GROWTH AND EXPANSION OF FMCG WITH SPECIAL REFERENCE TO PROCTOR AND

GAMBLE
Dissertation submitted to
SEETHALAKSHMI RAMASWAMI COLLEGE
(AUTONOMOUS AND ACCREDITED BY NAAC)
Affiliated to BHARATHIDASAN UNIVERSITY in partial Fulfilment of
the requirements for the
Award of the degree of
MASTER OF COMMERCE
(CORPORATE FINANCE)
Submitted by

K.KASTHURI 12 PCO 007

B.NIVEDHA 12 PCO 013

M.NIVEDHA 12 PCO 014

K.SUDHA 12 PCO 017

R.SURYA 12 PCO 018

Under the guidance of

DR.R.LALITHA, M.Com.,M.Phil.,PGDCA.,Ph.D.,M.A(YHE)
DR.R.VIJAYALAKSHMI, M.Com.,M.Phil.,Ph.D

DEPARTMENT OF COMMERCE SEETHALAKSHMI

RAMASWAMI COLLEGE (AUTONOMOUS AND
ACCREDITED BY NAAC) TIRUCHIRAPALLI-620 002
MARCH 2013

1
 ACKNOWLEDGEMENT

We express our deep sense of gratitude and sincere thanks to all who motivated us in
various ways in the preparation of this project.

It is our honour to convey our heartfelt thanks to SEETHALAKSHMI

RAMASWAMI COLLEGE (AUTONOMOUS) for having introduced project work in the
syllabus which helped to acquire wide experience and knowledge. We express our grateful
thanks to

DR.(MS) KANAKA BHASHYAM, M.A., M.Phil., PGDJ., Ph.D., the

principal of Seethalakshmi Ramaswami College (Autonomous).

We take this opportunity to express our gratitude to MRS. M.GUNAVATHI,

M.Com., M.Phil., DLL., Ph.D., Head of the Department of Commerce for having
encouraged us to complete this project successfully.

We wish to acknowledge our indebtedness and deep sense of gratitude to

DR.R.LALITHA,M.Com.,M.Phil.,PGDCA.,Ph.D.,M.A(YHE) and
DR.R.VIJAYALAKSHMI, M.Com.,M.Phil.,Ph.D for her valuable guidance &
suggestions at each and every step of this dissertation’s.

We extend our thanks to our parents, friends and all the teaching faculties for their
co-operation and support.

We could be failing our duty if we do not thank GOD, the ALMIGHTY who is the
author of all our inspiration and enthusiasm to complete our study successfully.
 CONTENT

CHAPTER PARTICULARS PAGE NO.

I. INTRODUCTION 6

II. COMPANY PROFILE 17

III. ANALYSIS OF P& G ON 35

VARIOUS HEADS

IV. SUSTAINABILITY 96

V. RECOMMENDATION AND 102

SUGGESTION
 CHAPTER – I

INTRODUCTION
Meaning of FMCG

FMCG stands for Fast Moving Consumer Goods. It is also referred to on occasion as CPG,
an abbreviation of Consumer Packaged Goods.

They are described as being reasonably low cost items that are supplied and sold in a very
short time period - often these types of products have a short shelf life, hence having a short sale time.
FMCG's are often bought in bulk to take advantages of economies of scale - due to their low price,
profit margins are often small so the sale of large quantities over a short period of time is vital to
make worthwhile.

FMCG's can be split into highly perishable and non-highly perishable goods. Highly
perishable goods include meats, vegetables, fruit, and bakery items - anything that has a reasonably
short shelf life. In contrast, products such as wine, beer and spirits, canned foods and toiletries have a
longer shelf life and do not perish quickly. Nonetheless, these products are in high demand and as a
result product turnover is high; they do not spend long on the supermarket shelves.

Fast Moving Consumer Goods are recognised as being a frequent consumer purchase, and
what that involves a low level of risk and/or emotion.

Characteristics of FMCGs:

 From the consumers' perspective:

Frequent purchase
Low involvement (little or no effort to choose the item – products with strong brand loyalty
are exceptions to this rule)
Low price

 From the marketers' angle:

High volumes
Low contribution margins
Extensive distribution networks
High stock turnover
FMCG CATEGORY AND PRODUCTS

Category Products

Household care Fabric wash (laundry soaps and synthetic detergents);

household cleaners (dish/utensil
cleaners, floor cleaners, toilet cleaners,
air fresheners, insecticides and mosquito repellents,
metal polish and furniture polish

Food and health beverages Soft drinks; staples/cereals; Beverages bakery products
(biscuits, bread, cakes);food; chocolates; ice cream; tea;
coffee; soft drinks; processed fruits, vegetables; dairy
products; bottled water; branded flour; branded rice;
branded sugar; juices etc.

Personal care Oral care, hair care, skin care, personal wash(soaps);
cosmetics and toiletries; deodorants; Perfumes; feminine
hygiene;
SWOT analysis of FMCG
Strengths:

Low operational costs

Presence of established distribution networks in both urban and rural areas
Presence of well-known brands in FMCG sector

Weaknesses:

• Lower scope of investing in technology and achieving economies of scale, especially in small
sectors
• Low exports levels
• "Me-tooʺ products, which illegally mimic the labels of the established brands. These
products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

• Untapped rural market

• Rising income levels, i.e. increase in purchasing power of consumers
• Large domestic market- a population of over one billion.
• Export potential
• High consumer goods spending

Threats:

• Removal of import restrictions resulting in replacing of domestic brands

• Slowdown in rural demand
• Tax and regulatory structure
TOP 10 FMCG COMPANIES IN INDIA
FMCG (Fast Moving Consumer Goods) or Consumer Packaged Goods (CPG) – are
products that are sold quickly and at relatively low cost. Below is a List of Top 10 FMCG
Companies in India 2012.

1. ITC (Indian Tobacco Company)

Market Capitalization –
(Rs. Crore): 151,078

It presence in FMCG, Hotels,

Paper boards & Specialty Papers,
Packaging, Agri-Business, and
Information Technology.ITC Ltd,
traditional businesses of Cigarettes,
Hotels, Paperboard‘s, Packaging and
Agri-Exports.
2. HINDUSTAN UNILEVER Market Capitalization – (Rs.
Crore): 39,819

A subsidiary of Nestlé
S.A. of Switzerland. A largest
food and beverage
manufacturer in the world
with many popular and largest
selling products such as
MAGGI, NESCAFE,
KITKAT and MILKMAID.

4. DABUR INDIA
3. NESTLE INDIA
 India’s largest consumer
products with products such as
soaps, tea, detergents and shampoos
Market Capitalization – with over 700 million Indian are using
(Rs. Crore): 67,858 its products.

Market Capitalization – (Rs.

Crore): 18,632

They has 17 ultra modern manufacturing

units around the globe and its products marketed
in over 60 countries.
 5. GODREJ CONSUMER PRODUCTS

Market Capitalization –
(Rs.Crore): 13,335

A Household, hair colors, household

insecticides and Personal Care Products.

6. P&G (Proctor and Gamble India)

Market Capitalization – (Rs. Crore): 12,838

Acquisition by Gillette.
7. COLGATE-PALMOLIVE

Market Capitalization –
(Rs.Crore): 12,764

The leading Tooth Paste Brand in

India.
 8. GSK (Glaxosmithkline Consumer Healthcare)

Market Capitalization -
(Rs.Crore): 9,842

A pharmaceutical
industry and over 100,000 employees
Worldwide.
 9. MARICO

Market Capitalization - (Rs.Crore): 9,078

And the company present in more than 25 countries

across Asia and the African continent.

10. EMAMI

Market Capitalization - (Rs.Crore): 6,836

And over 20,000 employees. Products are

paper , writing instruments, edible oil and
cultivation, bio-diesel, hospitals, contemporary art,
pharmacy, cement, real estate and retail.
BENEFITS OF FMCG COMPANIES

Cumulative Profits

For a retailer's bottom line, the key benefit of CPGs/FMCGs is the cumulative profit they
provide. CPGs/FMCGs have a low profit margin, which means that a small percentage of each each
unit sale represents profit. However, CPGs/FMCGs also sell in very high quantities. This means that
those small profits add up and can form a significant portion of a retailer's total profits for a fiscal
period. This profit serves any number of financial purposes in the business.

Cross Merchandising Opportunities

Retailers thrive when customers buy multiple items on each visit. CPGs/FMCGs provide
opportunities for cross merchandising, which occurs when a business places two products from
different categories close to one another in a strategic arrangement. For example, an electronics
retailer may sell remote controls that have high profit margins but don't fall into the CPG/FMCG
category. A shelf of batteries (which are CPGs/FMCGs) next to those remotes provides a chance to
boost sales and earn profit on two items when customers choose to buy the batteries they will need to
operate their new remotes at the same time.

Brand Appeal

When a retailer offers CPGs/FMCGs, it can rely on the brand appeal that they generate to
drive sales. Most CPGs/FMCGs come from brands that advertise heavily. This means that when
customers see CPGs/FMCGs on store shelves they have pre-existing emotional relationships with
those brands, which may not be true of the other items that the retailer sells. Seeing recognizable
brands may build trust between the customer and retailer or lead to an additional purchase based on
brand awareness, with no special effort from the retailer.

