• 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.