10,000, as scaled on the income statement. Similarly, Unilever’s basic share earnings are 1.51 compared to two years ago when it was 1.21. The expansion of the companies in different countries brings in more revenue allowing the stock to increase giving more benefit to the shareholder. This same expansion that allows higher equity, however, is a factor in debts increasing that occurs in many of these companies.
Increased Debts
Increased debts may seem like an immediate turn-off to investors but learning why the debts are going up is important to look at. The main reasons debts in these companies are due to extensive improvements being made within the industry, which is positive. In regard to Avon, debt increased from 808,000 to 850,000. This may seem like a large increase but cash assets are up and the cost of raw materials are down. Additionally, land and building improvements are being made, expressing where the debt money as result of. Unilever’s overall debt is up but many of the short-term debts are being paid back and liabilities associated with assets held for sale account for other debts but will soon be gone as the assets are sold. L’Oreal has accumulated more debt because of an increase in employee retirement obligations and related benefits. This shows that L’Oreal not only observes its employees as assets but also ensures their benefits. Overall, despite the increase in debt the reasons are beneficial to the company thus encouraging other to invest.

Sources:

How has the recession (2008-2009) affected companies’ balance sheets?

In the Household and Personal Products industry, we see a wide range of products at a variety of prices. As a result, when the recession hit, we see a loss of profits and net income in the big brands. For this post, we will be looking at P&G and Clorox. These two companies sell similar products, have recognizable brand names, and are easily comparable.

P&G


2008 Report | 2009 Report |

First, looking at the the years 2008 and 2009, we see a few differences. First, looking at the assets, we see that in cash assets, P&G has increased them by about $1,000. Meaning that from 2008, they have gone from about $3,000 to about $4,000. In the same on the balance sheet, we see an decrease in inventories. Overall, total inventories decrease from $8,000 to $5,000 in that one year period. This is fairly important, because P&G is a distributor of their own products. Which means that if their inventories are decreasing, they might be trying to scale back. When we look at total current assets, largely because of this huge decrease, we see that current total assets have gone from $24,000 to $21,000. Another telling factor of the recession is in the decrease in property, plants, and equipment. Overall, it decreased by about $2,000, which could be worse. But since P&G owns quite a few plants, the fact that they may have had to sell some or have lost them affects their overall output. Finally, when we look at their total assets, there is a decrease of almost $10,000.

When we start looking at losses, one of the most telling factors is the fact that debt due within one year has gone from $13,000 to $16,000. This means that P&G is borrowing more, but when you look at total current liabilities from 2008 to 2009, they have stayed fairly consistent. Additionally, long term debt has gone down from P&G, which is overall better for the company. So even though the assets for P&G had decreased to respond to the recession and it appears that they are borrowing more, the company is trying to keep risk low.

Clorox Company


2009 Report


Much like P&G, we see a decrease in assets and liabilities. However, this one is not nearly as telling as P&G's report. Instead of a $10,000 loss, we see a lost of about $200. This is likely resulting from the fact that Clorox is simply not as big as P&G and thus has less to lose. From 2008 to 2009, there is about a $8 decrease in cash assets. Furthermore, their inventory decreases from $384 to $366. This means that like P&G, Clorox is scaling back on their inventory. When we look at Clorox's property, plants, and equipment, it remains fairly consistent from 2008 to 2009, with only about a $5 decrease. This means that even though they may be scaling back inventory production, they aren't closing very many plants.

When we start looking at liabilities, we first see a drop in notes and loans payable from $755 to $421. What this tells me is that the company is paying off their debts. On the other hand, just below, we see that long-term debts owed within the years goes up $500 from the nothing that was last year. So even though we see the company trying to pay off some of it's debts, it has long-term debt to account for. Clorox has reported a $300 increase in total current liabilities, which means that even as the company is scaling back slightly, they are still gaining debt. Total liabilities, on the other hand, have decreased about $300. This is likely due to the decrease in long-term debt. Clorox during the recession was basically trying to scale back production while simultaneously paying off more debt.

Monday, March 5, 2012

• What are some current events in your industry? What is the impact of these events on the industry?