Diversification

Selling CPGs/FMCGs spreads a retailer's revenue sources over a broader spectrum of goods.
The profits can help offset slow sales for other products during seasonal dips in demand or periods of
reduced consumer confidence. In the category of CPGs/FMCGs, retailers can choose from among an
almost unlimited range of product types including pharmaceuticals, food items, beverages, household
products and disposable items. The range is so broad that some retailers, such as grocery stores and
convenience markets, stay in business selling them exclusively.
Characteristics of FMCG in India

Branding: Creating strong brands is important for FMCG companies and they devote
considerable money and effort in developing bands. With differentiation on functional
attributes being difficult to achieve in this competitive market, branding results in consumer
loyalty and sales growth.

Distribution Network: Given the fragmented nature of the Indian retailing industry and
the problems of infrastructure, FMCG companies need to develop extensive distribution
networks to achieve a high level of penetration in both the urban and rural markets. Once they
are able to create a strong distribution network, it gives them significant advantages over their
competitors.

Contract Manufacturing: As FMCG companies concentrate on brand building, product

development and creating distribution networks, they are at the same time outsourcing their
production requirements to third party manufacturers. Moreover, with several items reserved
for the small scale industry and with these SSI units enjoying tax incentives, the contract
manufacturing route has grown in importance and popularity.

Large Unorganized Sector : The unorganised sector has a presence in most product
categories of the FMCG sector. Small companies from this sector have used their locational
advantages and regional presence to reach out to remote areas where large consumer products
have only limited presence. Their low cost structure also gives them an advantage.
CHAPTER – II

COMPANY
PROFILE
COMPANY PROFILE
Neither William Procter nor James Gamble ever intended to settle in Cincinnati. Although the
city was a busy center of commerce and industry in the early nineteenth century, William, emigrating
from England, and James, arriving from Ireland, were headed farther west.

Despite their intentions, however, both men ended their travels when they arrived at the Queen
City of the West – William, to care for his ailing wife Martha, who soon died, and James, to seek
medical attention for himself.

William Procter quickly established himself as a candle maker. James Gamble apprenticed
himself to a soap maker. The two might never have met had they not married sisters, Olivia and
Elizabeth Norris, whose father convinced his new sons-in-law to become business partners. In 1837, as
a result of Alexander Norris‘ suggestion, a bold new enterprise was born: Procter & Gamble.

1837 — 1890

The Partnership Years.1837 was a difficult time to start a business. Although Cincinnati
was a bustling marketplace, the U.S. was gripped by financial panic. Hundreds of banks were closing
across the country. There was widespread concern that the United States was bankrupt. Yet, William
and James launched their new enterprise, more concerned about how to compete with the 14 other
soap and candle makers in their city than with the financial panic shaking their country.

Their calm in the midst of that economic storm reflected their forward-looking approach to
the business – an approach that became the hallmark of Procter & Gamble. In the 1850s, for example,
despite rumours of an impending civil war in the U.S., they built a new plant to sustain their growing
business. Later, they pioneered one of the nation‘s first profit-sharing programs and were amo.ng the
first in American industry to invest in a research laboratory. By 1890, the fledgling partnership
between Procter and Gamble had grown into a multi-million dollar corporation. Nevertheless, P&G
still had its eyes on the future.

1837

On April 12, 1837, William Procter and James Gamble start making and selling their soap
and candles. On August 22, they formalize their business relationship by pledging
$3,596.47 apiece. The formal partnership agreement is signed on October 31, 1837.

1850

The Moon and Stars begins to appear in the 1850s as the unofficial trademark of Procter &
Gamble. Wharf hands used the symbol to distinguish boxes of Star Candles. By the 1860s, the Moon
and Stars appears on all Company products and correspondence. Once a
staple of the Company‘s product line, candles decline in popularity with the invention of the electric
light bulb. The Company discontinues candle manufacturing in the 1920s.

1859-1862

Twenty-two years after the partnership is formed, P&G sales reach $1 million. The Company
now employs 80 people.

During the Civil War, Procter & Gamble is awarded several contracts to supply soap and
candles to the Union armies. These orders keep the factory busy day and night, building the
Company‘s reputation as soldiers return home with their P&G
products.

1879

James Norris Gamble, son of the founder and a trained chemist,

develops an inexpensive white soap equal to high-quality, imported
castiles. Inspiration for the soap‘s name – Ivory – came to Harley Procter,
the founder‘s son, as he read the words ―out of ivory palaces‖ in the Bible
one Sunday in church. The name seems a perfect match for the white
soap‘s purity, mildness and long-lasting qualities.

1882

Harley Procter convinces the partners to allocate $11,000 to advertise Ivory

nationally for the first time. Ivory‘s purity and floating capability are first advertised
across the country in the Independent, a weekly newspaper.

1890 — 1945

A Company Built on Innovation. By 1890, P&G was selling more than 30 different types
of soap, including Ivory. Fueled by full-color print ads in national magazines, consumer demand for
P&G soaps continued to grow. To meet this increasing demand, the Company expanded its
operations outside Cincinnati, with a plant in Kansas City, Kansas, followed by a plant in Ontario,
Canada. As each new plant opened, P&G would embark on plans for another.

The research labs were as busy as the plants. Innovative new products rolled out one after
another – Ivory Flakes, a soap in flake form for washing clothes and dishes; Chipso, the first soap
designed for washing machines; Dreft, the first synthetic house-hold detergent; and Crisco, the first
all-vegetable shortening that changed the way consumers cooked. Each of these new products came
from P&G‘s in-depth understanding of consumer needs and pioneering approach to market research.
And they were marketed through equally innovative techniques, including radio ―soap operas,‖
product sampling and promotional premiums.
1890-1896

After running the Company as a partnership for 53 years, the partners

incorporate to raise additional capital for expansion. William Alexander Procter, son
of the founder, is named the first president. P&G sets up an analytical lab at
Ivorydale to study and improve the soap-making process. It is one of the earliest
product research labs in America. King Camp Gillette invents the first safety razor.

P&G‘s first color print advertisement – an ad for Ivory – appears in

Cosmopolitan magazine picturing this ―Ivory Lady.‖

1901-1917

American Safety Razor Company formed in Boston, Massachusetts, later becoming the
Gillette Co. William Cooper Procter becomes the head of the Company following the death of his
father, William Alexander Procter.

P&G introduces Crisco, the first all-vegetable shortening. Crisco provides a healthier
alternative to cooking with animal fats and is more economical than butter. The Company builds its
first manufacturing facility outside the United States, in Canada. Employing 75 people, the plant
produces Ivory soap and Crisco. U.S. Government requests Gillette supply razors and blades for the
entire U.S. Armed Forces during WWI.

1923-1930

Crisco sponsors cooking shows on network radio, placing P&G among the medium‘s
advertising innovators. A market research department is created to study consumer preferences and
buying habits – one of the first such organizations in industry. In response to the growing popularity
of perfumed beauty soaps, P&G introduces Camay. William Cooper Procter turns the reins of the
Company over to Richard R. Deupree.

1931

P&G‘s brand management system begins to take shape in the late 1920s. In 1931, Neil
McElroy, the Company‘s promotion department manager, creates a marketing organization based on
competing brands managed by dedicated groups of people. The system provides more specialized
marketing strategies for each brand and Procter & Gamble‘s brand management system is born.

1933-1939

Dreft, the first synthetic detergent developed for household use, is introduced. The discovery
of detergent technology lays the groundwork for a revolution in cleaning technology. `William
Cooper Procter dies and a monument is erected at Ivorydale in his honor. He is the last member of
the founding families to run the Company.
 The Company expands its international presenc with the acquisition of the Philippine
Manufacturing Company – the Company‘s first operations in the Far East. P&G celebrates its 100 th
anniversary. Sales reach $230 million. Just five months after the introduction of television in the
U.S., P&G airs its first TV commercial (for Ivory Soap) during the first televised major league
baseball game.

1943-1946

The Company creates its first division – the Drug Products Division – to sell its growing line
of toilet goods. Tide, ―the washing miracle,‖ is introduced. Tide incorporates a new formula that
cleans better than anything currently on the market. Its superior performance at a reasonable price
makes Tide the country‘s leading laundry product by 1950.

1947 — 1952

P&G‘s detergent technology leads to the development of a wide range of products such as
granulated and liquid detergents, shampoos, toothpastes and household cleaning products that
provide growth opportunities in the 1950s and beyond. Neil H. McElroy assumes leadership of P&G.
P&G establishes an Overseas Division to manage the Company‘s growing international business

1950-1955

The first subsidiary on the South American continent is established in Venezuela. A new
research facility, Miami Valley Laboratories, opens in Cincinnati. MVL is the Company‘s first
facility dedicated solely to upstream research

The Company begins operations in continental Europe by leasing a small plant in Marseilles,
France, from the Fournier-Ferrier Company, a detergent manufacturer. Crest, the first toothpaste with
fluoride clinically proven to fight cavities, is introduced. P&G announces plans to form individual
operating divisions to better manage its growing lines of products. This divisionalization also creates
separate line and staff organizations.

1956

The new General Office building opens, signifying P&G‘s continuing commitment to
downtown Cincinnati. P&G announces plans to form individual operating divisions to better manage
its growing lines of products. This divisionalization also creates separate line and staff organizations.
The new General Office building opens, signifying P&G‘s continuing commitment to downtown
Cincinnati

1957

P&G enters the consumer paper products business with the acquisition of Charmin Paper
Mills, a regional manufacturer of toilet tissue, towels and napkins. Howard J. Morgens
takes over Company leadership when Neil McElroy leaves to serve as the U.S. Secretary of Defense.

