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.

           

Sources:

http://money.cnn.com/magazines/fortune/global500/2011/full_list/

http://www.dior-finance.com/en/organigramme.asp

http://www.nytimes.com/2011/04/15/business/media/15adco.html?_r=1&ref=kimberlyclarkcorporation

http://www.nytimes.com/2011/09/28/business/media/researching-the-sneeze-and-how-to-handle-it.html?ref=kimberlyclarkcorporation

www.kimberly-clark.com

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:

80. P&G

136. Unilever

378. L’Oreal

P&G

Proctor and Gamble is ranked number 80 in the Top 500 Global Companies. The key to their success had been the creation of their Global Business Units (GBUs), Marketing Development Organizations (MDOs), and Global Business Services (GBS). The GBUs mission is to focus on the consumer, branding, and competitors. GBUs are responsible for innovation, profitability and shareholder returns. P&G has stockholder equity of approximately $62,000. The MDOs are in charge of the consumers and retailers. They are responsible for knowing the market in which P&G competes and integrating the innovation of the GBUs with each country’s business plan. Lastly, but most importantly the GBS showcases P&G’s expert partners to provide grand business support services at the lowest costs including: streamlining operations, accelerating internal collaboration,  and scaling systems, services, and processes globally. P&G holds 20% in the global household care market which is worth $200 billion.

Unilever

Unilever is ranked at 136. This can be attributed to their Unilever Leadership Executive (ULE) which is a team of experts responsible for managing profits and loss, and delivering growth across regions, categories and functions. Unilever focuses on partnerships to achieve global success. Unilever works on an idea they call the Value Chain, which is merely their extensive supply chain in which they are partnered with the members of the chain, also known as vertical mergers. They also have strict supply policies in order to be involved within the supply chain. Having such insight into the supply chain allows them to be more efficient in manufacturing, distributing, and selling their products. Unilever’s strategy of managing the supply chain is the key to their success in the global market.

L’Oreal

Branding is at the heart of L’Oreal’s success and position on the Top 500 at number 378. The brand name and brand image has enabled L’Oreal to expand into the global market. L’Oreal appeals to many different ethnicities which gives them a large advantage in branding. Additionally, L’Oreal’s use of celebrity endorsement assists in their brand recognition. L’Oreal prides itself upon research and development of their products. Their success in this area is expressed through the brand quality and loyalty of their consumers.

Sources: 

http://money.cnn.com/magazines/fortune/global500/2011/full_list/

http://www.pg.com/annualreport2009/letter/purpose-growth.shtml

http://www.pg.com/en_US/company/global_structure_operations/corporate_structure.shtml

http://money.cnn.com/magazines/fortune/global500/2011/snapshots/334.html

http://www.unilever.com/aboutus/supplier/workingtogether/

http://www.loreal.com/_en/_ww/html/our-company/operations/innovate-to-mass-produce-the-products-of-tomorrow.aspx?

http://www.brandingstrategyinsider.com/endorsements/

http://finance.mapsofworld.com/brand/value/loreal.html

Do players in your industry manufacture overseas? What aspects of their operations to the outsource?

It's not uncommon for companies in the Household and Personal Products industry to manufacture outside of the US. We've already established that the industry has to price competitively and rely on brand names to ensure profits, and a large part of how they do this is cut costs in production. This can mean cheaper packaging, or just automating as much of their process as possible.

Take, for example, Procter & Gamble. Like many brand name companies, they have been hit hard by the economic downturn. Many of their customers in developed markets had switched over to the cheaper private-label alternatives. However, in their international market, they saw the most growth, and as a result, they are opening 20 new manufacturing plants in Brazil, China, South Africa, Romania, and Poland. This is added to their 140 other internationally based manufacturing plants. As a matter of fact, their most recent US plant was in Utah (2011), and it was the first US-based plant since 1971. For P&G, they are expanding their overseas manufacturing process in order to maximize overseas profit.

One of P&G's main competitors, Colgate-Palmolive also manufactures overseas. In their 2010 Annual Report they discussed their plant in China, which they claims is the biggest toothpaste factory in the world. They also acknowledged their presence in Brazil, where they purchase a key ingredient for soap. Like P&G, their presence overseas is mainly to cut down costs. In their China plant, they hope to produce toothpaste efficiently to sell cheaply in markets all over the world. In Brazil, they work to get an ingredient for cheap, so they can cut down production costs.