P&G’s largest consumer market has always been the middle class, but with the recent recession the mass of the middle class market has begun placing growing emphasis on price and value. This change in consumer priorities has forced P&G, who has one of the largest consumer markets for household goods, to change the way it develops and sells food.  For the first time in 38 years, for example, the company launched a new dish soap in the U.S. at a bargain price.  A wide swath of American companies is convinced that the consumer market is bifurcating into high and low ends and eroding in the middle. They have begun to alter the way they research, develop and market their products. Because of this effect entities such as Citigroup, has urged investors to focus on companies best positioned to cater to the highest-income and lowest-income consumers. Calling the phenomenon of the squeezing out of the middle class, the “consumer hourglass theory”. Companies selling high-end products, for example Tiffany & Co, neiman and marcus, and so on have been hiking up prices to compensate for its diminishing middle-class consumer market, while bargain stores have been creating more low priced goods in order to keep up with the growing demand of the budgeting middle-class. During the early stages of the recession, P&G executives defended its long-time approach of making best-in-class products and charging a premium, expecting middle-class Americans to pay up. But cash-strapped shoppers, P&G learned, aren't as willing to splurge on household staples with extra features. Droves of consumers started switching to cheaper brands, slowing P&G's sales and profit gains and denting its dominant market share positions. In late 2008, unit sales gains of P&G's cheaper brands began beating out more high-end lines, though they received far less advertising. As the recession continued to weigh on U.S consumers, U.S. market-share gains for P&G's cheaper Luvs diapers and Gain detergent increased faster than its premium-priced Pampers and Tide brands. At the same time, lower-priced competitors stole market share from some of P&G's biggest brands. P&G’s compensation strategy for the change in the consumer market, is to respond the in the increase in the income gap by creating specific high-end goods, at steep prices, along with better developing their bargain brands.

Sunday, March 4, 2012

What is the competitive landscape of this industry in the USA?


Mainly the largest American companies such as Colgate-Palmolive Company, Johnson & Johnson, Inc., Procter & Gamble and Kimberly Clark dominate the competitive landscape of the Household and Personal Products industry in the USA. Each of these companies dominates different categories of products in this industry. Although the companies that I mentioned before are the main ones there are other companies that dominate other categories of products in this industry such as The Sun Products Corporation, Philips Oral Healthcare, GlaxoSmithKline, Zero Odor, LLC and S.C. Johnson & Son, Inc.

The companies that I mentioned before dominate different categories of the industry according to the Product of the Year USA 2012 award. This is a consumer product award that is voted by consumers. Bellow are mentioned the companies with the specific products that won the award in each respective category.

LAUNDRY – Wisk® Deep Clean™ Original, The Sun Products Corporation
PERSONAL HYGIENE – Softsoap® Bar Soap Coconut Scrub – Colgate-Palmolive Company
ORAL CARE – LISTERINE® TOTAL CARE ZERO – Johnson & Johnson, Inc.
PROFESSIONAL ORAL CARE – Zoom NiteWhite & DayWhite – Philips Oral Healthcare
WHITENING – Colgate® Optic White – Colgate-Palmolive Company
BEAUTY CARE – Clairol® Nice ‘n Easy Color Blend Foam – Procter & Gamble
BABY CARE – HUGGIES® Little Movers Slip-on Diapers – Kimberly-Clark Corporation
TODDLER ORAL CARE – Aquafresh® Training Toothpaste – GlaxoSmithKline
HOUSEHOLD CLEANING – Zero Odor® Eliminator – Zero Odor, LLC
INSECT REPELLENT – OFF!® Deep Woods® Dry Insect Repellent – S.C. Johnson & Son, Inc.
SKIN TREATMENT – RetinoSyn-45 – Beauty Bioscience

Starting this month (March 2012) the winning products are going to come with a seal of “Product of the Year.” As well stores will display which these products are. This is really important for the companies of the winning products to remain being key players in the industry. For example, 33% of young consumers (under 35 years) are more likely to buy a product if it won an award. Also consumers in general prefer to buy recommended products.


Source:

How is your industry segmented (by customer, by geography, by cost, etc.)? Why?