1960

Crest sales skyrocket when The American Dental Association recognizes the toothpaste as
―an effective decay-preventive dentifrice.‖ P&G GmbH opens its first office in Frankfurt, Germany,
with 15 employees. Three years later, Germany‘s first plant in Worms begins production of Fairy
cleaning powder and Dash laundry detergent.

1961

Although Pampers‘ first test market in Peoria, Illinois, is unsuccessful, it

leads to an improved Pampers product at a lower cost that eventually replaces
cloth diapers as the preferred way to diaper babies.

1963-1968

P&G enters the coffee business with the acquisition of Folger‘s

Coffee. The first paper plant built by P&G opens in Mehoopany, Pennsylvania. Pringle‘s, with its
unique stackable shape and resealable can, is introduced into test market.

1972-1973

Bounce combines softening agents with a nonwoven sheet to soften clothes in the dryer. It
quickly becomes the second largest selling fabric softener after Downy.

The Company begins manufacturing and selling P&G products in Japan through the
acquisition of The Nippon Sunhome Company. The new company is called Procter & Gamble
Sunhome Co. Ltd.

1974-1981

Ed Harness is elected to head. Didronel is introduced. A treatment for Paget‘s disease, it is

one of the Company‘s first pharmaceutical products the Company. Sales reach $10 billion. John G.
Smale becomes head of Procter & Gamble.

1982-1984

P&G increases its prescription and over-the-counter health care business with the acquisition
of Norwich Eaton Pharmaceuticals. The Company introduces a superior feminine protection product,
Always/Whisper, which becomes the leading world brand in its category by 1985. Gillette acquires
Oral B, founded in 1950. Liquid Tide is introduced. This represents the results of global research with
surfactants developed in Japan, fragrance in Europe and packaging from the United States.
1985

The Company significantly expands its over-the-counter and personal health care business
worldwide with the acquisition of Richardson- Vicks, owners of Vicks respiratory care and Oil of
Olay product lines. P&G opens the General Offices Tower building, the expansion of Procter &
Gamble‘s world headquarters in Cincinnati, Ohio.

1986

Ultra Pampers and Luvs Super Baby Pants are introduced – with
effective, new technology that makes diapers thinner. P&G creates the
industry‘s first multi-functional customer teams. The Company develops a new
technology that enables consumers to wash and condition their hair using only
one product. Pert Plus/Rejoice shampoo quickly becomes one of the leading
worldwide shampoo brands.

1987

P&G celebrates its 150th anniversary. The Company increases its presence in the
European personal care category, with the acquisition of the Blendax line of products, including
Blend-a-med and Blendax toothpastes. P&G announces several major organization changes with the
creation of category management and a product supply system which integrates purchasing,
manufacturing, engineering and distribution.

1988-1989

The Company announces a joint venture to manufacture products in China. This is the
Company‘s first operation in the largest consumer market in the world. Refill packs are introduced in
Germany for liquid products like Lenor fabric softener. Germany‘s retail grocers name Lenor‘s refill
pouch the invention of the year.

The Company enters the cosmetics and fragrances category with the acquisition of Noxell and
its Cover Girl and Noxzema products.

1990

Edwin L. Artzt is named to lead the Company. The Company expands its presence in the
male personal care market with the acquisition of Shulton‘s Old Spice product line. Most of the
laundry detergent brands are reformulated to incorporate P&G‘s compact technology. Introduced in
Japan with the Cheer and Ariel brands, the technology is expanded to 36 brands in 20 different
countries during the year.
1991

The acquisitions of Max Factor and Betrix increase the Company‘s worldwide presence in the
cosmetics and fragrances category. P&G opens its first operation in Eastern Europe with the
acquisition of Rakona in Czechoslovakia. New businesses in other Eastern European countries –
Hungary, Poland and Russia – follow throughout the year.

1992

P&G receives the World Environment Center

Gold Medal for International Corporate Environmental
Achievement. Pantene Pro-V is introduced. Originally a
small part of the 1985 Richardson-Vicks acquisition,
Pantene becomes the fastest growing shampoo in the
world.

1993

Company sales exceed $30 billion. For the

first time in Company history, more than 50% of sales come from outside the U.S. The Japan
Headquarters and Technical Center opens on Rokko Island in Kobe City, Japan. The complex
consolidates headquarters and product development operations.

1994-1995

P&G enters the European tissue and towel market with the acquisition of the German- based
company, VP Schickedanz. John E. Pepper becomes P&G‘s ninth Chairman and Chief Executive, and
Durk I. Jager becomes President and Chief Operating Officer.

1996

The U.S. Food and Drug Administration grants approval of Olestra for use in salty snacks and
crackers. Olestra, marketed under the brand name Olean, is a calorie-free fat replacer that provides the
full taste of fat without the added fat calories. The Company continues to expand its global reach with
acquisitions of the U.S. baby wipes brand Baby Fresh – complementing the Company‘s global diaper
business and its strong European Pampers Baby Wipes business

1996-1998

Gillette acquires Duracell, originally founded in the early 1920s. The Company expands its
feminine protection expertise into a new global market with the acquisition of Tambrands. Tampax
Tampon is the market leader worldwide.
 P&G announces Organization 2005, a new global organizational design to drive innovative
ideas to world markets faster. Mach 3 razor is introduced. P&G provides a foundation for future
growth by investing in new breakthrough products. Febreze, Dryel and Swiffer are introduced and
sold around the world in less than 18 months.

1999-2002

Durk Jager becomes Chairman of the Board and Chief Executive. A.G. Lafley becomes
President and Chief Executive. Reflect.com, P&G‘s initial Internet brand, is launched. It is the first to
offer truly customized beauty care products online.

Crest WhiteStrips launches in the U.S. P&G acquires the Clairol business from Bristol-Myers
Squibb Co. Clairol is a world leader in hair color and hair care products. A.G. Lafley is elected
Chairman of the Board. Bruce Byrnes and R. Kerry Clark are elected Vice- Chairman of the Board.

2003-2004

FDA approves switching Prilosec, a treatment for frequent heartburn, from a prescription to
an over-thecounter (OTC) product. P&G‗s Children's Safe Drinking Water Program wins the World
Business Award from the United Nations Development Program & International Chamber of
Commerce in support of the UN‗s Millenium Development goals. Actonel becomes a billion dollar
brand, and P&G's first pharmaceutical brand to reach this important milestone.

2005

P&G and Gillette merge into one company and add five more billion dollar brands to our
product portfolio, including Gillette and Braun‗s shaving and grooming products, the Oral-B dental
care line and Duracell batteries.
Purpose, Values & Principles
Foundation
P&G Purpose, Values and Principles are the foundation for P&G‘s unique culture.
Throughout the history of over 170 years, P&G has grown and changed while these elements have
endured, and will continue to be passed down to generations of P&G people to come.

P&G Purpose unifies us in a common cause and growth strategy of improving more
consumers‘ lives in small but meaningful ways each day. It inspires P&G people to make a positive
contribution every day.

P&G Values reflect the behaviours that shape the tone of how they work with each other and
with their partners.

PURPOSE

P&G brands and P&G people are the foundation of P&G‘s success.
P&G people bring the values to life as they focus on improving, the lives of the world‘s
consumers.
VALUES
Integrity

They are honest and straightforward with each other.

They operate within the letter and spirit of the law.

They uphold the values and principles of P&G in every action and decision.

They are data-based and intellectually honest in advocating proposals, including, recognizing risks.

Leadership

Everyone should have responsibility in their area, with a deep commitment to delivering leadership
results.

They have a clear vision of where they going.

They focus their resources to achieve leadership objectives and strategies.

They develop the capability to deliver the company strategies and eliminate organizational barriers.

Ownership

The company accept personal accountability to meet their business needs, improve their systems and
it will improve their effectiveness.

Each one act like owners, treating the Company‘s assets as their own and behaving with the
Company‘s long-term success in mind.

Passion for Winning

They are determined to be the best at doing what matters most.

They have a healthy dissatisfaction with the status quo.

They have a compelling desire to improve and to win in the marketplace.

Ownership

P&G colleagues, customers and consumers, and treat them as they want to be treated.

They have confidence in each other‘s capabilities and intentions.

They believe that people work best when there is a foundation of trust.

PRINCIPLES
P&G Show Respect for All Individuals

They believe that all individuals can and want to contribute to their fullest potential.

They inspire and enable people to achieve high expectations, standards and challenging goals.

They are honest with people about their performance.

The Interests of the Company and the Individual Are Inseparable

They believe that doing what is right for the business with integrity will lead to mutual success for
both the Company and the individual. their quest for mutual success ties us together.

They encourage stock ownership and ownership behaviour.

P&G Strategically Focused in Their Work

They operate against clearly articulated and aligned objectives and strategies.

They usually do work and ask for work that adds value to the business.

They simplify, standardize and streamline our current work whenever possible.
Innovation Is the Cornerstone of P&G Success

They place great value on big, new consumer innovations.

Challenge convention and reinvent the way we do business to better win in the marketplace.

Value Personal Mastery

They believe it is the responsibility of all individuals to continually develop themselves and others.

They encourage and expect outstanding technical mastery and executional excellence.

P&G Seek to Be the Best

They strive to be the best in all areas of strategic importance to the Company.

Their performance are rigorously versus the very best internally and externally.

They learn from both of their successes and failures.