The Clorox company also has an international presence in manufacturing. They have plants in 17 countries, including the US, Saudi Arabia, China, and India. Once again, their reasoning all narrows down to money. Having plants internationally can help with distribution for an international brand as well. And for this industry, it's hard not to find a brand that's not international.

When it comes down to it, these three companies find the most growth in an international market. Furthermore, the production of these products can be made cheaper internationally. With a market that depends on competitive pricing and brand names, a few cents off of a detergent can make a different in the long run.

What are some interesting mission statements or values statements of some of the companies in your industry? What do their statements reveal about them?

While a vision statement may sound very much like a mission statement, each serves as different guidelines for a company or organization. The vision statement declares what the company ideally wants to be in the future and sets long-term goals. The mission statement simply proclaims how and what the organization does to reach its vision. Three companies’ statements that will be examined are Avon Products, Inc. The Clorox Company, and SC Johnson.

Avon Products, Inc.

            The combination of Avon’s corporate social responsibility, mission, and vision statements made it one of the most interesting to read. All three components contained a strong emphasis on the empowerment of women. Their statements highlighted their desire to achieve a premier status as a beauty products company, offering both a quality place of employment and quality products. In addition, Avon’s statements also focused on their social initiatives as becoming the leading foundation dedicated to women’s causes.

SC Johnson

            SC Johnson mission and vision statements are extensively explained within their, “This We Believe” document, which states the five groups it serves and hopes to bring greater good to. These are the employees, consumers and users, the general public, neighbors and hosts, and the world community. The great in-depth into which the company seeks to serve each of these groups currently and in the future demonstrates the good will of the company. Through serving these groups honestly and justly, they feel growth, development, and expansion with follow naturally.

The Clorox Company

            Clorox set forth simple, yet meaningful goals for its company. Clorox’s statement comes compactly in one sentence stating, “We strive to understand and delight consumers with brands that enhance their lives, as well as to make a positive impact in the communities where we do business.” Clorox also enumerated upon four values that serve as the foundation to everything they do. These values are “do the right thing,” “stretch for results,” “take personal ownership,” and “work together to win.” From their mission statement and four core values, Clorox also emphasizes community outreach and promises aid during disaster relief.

Overall, each of the three companies statements focused upon three main components. The first is to provide its customers with quality products. The second main component is to foster safe, open, and quality work environments for its employees. And thirdly is to benefit its local, national, or international community through philanthropy. By containing each of these components, Avon, SC Johnson, and Clorox are being responsible and ethical corporations, however each is serving their communities in unique, individual ways differentiating themselves from the competition.  

Sources:

http://www.scjohnson.com/Libraries/Download_Documents/TWB-English.sflb.ashx

http://www.thecloroxcompany.com/company/mission-and-values/

http://www.avoncompany.com/corporatecitizenship/corporateresponsibility/vmvp/index.html

http://www.avoncompany.com/corporatecitizenship/corporateresponsibility/index.html

• Which companies in the industry stand out in regards to their view and actions in CSR?

Many modern companies have begun developing and redesigning their CSR programs, in order to stand out, and become recognized and respected by stakeholders. Companies are exceeding expectations in order to ensure the well-being of their stakeholders. Most companies have different takes on fulfilling their CSR duties. Some appeal to stakeholders directly by offering free health insurance and products to those in need. Others use a more indirect approach, and appeal to future generations by making efforts to help sustain the environment, and encourage green thinking. One company who performs social initiatives which stand out is Colgate-Palmolive. Colgate-Palmolive developed a program to educate underdeveloped areas on dental hygiene, as well as provide the inhabitants with the necessary supplies to maintain a reasonable oral hygiene routine. Colgate-Palmolive India continues its march in the area of spreading oral health awareness through its School Dental Health Education Program. Under this Program, Over 50 million school children in rural and urban parts of the country in the age group of 6-12 years have been reached out to till date. Training of the basics of oral health care is imparted to the school teachers, through the Colgate Bright Smiles program, to ensure further education to children of preventative health care. In the field of academics, Colgate encourages striving for excellence by offering grants and scholarships to outstanding students, at the college level. Another company with a notable CSR track-record is L’Oreal. L’Oreal is an example of a company who has appealed to both the environmental aspect of corporate social reasonability, as well as the philanthropic aspect. L’Oreal’s target goals for increasing sustainability are to reach 50% reductions in greenhouse gas emissions, waste, and water consumption per finished product. Fair trade policy and commitment to local communities are fully integrated into L’ Oreal’s business making process. L’Oreal is responsible for a program called For Women in Science, which promotes scientific careers and identifies outstanding women scientists. L’Oreal encourages talent by offering women the UNESCO-L’Oreal international fellowship, granted every year since 2000, to 15 promising women scientists, doctorate or post-doctorate. L’Oreal also offers the L’Oreal national and regional fellowships with support from UNESCO, for women in science programs around the world. L’Oreal has helped to establish the careers of many leading female scientists today.

