P&G Marketing Strategy for Candles

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  • Topic: Marketing, Procter & Gamble, Brand management
  • Pages : 17 (4991 words )
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  • Published : May 30, 2013
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Marketing Project|
Procter and Gamble|
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10/22/2011|
Abstract
The following marketing analysis on Procter and Gamble will be drilled down into the Home and Fabric care division more specifically on the febreze glass candles. The analysis will use all of the candle industry researched information that was available. If the pertinent information was not found, the overall company information will be used.

Current Situation Analysis

External Environment
Industry Overview
Procter and Gamble started in the candle industry in early 2006 with the Febreze candle line taking the scent that was chemically formulated to reduce odor and leave a fresh scent. This innovative scent transcended into the candle industry allowing Procter and Gamble to grow the market by $50,000,000 in 2007. Over the past 4 years, economic conditions have hit the candle industry hard since candles are considered discretionary spending. The overall market has decreased 4-6% on average over that time period. The industry is expected to decline over $400,000,000 in the next 5 years. The candle industry has over 13 major players which comprise 63% of the market. Smaller companies make up the remaining 37%. There are 189 candle manufacturers in the U.S. Procter and Gamble has 4% of the current market share compared to SC Johnson’s 17% claim. The industry has a lot of competition for market share and will continue to be that way with the reduction of the market size.

Prices are in millions of USD – source Anchor Hocking
Porter’s Five Force Analysis
Buying Power
Consumer – consumer buying power is relatively weak due to the diversity of products in the marketplace and fragmented demographics. Consumers are not concentrated enough to drive prices positive or negative. WEAK FORCE

Retail – Retailers such as Wal-Mart and Target have a tremendous amount of buying power and demand lower prices. These retailers carry a wide variety of candles and price is the driving factor in shelf space. Also, larger companies such has SC Johnson and Procter and Gamble offer larger product lines and the need to keep all of their products in the store drives the buying power. STRONG FORCE

Supplier Power
The cost of switching suppliers (Anchor supplying Procter and Gamble) is large in the industry but the supplier power is limited. When you compare Anchor Hocking need to have Procter and Gamble buy their product, the power is great. If you average these powers out, they are about even. No real supplier power. MODERATE FORCE

Threats of new entrants
Startup costs are relatively low for candle production. Threat is a possibility if product is desirable. There are 189 candle producers in North America already. The size of the companies can range from producing 1,000 candles to over 25,000,000 a year. WEAK FORCE

Threats of Substitutes
Air sprays, freshners, and plug-ins offer the greatest threat to candle sales. Consumers with the current recession, want to get the most out of their money. These products produce similar scents with longer life cycles often with refillable options. These pose a great threat to the candle industry. Many companies (SC Johnson and Yankee Candle) have augmented their product lines to include these products. STRONG FORCE

Degree of Rivalry
SC Johnson and Reckett Benckiser are major players in this industry as well as Procter and Gamble’s main business segments (consumer goods, cleaning products). With 189 candle companies in North America sharing market share, this is a very powerful force. The two named companies are the closest to Procter and Gamble’s product offering structure and are the closest competitors. As ranked #1 in the candle market share with 17%, SC Johnson is the powerful rival that Procter and Gamble has to catch up to. STRONG FORCE

PEST Analysis
Regulations is 3rd most important concern for the industry

Local, State, and Federal legislation
Consumer product...
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