P&G Are Externally Focused

They develop superior understanding of consumers and their needs.

They create and deliver products, packaging and concepts that build winning brand equities.

They develop close, mutually productive relationships with their customers and their suppliers.

They incorporate sustainability into products, packaging and operations.

Mutual Interdependency Is a Way of Life

It work together with confidence and trust across business units, functions, categories and
geographies.

They take pride in results from reapplying others‘ ideas.

 P&G INDIA BRANDS

Ambi Pur

Though we strive hard to keep our homes

and our cars clean and tidy, the results are
rarely satisfactory. Odours that linger in our
homes just before guests arrive, or a persistent
stench that never leaves the car, not only
adversely affect our mood, but also that of our
guests. With this in mind, P&G experts have
bottled the fragrance of freshness with the new
Ambi Pur range for both homes and cars.

Ariel

Introduced in 1991, Ariel was the first to bring

the 'compact detergent' technology, the enzyme
technology for safe and superior stain- removing
power and the 'smart eyes' technology into India,
with an aim of becoming India's best stain removal
detergent. Ariel contains safe ingredients for all
fabrics under recommended usage conditions for
laundry. The Ariel product
range in India includes different variants to meet your specific needs like Ariel
OxyBlu, Ariel Oxyblu Ultramatic, Ariel Front O Mat, Ariel 2in1.

Duracell

Duracell batteries have a history of providing dependable power when

and where you need it the most. Our range
of Batteries gives you the right power for all
your device needs, providing up to 10x
performance. The product range in India
includes Duracell and Duracell Ultra.
Duracell is available in sizes AAA, AA, C,
D, and 9-volt while Duracell Ultra is
available in sizes AA and AAA sizes.
Gillette

Gillette® has been at the heart of men‘s grooming for over 100 years. Each day, more than
600 million men around the world trust their
faces and skin to Gillette‘s innovative razors and
shaving products designed for the unique needs of
men – helping them to look, feel and be their best
every day. The razor range in India includes Gillette
Vector, Gillette Mach3, Gillette Mach3 Turbo,
Gillette Guard and Gillette Mach3 Turbo Sensitive
and Gillette Fusion. The Shave Care
range includes Gillette Fusion HydraGel, Gillette Series Sensitive Skin Foam, Gillette Series After
Shave & Gillette Classic Shave Foam Sensitive Skin.

The Gillette Skincare regimen is a no-fuss and efficient solution in caring for the health and
appearance of men‘s skin and includes a special range of designed-for-men Gillette Skincare Foaming
Wash, Gillette Skincare Scrub, Gillette Skincare Facial Moisturizer with Aloe Vera, Gillette Skincare
Facial Moisturizer with SPF and Gillette Skincare Lotion 100ml.

Head & Shoulders

Since 1950, Head & Shoulders has been at the forefront of scalp and hair science,
significantly advancing the treatment of dandruff and scalp problems. Along with
professional advice and expert insight we have a
wide range of products to care for your scalp and
nurture your hair.

Head & Shoulders is available in 8 variants

in India including Men Hair Retain, Complete Care
for Dry Scalp, Anti Hair fall, Smooth & Silky, Cool
Menthol, Clean &
Balanced, Thick & Long & Silky Black.

Olay

Olay is a product truly born in love created by Graham

Wulff for his wife Dinah in 1950s to address her frustration with the
then thick and waxy beauty creams. Today, Olay is one of the most
recognizable brands in the world. Yet through all the changes and
innovations, the philosophy upheld by Graham Wulff remains just
as relevant as ever: Help women
look and feel beautiful and Challenge what‘s possible with their skin.
Oral-B

Oral-B continuously strives to work closely with the dental professionals and deliver high
quality products, which make us leaders* in the $ 4.5 billion toothbrush category, marketing
toothbrushes for children & adults, as
well as inter-dental products such as Dental Floss. In
India, Oral-B has an innovative range of
toothbrushes including Cross Action Pro- health 7
Benefits, Cross Action Pro-health Superior Clean
and Advantage Sensitive
toothbrush. Oral-B‘S floss range includes Ultra Floss & Essential Floss.

Pampers

As a result of constant research and innovation in understanding the needs of babies at

various stages of development, Pampers Active Baby
has been voted as the best diaper by Indian moms with
the guarantee of superior dryness for an uninterrupted
sleep of 12 hours. Pampers has an answer for all your
needs with its innovative product range that includes
Pampers, Pampers Active Baby, Pampers Active Baby
Pants, all designed especially for providing a night of
Golden Sleep for the baby.

Pantene

The New Pantene Amino Pro-V Complex range of shampoo & conditioner comes in three
variants suited for individual needs - Pantene Nourished Shine, Pantene Hair Fall Control & Pantene
Smooth & Silky. Enriched with the
goodness of pro-vitamins and three essential aminos, Pantene
restores your hair with its lost beauty while making your hair
ten times stronger.
Tide

Tide is the World‘s Oldest & Most Trusted Detergent brand and is the Market Leader
in 23 Countries around the world. Launched in India in mid-
2000, Tide provides ‗Outstanding Whiteness‘ on white clothes
& excellent cleaning on coloured clothes as well. Tide‘s Fabric
Whitening Agents clean clothes without bleaching or removing
colour from a garment. The Tide range in India includes Tide
(Detergent) and Tide (Bar with Whiteons). Tide Naturals was
launched in India in December 2009. Packed with the benefits of
lemon and chandan, it provides great cleaning while keeping the
hands soft.

Vicks
Vicks has long been invested in the science and research of
respiratory health and through that dedication has developed a wide range of
therapeutic products that offer effective relief for all the major signs and
symptoms of the common cold, flu and sinus pain and pressure. The Vicks
product range in India includes Vicks Cough drops, Vicks Vaporub, Vicks
Inhaler, Vicks Vapocool, and Vicks Action 500 Extra.

Whisper

Whisper understands that we're each very different, and offers a wide range of sanitary
napkins to suit every girl or woman's needs. With the right menstrual pad, you could take the first step
to having a Happy Period. Whisper has a wide range of products in India
which includes Whisper Ultra Regular Wings, Whisper
Ultra XL Wings, Whisper Ultra Heavy Flow Overnights
Wings, Whisper Maxi Regular, Whisper Maxi XL Wings,
Whisper Choice Regular, Whisper Choice Wings and
Whisper Choice Ultra Wings.
 CHAPTER – III

ANALYSIS OF P&G ON
VARIOUS HEADS
 SWOT ANALYSIS

FINANCIAL ANALYSIS

MARKET ANALYSIS

TECHNICAL ANALYSIS
PROCTER & GAMBLE SWOT ANALYSIS
―SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the
environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique
through which managers create a quick overview of a company‘s strategic situation. The technique is
based on the assumption that an effective strategy derives from a sound ―fit‖ between a firm‘s
internal resources (strengths and weaknesses) and its external situation (opportunities and threats).
A good fit maximizes a firm‘s strengths and opportunities and minimizes its weaknesses and threats.
Accurately applied, this simple assumption has powerful implications for the design of a successful
strategy.‖

Procter & Gamble

P&G is the world's largest consumer goods company that markets more than 300 brands in
over180 countries. The company is engaged in producing beauty, health, fabric, home, baby, family
and personal care products. The company's product portfolio also includes pet health products and
snacks. The company's leading market position along with its strong brand portfolio provides it with a
significant competitive advantage. However, slowdown in global economic condition is making it
increasingly difficult for branded product manufacturers like P&G to maintain their sales volume and
revenue growth.
Strengths

 The large scale, on which the P & G operates, is one of its strengths. It is a global leader for
different product categories like fabric, home, baby, beauty, health and personal care in many
countries. Its three hundred products are sold in over one hundred and eighty countries.

 The strong branding of P & G makes it one of the most successful brands in the world.

 The company has a vast experience in oral and personal hygiene products as they are working
since...
 Also, it has an extensive experience in marketing in different market segments and is one of the
best marketers in the world.

 P & G is tightly integrated with some of the largest retailers in United States of America as well
as world around. and around the world Distribution channels all over the world

 Gross profit margin of the company is 15 times the industry average

 P & G is known for its diverse brand portfolio. The company is able to customize its global
products and brands according to the local preferences.

 P & G invests greatly in its research and development to. About $2 billion are invested every
year by P & G for improving and introducing new products. The end-consumer understanding
of P & G and its large database of consumers make its research and development strong.

Weaknesses

 Many of the top brands of P & G are losing their market share rapidly. In online
media leadership and presence P & G is lagging behind.

 The beauty and health products by P & G are mostly for women.

 P & G does not make and offer any private label products for the retail customers
and is, missing an opportunity.
  The large scale operation of the company makes the culture heavy and processes
slow. This also leads to quality control problems.

 P & G does not divest its weak or poor brands.

 The major customers of P & G are located at some of the places and it concentrates
heavily as them.

 When P & G acquired Clairol business in year 2001, it was unable to grow this
business. The Clairol Herbal Essence brand failed to enter new markets as the
market had access to better and innovative products. This shows weakness of P & G
in the beauty care division.

Opportunities

 An opportunity for P & G is health and beauty products for men. With the acquisition of
Gillette, the company now has several growth opportunities in this market segment.

 P & G has doubled its Environmental Goals for the year 2012 and thus, promises more value
for the environment concerned customers today.

 Using the online social networks and internet marketing techniques is also an opportunity for
P & G.