What are some examples of ethics challenges that industry players have experienced?

Ethics challenges are situations in which organizations have to choose to act between alternatives that are considered right or wrong. Most of the time these decisions are difficult to make but organizations have to make them carefully to avoid hurting their reputation and profits as a consequence of their actions. They have to take into account long-term consequences instead of just caring about short-term ones.

Johnson and Johnson is a company that was known for being socially responsible for choosing the considered right alternatives and believing in “patients come before profits”. Now, unfortunately, Johnson and Johnson is presenting ethical challenges. This organization’s ethical issues consist in having on recall some of their products, such as: different medicine brands, surgical sutures and contact lenses because they were defective or the medicines had un-identified side effects. The company also has issues on some of their products’ quality and safety. For example, they have quality and safety issues on their artificial hips. The company has response ineffectively to these situations. This is worrying because reflects that for the company profile making is more important than providing good quality without presenting negative impacts on their customers although the company used to believed in “patients come before profits”.

 Animal testing is other significant problem in this industry how Dye mentioned in her post. Avon, Mary Kay and Estée Lauder are companies that stopped testing on animals and were added on PETA’s cruelty free list. The problem is that now the Chinese government requires animal testing for cosmetics and skin care products that are sold in China. Mary Kay is not doing animal testing and is negotiating with the Chinese government for other methods to test the products. Instead Avon and Estée Lauder are doing animal testing on China to meet government requirements. For this reason PETA’s removed these two companies from the PETA’s cruelty free list.

Sources:

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2943

http://www.mnn.com/lifestyle/natural-beauty-fashion/blogs/avon-estee-lauder-and-mary-kay-are-again-testing-makeup-on-an

What are key ethical issues this industry faces?

What are key ethical issues this industry faces?

Businesses in the Household and Personal Products Industry are ranked in the top percent for the best ethical practices. The products produced by companies in this industry are very close to consumers and rely on consumer satisfaction thus requiring a high standard of ethical practices.

Key ethical issues this industry faces deal with:

·         Espionage/spying

·         Ethics marketing

·         Animal testing

Espionage/spying

In 2001, there was a huge issue with espionage. A member of the competitive analysis group at Proctor and Gamble had been caught spying on Unilever, P&Gs main competitor. P&G and Unilever compete in the hair care market, particularly with shampoos. The analyst at P&G obtained information on future business ventures Unilever had planned including: launch-plans, pricing, and margins. Businesses in the Household and Personal Products Industry face a large amount of competition to produce better products for the consumers they are so close to, in relation to personal use of the products. Espionage and spying are large ethical issues. Spying and espionage practices hinder the free market system, in which business have the right to compete with one another. Having illegal insight into another company’s strategies gives that particular company and unfair advantage and if the plans are continuously stole and implemented by the other company the other can suffer immensely.

Ethics Marketing

In order to reach different markets, companies in the Household and Personal Products Industry use a strategy of ethics marketing. This practice is where companies express their excellence in ethics in order to be more appealing to potential buyers. The companies are providing truly remarkable and helpful service to many communities across the globe while also enhancing their marketing practices. Kimberly-Clark is the best example of ethics marketing. Their extensive pledge to sustainability and company ethics is shown through their many global initiatives. As part of their new 2010 plans, each unit within the company must set and work to meet goals for social and environmental outcomes. The countries in which Kimberly-Clark and other companies within this industry provide service, also, are included in their top revenue increasing areas. Consumers of household and personal products tend to be very conscious of the products they purchase and the widespread assistance these companies give appeal to the customers resulting in more buying to influential companies. Ethics marketing supports the community and the company.

Animal Testing

Products within this industry care commonly directly used by the consumer, to be more specific, the products are used on the body or near it. To ensure the product will not have negative effects on the human some companies practice animal testing. In previous years, animal testing was not a large issue mainly because the practice was hidden. Through the new transparency of the government and business these practices have been learned and are being strongly protested. Due to the increase in protest against animal testing companies have altered their product ingredients that are known to work well with the skin and not need to test. Some of these companies include: Avon, Revlon, Mary Kay, etc. As mentioned before, consumers of this industry’s products are often aware of these ethical standards and will buy accordingly.