The primary market segmentation is the differentiation between the household products and the personal care products. Household products account for 25.4% of the international market share, while personal care products account for 74.6%.


The household products and personal care markets are then subdivided. Both markets are segmented by the amount of different types of products sold.

The household products is segmented into six different product types. These six segmentations make up the 25.4%. The first is laundry detergent, which accounts for 32.2%. The second is general-purpose cleaners making up 7.7% of the market share. The next is dishwashing products holding 7.3% of the market. These are followed by air fresheners accounting for 4.5% and toilet care at 2.5%. The last and largest segmentation, accounting for 45.8% of the market are classified as other products.


The personal care products segmentation accounts for 74.6% of the market share for the entire international industry, which is obviously a vast majority. This market is also subdivided into six different product types. The first is over-the-counter healthcare accounting for 27.5%, which is then followed by skincare at 16.9% of the market. These are followed by hair care products, which account for 10.5%. The next two are fragrances making up 7.8% of the market and make-up accounting for 7.4%. Also like the household products market segmentation, products identified as other hold the largest market share of personal care products at 29.9%.


Another method for evaluating the market of this industry is to analyze various regions of the world and how much of each of these products they consume. Europe represents the largest share of the market at 34.4%. The next largest consumer of these goods is the Americas accounting for 29.4% of the industry’s market. The Asia-Pacific region closely follows with 29.3%, which leaves 6.9% to the rest of the world. 



Sources:
http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=d8275404-5467-4704-836b-1b4f288688df%40sessionmgr4&vid=2&hid=9
http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=015b7ad7-0054-46a3-aa1e-f1491eb9f7d8%40sessionmgr12&vid=2&hid=104
http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=423d4ffe-a198-46af-b7fe-9f70113468c2%40sessionmgr14&vid=2&hid=104

What are some recent consumer behavior trends that are influencing the industry?


What are some recent consumer behavior trends that are influencing the industry?
Within the Household and Personal Products industry consumer trends are a reflection of the occurrences of today. For example, the new health conscious consumers are demanding natural and organic products. Another trend, maybe the most obvious, is the use of social media. The leading companies in this industry are putting more money into their marketing strategies or meet these new consumer trends.
Avon, Colgate-Palmolive, Proctor and Gamble, Unilever, and more are among Advertising Age list of Top 100 global marketing companies. Listed below in the chart are companies in this industry’s spending on advertising as of 2009.
Rank
Company
Media Spending 2009
1
Procter and Gamble
$8,678.60
2
Unilever
$6,033.20
3
L’Oreal
$4,559.90
8
Johnson & Johnson
$2,250.80
38
Colgate-Palmolive Co.
$887.30
63
Clorox Co.
$515.40
85
Kimberly-Clark Corp.
$359.20
100
Avon Products
$249.80

L’Oreal
L’Oreal’s most successful marketing strategy is proving on-site and online activations. At the 2011 Toronto International Film Festival L’Oreal set this plan into action. They provided on-site make-up application tutorials, broadcast videos during the show, and set up stands to sell products. Additionally, L’Oreal is turning to social media to reach out to its consumers. On their Facebook page L’Oreal frequently post videos of products and how they can be used to get the new red carpet looks consumers are looking for. Also, several contests are advertised on their Facebook, offering many prices and incentives for customers. L’Oreal is meeting the trends of social media use and increased instruction in using their products.
P&G
Procter and Gamble are focusing on the chemistry aspect of their products to market to those favoring natural items. Tom Nelson, director of P&G Chemicals, stated that with the recovery from the recession things have changed that make their products higher in quality. These changes include: further optimizing fatty alcohol network, creating new uses and application for alcohol co-products, optimizing tertiary amine supply, expanding development of sustainable formulations, and stay ahead of regulatory compliances. P&G is devoted to creating high quality products to meet the consumer trend of natural and organic products.

How do companies in this industry differentiate themselves from one another?

A lot of the main companies in the Households and Personal Products industry have a variety of different products they sell. One company could hold as many as twenty products or more, each with a specific and different purpose. As a result, these companies differentiate themselves in two ways. The first begins at a corporate level with outreach. Second is brand name and packaging.