 Divest brands that are not in accordance or do not meet P & G's long-term goals

 Company is constantly trying to pursue growth overseas.

Threats

 There is a cut throat competition in the fast moving consumer's goods markets today.
Companies like Kimberly Clark, Unilever, Johnsons & Johnsons and Colgate-Palmolive etc
pose a serious threat to its market share in different countries.

 The competitors are making their product portfolios diverse day b day and using different
marketing and promotional strategies to increase their market share.

 In the market many substitutes are available for P & G products at cheaper prices.

 The private label growth is also a serious threat to the P & G's market share.

 Due to recession, the consumer spending has decreased globally. Also, the prices for raw
materials are increasing so cost to the company is increasing.
 STRATEGY
They are focused on strategies that the right for the long- term health of the Company and
will deliver total shareholder return in the top one-third of their peer group.

The Company’s long-term financial targets are:

Grow organic sales 1% to 2% faster than market growth in the categories and geographies in which
they compete,

Deliver earnings per share (EPS) growth of high single digits to low double digits, and

Generate free cash flow productivity of 90% or greater.

In order to achieve these targets, they are prioritizing the strategies and resources that will make
P&G more focused and fit to win over the near- and long-terms.

IMPROVING PRODUCTIVITY AND CREATING A COST SAVINGS CULTURE

They have taken significant steps to accelerate cost savings and create a more cost focused
culture within the Company, including a five-year, $10 billion cost savings initiative, which was
announced in February 2012. The cost savings program is based on:

The reduction of approximately 5,700 non-manufacturing overhead positions by the end of fiscal
year 2013.

Approximately $1.2 billion in annual cost of goods savings across raw materials,
manufacturing and transportation and warehousing expenses.

Generating efficiencies to enable us to grow marketing costs at a slightly slower rate than sales
growth while still increasing consumer reach and effectiveness, saving approximately
$1 billion over the five year period.
Procter and Gamble: Still a Champion Blue-Chip

Procter and Gamble (NYSE: PG) is a worldwide consumer products company, and one of the
largest companies in the world. The company has grown its dividend for well over 50 years, and has a
market cap of almost $190 billion.

-Seven Year Revenue Growth Rate: 5.7%

-Seven Year EPS Growth Rate: 4.7%
-Seven Year Dividend Growth Rate: 11%
-Current Dividend Yield: 3.28%
-Balance Sheet Strength: Strong, but with Goodwill

The returns have been positive since, PG dividend stock report from 2011 when called the
stock fairly valued and a ―hold‖, but the company seems to have a diminished moat and lackluster
growth prospects. Over the long-run, earnings will begin inching up and the rate of return will be
positive, but they don‘t view the current valuation as appropriate for the stock performance with a
margin of safety. They would desire a 10% pullback or more to invest.

Overview

Founded in 1837, Procter and Gamble (symbol: PG) is now one of the largest companies in
the world. They sell their products in over 180 countries and currently have a market capitalization of
over $180 billion. The company is known as one of the most solid blue chip dividend stocks with the
history of more than five decades of consecutive annual dividend growth and large product
diversification.

The company operates in numerous segments, as outlined below:

Beauty

With brands like Head and Shoulders, Pantene, and Olay, Procter and Gamble brings in 24%
of its sales and 22% of its earnings from its beauty segment.

Grooming

Another 10% of sales and 16% of earnings come from the grooming segment, which includes
brands like Braun, Fusion, and Gillette.
Health Care

Procter and Gamble offers a number of feminine care, oral care, and symptom-care products,
including Oral-B, Vicks, and Always. The company generates 15% of sales and 17% of earnings from
this segment.

Fabric/Home Care

The company has a variety of brands like Duracell batteries, Tide detergent, and Febreeze air
care, from which it generates 32% of revenue and 26% of earnings.

Baby/Family Care

Through brands like Bounty, Charmin, and Pampers, Procter and Gamble generates 19% of
sales and 19% of earnings from baby and family care products.

In terms of geographic exposure, 39% of sales come from North America, 19% come from
Western Europe, 18% come from Asia, 14% come from Africa, the Middle East, and Central/Eastern
Europe, and 10% come from Latin America.
RATIOS

Price to Earnings: 22
Price to Free Cash Flow: 22
Price to Book: 3
Return on Equity: 17%

REVENUE CHART

Sales grew at an annualized rate of 5.7% over this period, but over a more recent period,
sales growth has been flat. The company has restated numbers which are not shown here, and those
points to mild growth. In some ways, the chart is not quite as bad as it looks, because the company
was actively divesting brands over this period, including selling the large Folgers coffee brand to
Smuckers, rather than focusing on growth. Still, investors are broadly and correctly unimpressed by
Procter and Gamble‘s performance over this period.
 Earnings and Dividends

In terms of earnings per share, the company grew at an annualized rate of 4.7%.
However, earnings have declined over the later period as part of the cost-cutting.

The company has stated that it targets high single digit EPS growth. When combined with a
dividend yield of over 3%, that would mean long-term low double-digit returns.

As far as the dividend is concerned, it currently yields 3.28% with a payout ratio of under
60%. The dividend has grown by a rate of 11% annually, and the most recent increase was 7%.
Approximate historical dividend yield at beginning of each year:

Year Yield

Current 3.28%

2012 3.1%

2011 3.0%

2010 2.9%

2009 1.8%

2008 2.5%

2007 1.9%

2006 1.9%

Like many stocks, PG was overvalued several years ago, and had a lower yield. Plus, the
payout ratio increased from around 40% to around 60% over this period.

In most years, PG spends more on stock buybacks than on dividends. Over the last 3 years,
the company spent over $17 billion on share repurchases and over $17 billion on dividends. Based on
2012 results, the company‘s shareholder yield is around 5.4%.

BALANCE SHEET

Total debt/equity for the company is under 50%, and the debt/income ratio is under 3 xs.
However, over 80% of the existing shareholder equity consists of goodwill. Much of PG‘s growth was
due to acquisitions.

The interest coverage ratio is very solid, at over 17. Taking everything into account, Procter
and Gamble has a rather strong balance sheet, with manageable debt levels, a high interest coverage
ratio, and good investment grades. The only real downside to the balance sheet is the large quantity of
goodwill, but overall, it‘s in good shape.
INVESTMENT THESIS

Procter and Gamble is the largest company in the world at what it does, and has 25 billion-
dollar brands. The company‘s goals, as stated in their most recent annual report, were for an organic
sales growth rate of 1-2% above global market growth rates, earnings growth in the high single digits
or low double digits, and for free cash flow to be 90% of earnings.

The company has pursued a global growth strategy, and has achieved 23% compound annual
sales growth in Brazil, 25% compound annual sales growth in Russia, 27% compound annual sales
growth in India, and 17% compound annual sales growth in China, over the last 10-year period.

For example, if a company can achieve 2% annual volume growth and 3% pricing growth on
that volume (basically in line with a standard inflation rate), then the revenue growth is around 5%. If
a company then buys back 3% of its market cap in stock buybacks each year and net profit
margins remain static, then EPS growth is in the ballpark of 8%. Add a 3% dividend yield, and P&G
got a good investment on your hands.

But if margins deteriorate, or volume growth halts, then the picture can change. In addition, if
the valuation of the stock is too high, it drives down the dividend yield and reduces the number of
shares that the company can repurchase, which in turn reduces the EPS growth rate. That‘s something
that not everyone realizes: that for a company that does buybacks, a high stock valuation results in a
measurable reduction in EPS growth compared to if the stock valuation were low. Slow and profitable
growth works great when the valuation is low enough to provide double-digit returns.

For Procter and Gamble, they announced earlier in 2012 a plan to save $10 billion in
operations by the end of 2016. Specifically, they call for $6 billion in savings on cost of goods (which
comes out to around $1.2 billion per year), $3 billion in savings on overhead (reducing the number of
employees, at about $600 million per year), and then $1 billion in savings from marketing, or around
$200 million per year.

To do this and keep the top line intact means that these savings can go towards dividends,
buybacks, or strengthening the balance sheet.
 RISKS
Procter and Gamble faces commodity cost risk and global currency risk. More specifically,
they operate in a highly competitive industry, and if consumers are looking to reduce spending, they
can switch and have switched to private label products. Plus, other branded companies with
overlapping products, like Colgate, can fight for market share.