Sources: http://mba.tuck.dartmouth.edu/pdf/2005-1-0095.pdf

            http://www.kimberly-clark.com/

            http://www.nytimes.com/1989/08/02/business/cosmetics-companies-quietly-ending-animal-tests.html?pagewanted=all&src=pm

           

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

Procter & Gamble, Colgate-Palmolive, and Kimberly-Clark both saw profits drop in the fourth quarter. Clorox, on the other hand, saw gains for the second fiscal quarter.

Between the three companies, P&G saw the greatest loss in profits at 49%. This has caused the company to project less profits for the current quarter and slice it's earnings projections for the year. Despite this news, P&G has said that they expect developing markets to increase it's growth. They also project that it's core sales, despite these troubles, will "remain in the range it set earlier this year, and rise 4% and 5%." While they do hold a positive outlook, that does not necessarily mean good news for it's stock holders. They can expect their full years earnings per stock to be down 20 to 30 cents. For people with a high stake in P&G, this can add up. However, the company attributes their loss due to the stronger dollar, and they don't expect any long term loss.

Kimberly-Clark had the second greatest loss in profits at 19 percent for the fourth quarter. Like P&G, the company has adjusted it's total stock outlook to about 10 cents less than originally projected. However, they only expect their growth for 2012 to be 1%. They plan to put more money into marketing, research, and development in order to bring demand up. Executive Tom Falk was quoted as saying, "We have a big increase expected in our strategic marketing, Hopefully, part of it will go to higher margins as well." Even though they suffered a loss, Kimberly-Clark is hoping to counteract this for the 2012 year and like P&G, they don't project any long term losses.

Colgate-Palmolive saw a 5.4% profit loss for the fourth quarter. However, the company's global outreach is expanding, and core sales grew the highest in the Latin America and Asian Markets. In the US, however, they found the profits fell by 11%. Like both Kimberly-Clark and P&G, the company expects the stronger US dollar to hurt earnings. However, the toothpaste giant is additionally having problems with "higher input prices." But they hope that advertising their new products such as Optic White and Sensitive Pro-Relief will offset profit loss for 2012.

On the other end of the spectrum, Clorox is facing strong sales for the second fiscal quarter. This comes after the company has been recovering from reduced sales after the economic downturn. Clorox claims that the gains were a result of price increases. As a result of this information, the company has increased their growth projections.

While the three companies that suffered losses are changing their projections, they emphasize that this is only the result of a stronger US dollar. They don't expect these losses to continue long term and they do expect their company to grow, if not domestically, internationally. Clorox, which has a strong US base, seems to expect this growth to continue, considering it has not been as affected by the stronger dollar. 

Sources: http://online.wsj.com/article/SB10001424052970203889904577201242580343200.html
http://online.wsj.com/article/SB10001424052970204573704577184601445520734.html

http://online.wsj.com/article/SB10001424052970203806504577180621864804822.html

http://online.wsj.com/article/SB10001424052970204573704577186622143009202.html

What drives revenue growth?

Because the Household and Personal Products industry is a stable and well established industry, the leading companies must find more unique methods to garner revenue growth. Companies within this industry earn revenue simply through the sales of their products. In a market analysis compiled by Wipro IT Business, four recent trends in revenue growth strategies were discussed. These strategies are branding, “micro-selling”, product enhancement, and combating private label competitors.

Branding

For many companies within the Household and Personal Products industry, the importance of the marketing strategy of branding is key. Many companies are seeking to create a sense of loyalty with its customers. To create this brand loyalty, companies offer reward promotions, consistently provide highly quality, and maintain reasonable prices. The goal for these companies is when a customer is standing in front of well-stocked grocery shelves; the customer will purchase their brand again and again, rather than choosing another.

Micro-Selling

            Micro-selling is a revenue growth strategy that targets developing economies. Within developing markets, like India and China, there are lower incomes than compared to United States’ incomes. These lower incomes make it difficult for Household and Personal Products companies to enter and be successful in these types of markets.

A strategy to tap into these markets is the micro-selling method. The products within these low-income markets are packaged smaller. The smaller size of the product makes it cheaper but this is not a detrimental factor because of the sheer immense size of markets like China and India.

Product Enhancement

            Product enhancement deals with what companies call “value-added products.” What this means is that instead of simply selling tissues, companies are selling tissues with lotion inside of the paper tissue’s fibers so customers’ noses do not get chaffed. These “value-added products” are sold at higher prices and are sold within economic markets where they can be afforded.  

