- March 12, 2013
- Posted by: essay
- Category: Term paper writing
The company attempts to use its pricing policies to enhance its position in the market. Pricing policies focus on customers, their needs and buying power. In fact, P&G sets the higher price for customers, who can afford to pay more, whereas the company can decrease price if it is unaffordable for customers. For instance, the company can set the high price for customers in the US and lower price for customers in Mexico because they have the different level of income and different buying power. Hence, the company conducts flexible pricing policies grounded on the customers’ buying power.
At this point, it is worth mentioning some basic competencies P&G that the company needs to maintain its competitive position. First of all, P&G develops close relationships with retailers and create relationships with new retailers. In such a way, the company takes advantage over its major rivals, through the development of close interaction with retailers and developing close relationships with new retailers.
At the same time, P&G distinguishes itself from private labels, which are imitators, whereas P&G is an innovator. Therefore, P&G is in a better position compared to private labels because P&G can offer customers unique products. Naturally, as the company offers customers unique products, it can require the higher price for its products, whereas private labels, who just imitate P&G, can offer lower price because their products just follow the lead of P&G. In such a way, the company is in an advantageous position compared to its rivals.
In this regard, acquisition and business partnerships are contributing to building up a competitive advantage of P&G in the market. To put it more precisely, P&G develops business partnership to save costs and to develop new products. In fact, the company takes advantage of its partnerships because it provides its business partners with an opportunity to develop their products under P&G’s brand and the company invests just a part of funds to develop and introduce new products. As a result, P&G benefits from its partnerships and develops its business successfully, whereas, today, in the time of economic recession, business partnerships become particularly effective.
In addition, P&G carries on the strategy of acquisitions to enhance its position in the market. In fact, acquisitions allow the company to expand its market share fast, although acquisitions need substantial funds and time for restructuring of acquired organizations. Nevertheless, benefits from acquisitions are obvious because the company can expand its market share without investing into the development of new products and brands but it just need to acquire new companies and to invest into their restructuring and to accelerate their development. In fact, acquisitions are strategically important for P&G because they contribute to the fast growth of the company and allow the company to raise entering barriers that enhances the position of P&G in the market.
Finally, P&G focuses on emerging markets to maintain its business growth. In actuality, emerging markets are growing fast and the consumption of P&G’s grows. In fact, P&G can count for the fast economic growth due to the use of the potential of emerging markets. At this point, it is worth mentioning the fact that the company fails to accelerate its business development in markets of well-developed markets, where the market is shared between the major companies and the consumption is steady. In contrast, emerging markets grow fast and P&G can increase substantially its sales in these markets. For instance, Chinese market is very prospective for P&G. As a result, P&G can accelerate its business development due to the expansion its share in emerging markets.
Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the development of P&G is vulnerable to the impact of the economic recession. Today, the company needs to recover after the economic recession. In this respect, P&G should use its traditional strategies and methods, which contribute to the improvement of its competitive position, including the focus on customers’ needs, innovations, and flexible pricing policies.
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