If the company doesn‘t make good use of its advertising, maintain pricing power, and
continue to grow global volume, then their earnings growth rate won‘t match their target rate of high
single digits or better per year.
 THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information

Three Months Ended March Nine Months Ended March

31 31

2012 2011 % CHG 2012 2011 % CHG

NET SALES $ 20,194 $ 19,893 2 %$ 63,468 $ 60,653 5 %

Cost of products sold 10,237 9,789 5 % 31,894 29,327 9 %

Selling, general & administrative 6,636 6,399 4 % 19,769 19,010 4 %

expense

Goodwill & indefinite lived 22 0 - 1,576 0

-
intangible impairment charges

OPERATING INCOME 3,299 3,705 (11) % 10,229 12,316 (17) %

Total interest expense 179 202 (11) % 587 619 (5) %

income/(expense),
Other non-operating
67 104 (36) % 238 171 39 %

EARNINGS FROM
CONTINUING OPERATIONS 3,187 3,607 (12) % 9,880 11,868 (17) %
BEFORE INCOME TAXES
operations
Income taxes on continuing
754 748 1 % 2,776 2,638 5 %
CONTINUING OPERATIONS
NET EARNINGS FROM
2,433 2,859 (15) % 7,104 9,230 (23) %

NET EARNINGS FROM

DISCONTINUED 34 47 (28) % 133 158
OPERATIONS

Net controlling
non earnings interests 2,467 2,906 (15) % 7,237 9,388 (23) %

Less: net earnings attributable to

56 33 70 % 112 101 11 %

NET EARNINGS
ATTRIBUTABLE TO 2,411 2,873 (16) % 7,125 9,287 (23) %
PROCTER & GAMBLE

Effective tax rate 23.7 % 20.7 % 28.1 % 22.2 %

 BASIC NET EARNINGS PER
COMMON SHARE (1):

Earnings from continuing operations $ 0.84 $ 0.99 (15) % $ 2.47 $ 3.18 (22) %

Earnings from discontinued

operations $ 0.01 $ 0.02 (50) % $ 0.05 $ 0.06 (17) %
BASIC NET EARNINGS PER
COMMON SHARE
$ 0.85 $ 1.01 (16) %$ 2.52 $ 3.24 (22) %
DILUTED NET EARNINGS
PER COMMON SHARE (1):

Earnings from continuing

operations

Earnings from discontinued $ 0.81 $ 0.94 (14) % $ 2.37 $ 3.04 (22) %

operations

DILUTED NET EARNINGS $ 0.01 $ 0.02 (50) % $ 0.05 $ 0.05 0 %

PER COMMON SHARE

$ 0.82 $ 0.96 (15) %$ 2.42 $ 3.09 (22) %

DIVIDENDS PER COMMON

SHARE

Average diluted shares

$ 0.5250 $ 0.4818 9 %$ 1.5750 $ 1.4454 9 %
outstanding
COMPARISONS AS A % OF
Basis Pt Basis Pt
NET SALES 2,937.8 2,999.3 2,944.9 3,008.6
Chg Chg

Gross margin 49.3 % 50.8 % (150) 49.7 % 51.6 % (190)

Selling, general & administrative

expense 32.9 % 32.2 % 70 31.1 % 31.3 % (20)

Goodwill & indefinite lived

intangible
Impairment charges 0.1 % 0.0 % 10 2.5 % 0.0 % 250

Operating margin
16.3 % 18.6 % (230) 16.1 % 20.3 % (420)
Earnings from continuing
operations before income
Taxes 15.8 % 18.1 % (230) 15.6 % 19.6 % (400)
Net earnings NET
12.0 % 14.4 % (240) 11.2 % 15.2 % (400)

11.9 % 14.4 % (250) 11.2 % 15.3 % (410)

EARNINGS
ATTRIBUTABLE TO
PROCTER & GAMBLE
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions)
Consolidated Cash Flows Information

Nine Months Ended March 31

2012 2011

Cash and cash equivalents, $ 2,768 $ 2,879

beginning of period

Operating activities

Net earnings 7,237 9,388

Depreciation and amortization 2,427 2,103

Share-based compensation 277 295

expense

Deferred income taxes (5) 186

Gain on sale of businesses (201) (70)

Goodwill and indefinite lived 1,576 0

intangibles impairment charges

Changes in:

Accounts receivable (347) (495)

Inventories (287) (817)

Accounts payable, accrued and other (1,558) (223)

liabilities

Other operating assets & 131 (831)

liabilities

Other 61 (84)

TOTAL OPERATING 9,311 9,452

ACTIVITIES
INVESTING
ACTIVITIES

Capital expenditures (2,663) (2,066)

Proceeds from asset sales 290 89

Acquisitions, net of cash (4) (489)

acquired

Change in investments 90 97

TOTAL INVESTING (2,287) (2,369)

ACTIVITIES

FINANCING
ACTIVITIES

Dividends to shareholders (4,521) (4,237)

Change in short-term debt (122) (420)

Additions to long-term debt 3,985 1,536

Reductions of long-term debt (2,514) (188)

Treasury stock purchases (4,023) (4,536)

Impact of stock options and 1,439 691

other

TOTAL FINANCING (5,756) (7,154)

ACTIVITIES

Effect of exchange rate changes on (45) 138

cash and cash equivalents

Change in cash and cash 1,223 67

equivalents

CASH EQUIVALENTS $ 3,991 $ 2,946

 THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions) Consolidated

Balance Sheet Information

March 31, June 30,

2012 2011

Cash and cash equivalents $ 3,991 $ 2,768

Accounts receivable 6,200 6,275

Total inventories 7,239 7,379

Other 5,678 5,548

TOTAL CURRENT ASSETS 23,108 21,970

Net property, plant and equipment 20,384 21,293

Net goodwill and other intangible 86,262 90,182

assets

Other non-current assets 4,851 4,909

TOTAL ASSETS $ 134,605 $ 138,354

Accounts payable $ 6,684 $ 8,022

Accrued and other liabilities 8,449 9,290

Debt due within one year 11,771 9,981

TOTAL CURRENT LIABILITIES 26,904 27,293

Long-term debt 21,341 22,033

Other 20,451 21,027

TOTAL LIABILITIES 68,696 70,353

 THE PROCTER & GAMBLE COMPANY AND
SUBSIDIARIES

(Amounts in Millions)
Consolidated Earnings Information Three
Months Ended March 31, 2012
Earnings from % Net Earnings
%
% Change Continuing Change Attributable
Change
Versus Operations Versus to
Net Sales Versus
Year Ago Before Income Year Procter &
Year Ago
Taxes Ago Gamble

Beauty Grooming $ 4,844 1 % $ 710 1 % $ 523 3 %

Health Care 1,962 0 % 530 -9 % 398 -4 %

Fabric Care and Home Care
3,018 2 % 638 -3 % 411 -4 %
Baby Care and
Family Care 6,595 1 % 1,161 -7 % 716 -9 %
Corporate (378) N/A (755) N/A (210) N/A
4,153 5 % 903 9 % 573 9 %
TOTAL
COMPANY 20,194 2 % 3,187 -12 % 2,411 -16 %
 Nine Months Ended March 31, 2012

Earnings from % Net Earnings %

% Change Continuing Change Attributable Change
Net Sales Versus Operations Versus to Versus
Year Ago Before Income Year Procter & Year
Taxes Ago Gamble Ago

Beauty
$ 15,512 4 % $ 2,652 -6 % $ 2,008 -7 %
Grooming
6,332 4 % 1,861 2 % 1,401 2 %
Health Care
9,492 4 % 2,222 2 % 1,490 3 %
Fabric Care and
Home Care
20,703 4 % 3,643 -7 % 2,280 -10 %
Baby Care and
Family Care
12,394 7 % 2,511 5 % 1,583 6 %
Corporate (965) N/A (3,009) N/A (1,637) N/A

TOTAL
COMPANY 63,468 5 % 9,880 -17 % 7,125 -23 %
 Three Months Ended March 31, 2012
(Percent Change vs. Year Ago) *
Volume Volume
With Without
Acquisitions
Acquisitions/ Foreign Net Sales
/
Divestitures Divestitures Exchange Price Mix/Other Growth
Beauty

Grooming Health

Care

Fabric Care and

Home Care

Baby Care and

Family Care

Total Company
1 % 1 % -1 % 5 % -4 % 1 %

1 % 1 % -2 % 3 % -2 % 0 %

0 % -1 % -1 % 3 % 0 % 2 %

-3 % -3 % -1 % 7 % -2 % 1 %

3 % 3 % -1 % 5 % -2 % 5 %

0 % 0 % -1 % 5 % -2 % 2 %
 Nine Months Ended March 31, 2012

(Percent Change vs. Year Ago) *

Volume Volume
With Without
Acquisitions
Acquisitions/ Foreign Net Sales
/
Divestitures Divestitures Exchange Price Mix/Other Growth
Beauty

Grooming Health

Care

Fabric Care and

Home Care

Baby Care and

Family Care

Total Company
2 % 3 % 2 % 3 % -3 % 4 %

1 % 1 % 2 % 2 % -1 % 4 %

1 % 1 % 1 % 3 % -1 % 4 %

-1 % -1 % 1 % 6 % -2 % 4 %

2 % 2 % 1 % 4 % 0 % 7 %

1 % 1 % 1 % 4 % -1 % 5 %
 SHORT-TERM (OPERATING) ACTIVITY RATIOS

RATIOS (SUMMARY)
Procter & Gamble Co.,

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Turnover Ratios

Inventory turnover 12.45 11.19 12.36 11.49 9.92 11.22

Receivables turnover 13.79 13.16 14.80 13.54 12.35 11.54

Payables turnover 10.57 10.29 10.89 13.22 12.33 13.39
Working capital 17.19 14.66 17.67 11.73 9.94 9.88
turnover

Average No. of Days

Average inventory 29 33 30 32 37 33
processing period
Add: Average 26 28 25 27 30 32
receivable collection
period

Operating cycle 56 60 54 59 66 64

Less: Average payables 35 35 34 28 30 27

payment period

Cash conversion 21 25 21 31 37 37
cycle
INVENTORY TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476