Combating Private Label Competitors

            Private label competitors, more commonly known as store brands, are a threat to companies because of their ability to be sold at low prices. These low prices found at private label competitor stores like Wal-Mart and CVS make it difficult for major companies to raise prices because they would quickly lose revenue. To deal with this threat, companies are investing their money into their research and development departments to create and innovate products worthy of higher prices. 

Discuss supply and demand in the industry

Many factors come into play when weighing out supply and demand. Consumer taste is usually the heaviest factor. The recession has caused a downfall in brand loyalty. Consumers are no longer with buying their usual labeled products, which they believe to have greater product utility, but rather have begun purchasing what is cheap and effective.  A more price-conscious orientation among consumers has resulted in an increase in the “buy down” phenomenon, when consumers buy less expensive brands in order to reduce household expenses and save money. Nearly 46% of consumers have cut back on spending on home improvement, therefore reducing demand for household appliance staples, such as a fridge or dishwasher. Private label products, products or services typically manufactured or provided by one company for offer under another company's brand, are becoming increasingly popular during this difficult economic period, because they are typically a cheaper alternative to regional, national or international brands. In order to remain competitive in the slowing market, and keep up with the change in consumer spending, regional, national, and international brands have been creating frugal substitutes for their usual high-end, high-priced options. P&G is one example of a brand which has taken advantage of this strategy. P&G offers at least two product forms in many product categories. For example, the company has seen increases sales in Luvs from Pampers diapers and an increase in Gain detergent sales from Tide. In addition, P&G offers "Basic" versions of its Charmin toilet paper and Bounty paper towels. The company's broad offerings, combined with the necessity of household items, provide a degree of insulation against recession. Anther strategy that manufacturers are using is, to demonstrate superior value to private labels or more economical options. Multinational corporations must attempt to develop a brand that other retailers can’t copy. Focus on brand attributes that are difficult for retailers to replicate, such as exclusivity, product safety, social causes, innovation and sustainability. They should also think local, Identify regional or local variations in tastes and preferences and use them to create new and unique products that can compete effectively against the localized offerings of private labels. Brand labels must make it hard for private labels to copy them. Building customer loyalty, by creating a personal relationship with costumers, is also an effective way to ensure return buyers.

Discuss supply and demand in the industry

Personal Products Industry manufactures products for personal hygiene and beauty. I am going to explore the supply and demand of these products. Specifically of Avon. This company modified its supply chain to meet in a more efficient way supply and demand. This was because Avon supply chain was not efficient. The Avon’s of the six countries in which they used to operate during the1980’s used to do it independently. The selling cycle and the supply chain did not use to match. The reason of this is that they used to have short-selling periods of three weeks. That means that every three weeks they used to introduce new products. So they were not able to satisfy demand efficiently because some products were not popular enough and some were extremely popular so they used to experiment shortages. Another problem that Avon had was that they bought from suppliers’ pre-printed containers in different languages for their products. Sometimes they were not able to satisfy the demand because remaining containers were in other languages instead of the needed one. Another difficulty that Avon used to present was that the company used to buy glass bottles in Mexico because it was inexpensive, but the down side was that transportation was slow and expensive. During the 1990’s when Avon expanded to new countries, they started to have a centralized business so this way they could be more efficient in their supply chain. The company transformed the supply chain consolidating production. Now they also produce their own containers in the language that they need. In this way they supply demand efficiently. Avon, also, no longer imports bottles from Mexico, buying more expensive ones in Europe close to their production plants but now the company has lower total costs. Now a days Avon products demands come from 145 different countries. Avon supplies them in an efficient way. Business in this industry should follow what Avon did modifying their supply chain to meet in a more efficient way supply and demand.

 

Source:

http://www.prtm.com/uploadedfiles/books/avon_gets_its_supply_chain_makeover.pdf

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

The Household and Personal Products Industry is the distributor of products to meet personal needs such as: personal hygiene, beauty and health, and other household products. Recently, companies like Procter and Gamble (P&G), Colgate-Palmolive, and Haier America have been doing most of their work in countries with developing market to focus on the neglected low-income consumers. The low-income consumer market is perceived to have no money to spend on these items or impossible to reach. The previously mentioned companies are disproving these myths. Research, provided by A. T. Kearney investigators, showed much growth can be made from low-income consumers as seen in Russia, where the low-income consumers spend $104 billion annually. Companies in the household and personal product industry are aware that these consumers are very brand conscious, looking for reliable and fair costing products. Due to this an increase in the number of household and personal product companies has emerged in developing markets.