Corporate Outreach


One method that companies use involves actually extending a hand to the public when times are rough. P&G is one company that has no problems donating diapers, toothpaste, and whatever else they can spare to disaster areas. Although it's also a way to help the needy, it also doubles as a way for the company to get it's brand names out there. When people are in a pinch and can only get their hands on a certain brand, when they can finally afford to purchase their own products again, it could have created new brand loyalty to their companies products. Not to diminish what P&G is doing, but it has the double effect of benefiting the company in the long run.

Kimberly-Clark, on the other hand, has a different outreach method. Although they also have their own commitment to social responsibility, they also promote their products through different means. For example, the Huggies brand contest. Basically, parents are encouraged to film how their child moves for a Huggies commercial. Not only does this make the target market aware of the brand, but it also pushes the idea behind the product, which is that the diaper moves with the child. It's a method of promotion that really focuses on who Kimberly-Clark wants to buy their products.

Brand Name/Packaging


On the shelf, it's a different story for companies. When doing corporate outreach, it's largely just the company, but in the store different brands are competing directly against each other. It then becomes incredibly important for names to stand out. One example is P&G's new Tide Pods. After doing extensive market research, P&G found that many consumers dreaded doing laundry, and so they starting doing research in how to fill that need. Eventually they came up with the Tide Pod, which is light and easy to use. They even took care in designing the packaging. The pods themselves have detergent, fabric softener, and brightener in the signature colors of Tide (Orange, Blue, and White). Additionally, they made the packaging clear so that among the sea of regular detergent, it stands out. As a company with a huge brand name recognition and a reputation for innovation, this is one way they try to stand out.

Tide Pods Packaging

Another area in which there is fierce competition for a consumer's eye is in the Shampoo aisle. While companies know that plastering their name on the bottle is important, everything from the color of the packaging, to the placement of conditioner next to the bottle can make a difference. An advertisement research blog demonstrated the use of eye tracking software on a shampoo shelf.

Eye tracking results

In areas where there were large blocks of color, like Garnier's (L'Oreal) signature green bottles and Head and Shoulders's (P&G) white bottles. However, this could lead to confusion and potentially frustration if someone is searching for a specific part of the brand (like shampoo and conditioner for people with curly hair), and they can't find it easily. Head and Shoulders addresses this to an extent by having mostly white bottles with splashes of color to indicate what kind of shampoo/conditioner the bottle is. In this aisle, it's important to be able to have an extremely strong presence and a wide variety of product to display.

Monday, February 27, 2012

What non-US companies are key players in the industry?


            Two companies that are non-US, key players within the Household and Personal Products are the L’Oreal and Unilever. According to a report produced by Datamonitor, both of these two companies each hold considerable shares in the international markets alongside the big US companies like Procter and Gamble and Johnson & Johnson.  Unilever currently holds 5.7% of the international market share, while L’Oreal holds 4.5%.
            L’Oreal has earned its sizable share of the international market through numerous strengths it has garnered during its more than hundred years of operation. These strengths are, “strong international brands and presence in all distribution channels, accelerating globalization and internationalization of the brand portfolio, and focus[ing upon] innovation and differentiation through robust R&D.”
 The cosmetics company currently operates 23 unique brands in approximately 130 countries around the world. Each of these brands offers a varying product mix, including make-up, skin care, fragrances, and hair products all at various price points. Underneath the L’Oreal Group the company carries many well recognizable brands, such as L’Oreal Paris, Garnier, Maybelline, Redken, Lancôme, and Giorgio Armani.
Each of these brands is targeted to different market segmentations of socioeconomic status. Luxury brands like Lancôme are priced significantly higher and usually sold through higher end department stores compared to L’Oreal’s other makeup line Maybelline that is most commonly sold through drug stores. The brand differentiation allows for L’Oreal to be competitive in different segmentations, where price is a driving force.              
            Many of the strengths that have lead L’Oreal to be a key player in the international markets are very similar to those that have Unilever has utilized to earn its place in the share. Strengths unique to Unilever, carrying brands in both the household and personal products industry and the food products industry, are “diversified revenue streams, research and development activities, and a focus on sustainability.” With its combination of environmental conscientiousness and diverse brand and product selection, Unilever has become a formidable presence in the international markets. 