Inventories 6,721 7,379 6,384 6,880 8,416 6,819

Inventory Turnover, Comparison to Industry

Procter & Gamble Co. 12.45 11.19 12.36 11.49 9.92 11.22

Industry, Consumer – 11.02 10.51 10.01 10.56 –

Goods

Inventory turnover = Net sales / Inventories

= 83,680 / 6,721 = 12.45

Ratio Description The company

Inventory An activity ratio calculated as revenue Procter & Gamble Co.'s inventory turnover
turnover divided by inventory. deteriorated from 2010 to 2011 but then improved
from 2011 to 2012 exceeding 2010 level.
 RECEIVEBLE TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476
Accounts 6,068 6,275 5,335 5,836 6,761 6,629
receivable

Receivables Turnover, Comparison to Industry

Procter & 13.79 13.16 14.80 13.54 12.35 11.54
Gamble
Co.1

Industry, – 12.21 11.17 12.64 12.03 –

Consumer
Goods

Receivable turnover = Net Sales / Accounts receivable

= 83,680 / 6,068 = 13.79

Ratio Description The company

Receivables An activity ratio equal to revenue Procter & Gamble Co.'s receivables turnover
turnover divided by receivables. deteriorated from 2010 to 2011 but then slightly
improved from 2011 to 2012.
 PAYABLE TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476

Accounts payable 7,920 8,022 7,251 5,980 6,775 5,710

Payables Turnover, Comparison to Industry

Procter & Gamble Co. 10.57 10.29 10.89 13.22 12.33 13.39

Industry, Consumer – 13.32 11.93 15.94 13.46 –

Goods

Payable turnover = Net sales / Accounts payable

= 83,680 / 7,920 = 10.57

Ratio Description The company

Payables An activity ratio calculated as revenue Procter & Gamble Co.'s payables turnover
turnover divided by payables. declined from 2010 to 2011 but then slightly
increased from 2011 to 2012.
 WORKING CAPITAL TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476

Working capital 4,869 5,632 4,468 6,736 8,402 7,738

Working Capital Turnover, Comparison to Industry

Procter & Gamble Co. 17.19 14.66 17.67 11.73 9.94 9.88

Industry, Consumer Goods – 10.25 9.92 8.60 9.66 –

Working capital turnover = Net sales / working capital

= 83,680 / 4,869 = 17.19

Ratio Description The company

Working capital An activity ratio calculated as Procter & Gamble Co.'s working capital
turnover revenue divided by working capital. turnover deteriorated from 2010 to 2011 but
then improved from 2011 to 2012 not reaching
2010 level.
AVERAGE INVENTORY PROCESSING PERIOD
No. Of days

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data

Inventory turnover 12.45 11.19 12.36 11.49 9.92 11.22

Average Inventory Processing Period (no. of days), Comparison to Industry

Procter & Gamble Co. 29 33 30 32 37 33

Industry, Consumer Goods – 33 35 36 35 –

Average inventory processing period = 365 / Inventory turnover

= 365 / 12.45 = 29

Ratio Description The company

Average An activity ratio equal to the Procter & Gamble Co.'s average inventory
inventory number of days in the period processing period deteriorated from 2010 to 2011
processing divided by inventory turnover but then improved from 2011 to 2012 exceeding
period over the period. 2010 level.
 AVERAGE RECEIVEBLE COLLECTION PERIOD
No. Of days

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data

Receivables turnover 13.79 13.16 14.80 13.54 12.35 11.54

Average Receivable Collection Period (no. of days), Comparison to Industry

Procter & Gamble Co. 26 28 25 27 30 32

Industry, Consumer Goods – 30 33 29 30 –

Average receivable collection period = 365 / receivable turnover

= 365 / 13.79 = 26

Ratio Description The company

Average An activity ratio equal to the Procter & Gamble Co.'s average receivable
receivable number of days in the period collection period deteriorated from 2010 to 2011
collection divided by receivables turnover. but then slightly improved from 2011 to 2012.
period
 OPERATING CYCLE

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data

Average inventory 29 33 30 32 37 33
processing period

Average receivable 26 28 25 27 30 32
collection period

Operating Cycle, Comparison to Industry

Procter & Gamble Co. 56 60 54 59 66 64

Industry, Consumer – 63 67 65 65 –
Goods

Operating cycle = Average inventory processing period + Average receivable

collection period

= 29 + 26 = 56

Ratio Description The company

Operating Equal to average inventory processing Procter & Gamble Co.'s operating cycle deteriorated
cycle period plus average receivables from 2010 to 2011 but then improved from 2011 to
collection period. 2012 not reaching 2010 level.
 AVERAGE PAYABLES PAYMENT PERIOD
No. Of days

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data

Payables turnover 10.57 10.29 10.89 13.22 12.33 13.39

Average Payables Payment Period (no. of days), Comparison to Industry

Procter & 35 35 34 28 30 27
Gamble Co.

Industry, – 27 31 23 27 –
Consumer Goods

Average payable payment period = 365 / payable turnover

= 365 / 10.57 = 35

Ratio Description The company

Average An estimate of the average number of days Procter & Gamble Co.'s average
payables it takes a company to pay its suppliers; payables payment period increased
payment equal to the number of days in the period from 2010 to 2011 but then slightly
period divided by payables turnover ratio for the declined from 2011 to 2012.
period.
 CASH CONVERSION CYCLE
No. Of days

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data

Average inventory 29 33 30 32 37 33
processing period

Average receivable 26 28 25 27 30 32
collection period

Average payables 35 35 34 28 30 27
payment period

Cash Conversion Cycle, Comparison to Industry

Procter & Gamble Co. 21 25 21 31 37 37

Industry, Consumer Goods – 36 37 42 38 –

Cash conversion cycle = Average inventory processing period + Average receivable

collection period – Average payables payment period

= 29 + 26 – 35 = 21

Ratio Description The company

Cash A financial metric that measures the length of Procter & Gamble Co.'s cash
conversion time required for a company to convert cash conversion cycle deteriorated from
cycle invested in its operations to cash received as a 2010 to 2011 but then improved
result of its operations; equal to average inventory from 2011 to 2012 not reaching
processing period plus average receivables 2010 level.
collection period minus average payables
payment period.
 LONG-TERM (INVESTMENT) ACTIVITY RATIOS

RATIOS (SUMMARY)
Procter & Gamble Co.,

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Net fixed 4.11 3.88 4.10 4.06 4.05 3.91

asset
turnover

Total asset 0.63 0.60 0.62 0.59 0.58 0.55

turnover

Equity 1.32 1.22 1.29 1.25 1.20 1.15

turnover
NET FIXED ASSET TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476

Net property, 20,377 21,293 19,244 19,462 20,640 19,540

plant and
equipment

Net Fixed Asset Turnover, Comparison to Industry

Procter & 4.11 3.88 4.10 4.06 4.05 3.91

Gamble Co.

Industry, – 3.67 3.47 3.62 4.10 –

Consumer Goods

Net fixed asset turnover = Net sales / Net property, plant and equipment

= 83,680 / 20,377 = 4.11

Ratio Description The company

Net fixed asset An activity ratio calculated as total Procter & Gamble Co.'s net fixed
turnover revenue divided by net fixed assets. asset turnover deteriorated from
2010 to 2011 but then improved
from 2011 to 2012 exceeding 2010
level.
 TOTAL ASSET TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476

Total assets 132,244 138,354 128,172 134,833 143,992 138,014

Total Asset Turnover, Comparison to Industry

Procter & Gamble Co. 0.63 0.60 0.62 0.59 0.58 0.55

Industry, Consumer – 0.77 0.75 0.81 0.88 –

Goods

Total asset turnover = Net sales / Total asset

= 83,680 / 132,244 = 0.63

Ratio Description The company

Total asset An activity ratio calculated as total Procter & Gamble Co.'s total asset
turnover revenue divided by total assets. turnover deteriorated from 2010 to 2011
but then improved from 2011 to 2012
exceeding 2010 level.
EQUITY TURNOVER

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net sales 83,680 82,559 78,938 79,029 83,503 76,476

Shareholders' equity 63,439 67,640 61,115 63,099 69,494 66,760

attributable to parent

Equity Turnover, Comparison to Industry

Procter & Gamble Co. 1.32 1.22 1.29 1.25 1.20 1.15

Industry, Consumer Goods – 2.19 2.11 2.25 2.39 –

Equity turnover = Net sales / Shareholders’ equity attributable to parent

= 83,680 / 63,439 = 1.32

Ratio Description The company

Equity turnover An activity ratio calculated as total Procter & Gamble Co.'s equity turnover
revenue divided by shareholders' equity. deteriorated from 2010 to 2011 but then
improved from 2011 to 2012 exceeding
2010 level.
 LIQUIDITY ANALYSIS

Procter & Gamble Co. (PG)

Ratios (Summary)

Current Ratio

Quick Ratio
Cash Ratio

Ratios (Summary)

Procter & Gamble Co., liquidity ratios

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Current ratio 0.88 0.80 0.77 0.71 0.79 0.78

Quick ratio 0.42 0.33 0.34 0.34 0.33 0.40

Cash ratio 0.18 0.10 0.12 0.15 0.11 0.18

 CURRENT RATIO

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Current assets 21,910 21,970 18,782 21,905 24,515 24,031

Current liabilities 24,907 27,293 24,282 30,901 30,958 30,717

Current Ratio, Comparison to Industry

Procter & 0.88 0.80 0.77 0.71 0.79 0.78

Gamble Co.