For example, P&G has geared toward putting their products in developing markets like Mexico, Pakistan, and Nigeria where products like Pampers and Tide are not everyday products like they are in the US. To be successful in these developing markets P&G plan to put their products in “golden” stores, tiny mom-and-pop shops that carry 40 or more P&G products and display them together on the shelf rather than next to competing brands. A trend to sell more in the low-income consumer sector in other countries is to offer smaller packages. Reason being, low-income consumer can only afford to purchase products on a daily basis because that is usually how they are paid. Smaller packaging makes high quality product within reach of the low-income population. Also, the “golden” stores described above have limited stocking capabilities thus smaller packaging can guarantee the products reach the shelves and are bought over the local brands. Businesses attempting to expand into the low-income consumer market must study the demographics of the social environment concentrating on income.

In addition to product adjustment, marketing must change in order to connect with the low-income consumer sector. The consumers must be aware of the new high quality products these companies are offering. Colgate-Palmolive market researchers found that in places like India, where they are expanding, television advertising is not very effective. As a result, Colgate-Palmolive has taken to the streets with an open-air marketing strategy equip with video vans showing local movies and advertising their personal care products.  Determining the how the new set of consumers will accept the product goes along with marketing. Home appliance distribution company, Haier America, had to learn that their washing machines, in China, were not only used to wash clothes but also vegetables. The mud and dirt from the vegetable would often clog the machines’ pipes, instead of ignoring the issue because of the consumers misuse, they made the pipes wider. These kinds of accommodations, for the consumers needs, are what make their products increasingly popular and demanded.

To enter into developing markets with attention to a new set of consumers, it is important to be aware of what the consumers can afford, how they use the products, and how to present the products to them. Household and personal product companies like Procter and Gamble, Colgate-Palmolive, and Haier America are focusing on establishing their products in the low-income consumer sector to gain revenue. Other companies within this industry are reacting to the change in market and are following the examples of the companies mentioned earlier.

Sources:http://www.atkearney.com/index.php/Publications/serving-the-low-income-consumer.html
             

What are the basic economics of the industry? How do companies make money? What are their costs?

The need to stay clean, groomed, and healthy all contribute to America's spending on household and personal products. Everything from shampoo to cleaning products represent the desire of people to present their best at all times. Although the two industries offer different (but sometimes related) products, their industries are largely the same in terms of market domination and volatility.

On the side of personal products, which includes cosmetics, hair products, lotions, and toothpaste; large companies such as Proctor and Gamble, Kimberly-Clark, and Avon Products have a particularly big hand in the US. Their sales are driven by wide-distribution and brand name recognition. This industry also has the benefit of being somewhat stable. Personal care is so ingrained in US culture that there is a strong consumer base. The advent of the internet also allows companies to reach new consumer bases. These companies also highly automate their manufacturing process in order to cut costs as the automation removes the need to hire more workers and it keeps costs down. This means more productivity for less money.

But on the contrast, although this industry tries to keep costs down, they can't always be successful. Many of these products rely on various natural resources in order to continue large scale production. However, the output of these products can vary from year to year, making costs volatile. In addition, a good portion of what keeps this industry moving is advertising, so companies need to spend a lot to ensure that their sales will remain high. But even that can't be guaranteed. Economic hardship shifts demand away from these products towards generic brands that may not cost as much.

On the household part of the spectrum, I have narrowed it down to specifically the soap and detergent industry to keep this blog simple and understandable. This industry is dominated by giants such as Colgate-Palmolive, S.C Johnson & Son, and The Clorox Company. Like the personal products industry, this industry relies largely on wide product distribution and a large consumer base. Other industries such as the hospitality industry, food service industry, and the healthcare industry are also big drivers in sales. By doing market targeting, this industry can increase sales.  

But once again, the household industry has its own challenges separate from the personal products industry. While the personal products consumer base is fairly consistent in decent economic times, the soap and detergent industry has to adapt to changing consumer bases. New parents largely contribute to their sales, so if people are having fewer children, they need to adapt to that. Soap and detergent companies also come under fire for not being environmentally conscious, which can affect how these companies make and distribute their products.

Although both industries sell largely different products, there is fairly significant overlap in how companies make money and rely on cost management. Both industries are dominated by giants and have the challenge of keeping prices down so that consumers don't switch to cheaper generic brands. They also have to rely on brand names and heavy advertising to ensure that they keep their consumer base. 

Sources: http://subscriber.hoovers.com/H/industry360/overview.html?industryId=1170

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