Sources:
http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=2849aa12-d5fa-4bed-86a4-984f7cd2220c%40sessionmgr4&vid=4&hid=24

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=89cdf45a-5a42-4123-a432-a76aec76a7ed%40sessionmgr11&vid=2&hid=25

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=2849aa12-d5fa-4bed-86a4-984f7cd2220c%40sessionmgr4&vid=5&hid=105


There are many competitive household and personal products industries born and operated outside of the U.S, which have become prominent players in the global market place. To name a few, I shall start with the extremely innovative producer of household products. Dyson Ltd. develops and manufactures vacuum cleaners, hand dryers, fans, and motors. It offers groom tools, vacuum cleaners for asthma and allergy sufferers, vacuum cleaners for pet owners, digital motors, and cylinders; and spares and accessories for upright vacuum cleaners, cylinder vacuum cleaners, and handheld vacuum cleaners. The company was incorporated in 1991 and is based in Malmesbury, United Kingdom with additional offices internationally. On to the personal products industry, Vichy is the number one skincare brand in European pharmacies, and in slowly gaining popularity in the U.S. Vichy Laboratories is unique, because it is dedicated to advancing skin health through a deep understanding of how skin functions, supported by medical research. With patented ingredients combined with Vichy Thermal Spa Water enriched with rare minerals, Vichy skincare products deliver an exceptionally high level of efficacy, clinically proven by independent dermatologists. Another European personal products company is La Roche-Posay Laboratoire Pharmaceutique, offering cosmetic products. It provides body care, face care, hair care, sun protection, and make-up products. All dermatological products are formulated with La Roche-Posay thermal spring water, a similar tactic to vichy. The company was incorporated in 1976 and is based in La Roche-Posay, France. La Roche-Posay Laboratoire Pharmaceutique operates as a subsidiary of L'Oreal SA. L'Oréal's success is built on a strong foundation. The world's largest beauty products company, it creates cosmetics, perfume, and hair and skin care items. Its brands include L'Oréal Paris and Maybelline, Lancôme, and Redken and Softsheen/Carson. L'Oréal, which owns Dallas-based SkinCeuticals, also conducts cosmetology and dermatology research. With more than 50% of sales generated outside Europe, L'Oréal has focused on acquiring brands in those markets. L'Oréal also owns the UK-based natural cosmetics retailer The Body Shop International, which numbers some 2,550 stores worldwide. The firm's dermatology branch Galderma a joint venture between L'Oréal and Nestlé.

Which company(ies) in your industry are most global? What has been the key to their success in other countries?


According to Fortune Magazine’s Top 500 list of Global companies, the following companies in the Household and Personal Products Industry received these rankings:
344. Christian Dior
494. Kimberly-Clark

Christian Dior
Christian Dior is ranked number 344 in the Top 500 Global Companies. The key of the company global success has been its integration with other famous brands being part of LVMH company. Christian Dior is the main ownership of LVMH. Innovation, brand reputation and quality have play an important role in helping Christian Dior to hold its global leadership position. This company social responsibility programs have also been a key reason of its success.

Kimberly-Clark
             Kimberly-Clark is ranked number 494 in the Top 500 Global Companies. The key of their success has been Kimberly-Clark innovation of creating new ideas. Two examples of Kimberly-Clark innovation are the followings. The first one is the creation of pads for girls who had their first menstruation at an early age. These pads come in glittery boxes and are decorate with hearts and starts. The second one is the new tissue called Kleenex Cool Touch that gives cooling relief to sore noses. The launch of these products help this company to maintain its global position because are products that are different. Others companies do not offer these products with these 
characteristics so consumers to satisfy their wants buy this company brands. Social responsibility programs have also help the company to achieve and maintain its global leadership position. Eco-friendly products and environmental programs are other factors that have help this company to captivate the global market. The company has recycling programs in several countries around the world. As well Kimberly-Clark support a significant amount of environmental organizations. Other factor that has contribute to the global success of this company is to have the same Code of Conduct in all countries where the company operates having high 
standards in business policies regardless of whether the requirements of the country are lower.
           
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