Industry, – 1.10 1.20 1.10 1.07 –

Consumer Goods

Current ratio = Current assets / current liabilities

= 21,910 / 24,907 = 0.88

Ratio Description The company

Current ratio A liquidity ratio calculated as Procter & Gamble Co.'s current
current assets divided by current ratio improved from 2010 to 2011
liabilities. and from 2011 to 2012.
QUICK RATIO
Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Cash and cash 4,436 2,768 2,879 4,781 3,313 5,354

equivalents

Investment – – – – 228 202

securities

Accounts 6,068 6,275 5,335 5,836 6,761 6,629

receivable

Total quick assets 10,504 9,043 8,214 10,617 10,302 12,185

Current liabilities 24,907 27,293 24,282 30,901 30,958 30,717

Quick Ratio, Comparison to Industry

Procter & Gamble Co. 0.42 0.33 0.34 0.34 0.33 0.40

Industry, – 0.75 0.82 0.70 0.69 –

Consumer Goods

Quick ratio = total quick assets / current liabilities

= 10,504 / 24,907 = 0.42

Ratio Description The company

Quick ratio A liquidity ratio calculated as (cash plus Procter & Gamble Co.'s quick ratio
short-term marketable investments plus deteriorated from 2010 to 2011 but
receivables) divided by current then improved from 2011 to 2012
liabilities. exceeding 2010 level.
CASH RATIO
Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Cash and cash 4,436 2,768 2,879 4,781 3,313 5,354

equivalents

Investment – – – – 228 202

securities

Total cash 4,436 2,768 2,879 4,781 3,541 5,556

assets

Current 24,907 27,293 24,282 30,901 30,958 30,717

liabilities

Cash Ratio, Comparison to Industry

Procter & 0.18 0.10 0.12 0.15 0.11 0.18
Gamble Co.

Industry, – 0.33 0.35 0.28 0.23 –

Consumer
Goods

Cash ratio = Total cash assets / Current liabilities

= 4,436 / 24,907 = 0.18

Ratio Description The company

Cash ratio A liquidity ratio calculated as (cash plus Procter & Gamble Co.'s cash ratio
short-term marketable investments) deteriorated from 2010 to 2011 but then
divided by current liabilities. improved from 2011 to 2012 exceeding
2010 level.
LONG-TERM DEBT AND SOLVENCY ANALYSIS

Procter & Gamble Co. (PG) |

Ratios (Summary)

Debt to Equity
Debt to Capital

Interest Coverage

Ratios (Summary)

Procter & Gamble Co., debt and solvency ratios

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Debt to equity 0.47 0.47 0.49 0.59 0.53 0.53

Debt to capital 0.32 0.32 0.33 0.37 0.35 0.35

Interest 19.69 19.43 18.91 13.86 11.96 12.28

coverage
DEBT TO EQUITY

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Debt due within 8,698 9,981 8,472 16,320 13,084 12,039

one year

Long-term debt 21,080 22,033 21,360 20,652 23,581 23,375

Total debt 29,778 32,014 29,832 36,972 36,665 35,414

Shareholders' equity 63,439 67,640 61,115 63,099 69,494 66,760

attributable to parent

Debt to Equity, Comparison to Industry

Procter & Gamble Co. 0.47 0.47 0.49 0.59 0.53 0.53

Industry, – 1.01 0.97 0.97 0.87 –

Consumer Goods

Debt to equity = Total debt / Shareholders’ equity attributable to parent

= 29,778 / 63,439 = 0.47

Ratio Description The company

Debt-to-equity ratio A solvency ratio calculated as Procter & Gamble Co.'s debt- to-
total debt divided by total equity ratio improved from 2010
shareholders' equity. to 2011 and from 2011 to
2012.
 DEBT TO CAPITAL
Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007
Selected Financial Data (USD $ in millions)

Debt due within one 8,698 9,981 8,472 16,320 13,084 12,039
year

Long-term debt 21,080 22,033 21,360 20,652 23,581 23,375

Total debt 29,778 32,014 29,832 36,972 36,665 35,414

Shareholders' equity 63,439 67,640 61,115 63,099 69,494 66,760

attributable to parent

Total capital 93,217 99,654 90,947 100,071 106,159 102,174

Debt to Capital, Comparison to Industry

Procter & Gamble Co. 0.32 0.32 0.33 0.37 0.35 0.35

Industry, Consumer – 0.50 0.49 0.49 0.47 –

Goods

Debt to capital = Total debt / Total capital

= 29,776 / 93,217 = 0.32

Ratio Description The company

Debt-to-capital A solvency ratio calculated as total debt divided Procter & Gamble Co.'s debt- to-
ratio by total debt plus shareholders' equity. capital ratio improved from 2010
to 2011 and from 2011 to
2012.
 INTEREST COVERAGE

Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2010 2009 2008 2007

Selected Financial Data (USD $ in millions)

Net earnings attributable to 10,756 11,797 12,736 13,436 12,075 10,340

Procter & Gamble

Add: Net earnings 148 130 110 – – –

attributable to
noncontrolling interests

Add: Interest expense 769 831 946 1,358 1,467 1,304

Add: Income tax expense 3,468 3,392 4,101 4,032 4,003 4,370
(benefit)

Earnings before interest 15,141 16,150 17,893 18,826 17,545 16,014

and tax (EBIT)

Interest Coverage, Comparison to Industry

Procter & Gamble Co. 19.69 19.43 18.91 13.86 11.96 12.28

Industry, Consumer Goods – 14.76 12.20 10.17 20.33 –

Interest coverage = EBIT / Interest expense

= 15,141 / 769 = 19.69

Ratio Description The company

Interest coverage A solvency ratio calculated as Procter & Gamble Co.'s interest coverage
ratio EBIT divided by interest ratio improved from 2010 to 2011 and
payments. from 2011 to 2012.
 MARKET ANALYSIS
Porter five forces competitive analysis for P&G

Threat of New Entrants

P&G possess a significant amount of market share around the world.

To compete P&G, A competitor must have a large sum of capital
for heavy marketing and R&D.
Firms That Specialize in nice market could possibly become a threat to
P&G corresponding business segment.
Power of Buyers:

P&G is heavily dependent on wall mart and its affiliates for generating a
major part of its revenue.
High dependence upon Wal-Mart could reduce the bargaining power
of P&G.

Power of Suppliers

Supplier of P&G need key customer for profitable revenue generation

and will have little bargaining power.
Rising interest rate and declining availability of credit
ultimately should not affect P&G’s relationship with its
suppliers.

Threat of Substitutes

There are substantial no of substitutes for all of P&G‘s product offerings, creating an
intense competitive environment.
In order to differentiate itself P&G must continue to provide new and innovative
products to the customer.

Intensity of Rivalry

P&G has several strong competitors in different markets like AMWAY

corporation, Colgate-Palmolive Company, Johnson & Johnson, Revlon,
HUL among big and medium size competitors. Switching cost in this
industry is quite low.
Main competitors:
 HUL

 KIMBERLY CLARK LIVER PVT. LTD.

 JOHNSON AND JOHNSON

COMPETITORS ON THE BASIS OF PRODUCT

PRODUCT NAME COMPETITORS NAME

Vicks Amirtanjan Bam, Zandu Bam, Cold Snap,

Pharma’o cold

Pantene Sunsilk, Clinic Plus

Ariel Surf Excel, Rin

Whisper Kotex, Stayfree

Pamper Huggies, Snuggy Baby Diapers

 STRENGTH IN STRUCTURE
Global Business Units (GBUs) Focus on consumers, brands and competitors in India. They
are responsible for the innovation profitability from their businesses.

Market Development Organizations (MDOs) are charged with knowing consumers

and retailers in each market.

Global Business Services (GBS) utilizes P&G talent and expert partners to provide
best-in-class business support services at the lowest costs.

Lean Corporate Functions ensure ongoing functional innovation and capability improvement.
Business level

 Efforts to build competitive advantage

 Collaborative partnership and strategic alliance
 Distribution channel

Functional level strategy

 Human Resources Strategy

 R&D Technology Strategy
 Marketing and Sales Strategy

VALUE CHAIN ANALYSIS

Analysis of Primary activity

P&G developed extensile economies from its scale of operations in finance,

logistics, marketing, Research, new product development, technology innovation and other
function.

Inbound and Outbound Logistics

P&G‘s goal has been to create adaptive, reactive supply networks that will
link together sales and supply processes, inside and outside the organization, to improve
product availability.

Operations

P&G organized into 3 business units

 Beauty
 Health and well-being
 Household care

The operation group consists of market development organization and global business
services

Sales and Marketing

 The company markets more than 300 brands over 180 countries
 23 of these brands are categorized by P&G as billion dollar brands.
 Majority of sales now coming from promotional events, pull systems of efficient
distributors of consumer and industrial product.

Services
 P&G emphasis on its principal business call of providing its customers with right
products at right place all the time.
Analysis and Support Activity
Firm Infrastructure:

Integrity
Passion for Winning
Leadership
Trust
Ownership

Product R&D

P&G has strong commitment to find the best researchers, and retain them with
cultural design to reward success, stimulate learning, challenges compliancy and nurture
innovation.

Human resources Strategy

Hire the best

Challenges of P&G people from day1

Business and functional leaders activity recruiters, Teach and Coach Plan

careers

Never Stop Learning

Top 40 Businesses:

They define their core business as the top 40 country/category combinations, 20 in

Household Care and 20 in Beauty & Grooming, which generate the highest level of annual sales
and profit.

Top 10 Developing Markets:

Maintaining the strong growth momentum they have established in developing markets is
critical to delivering their near- and long-term growth objectives. They are focusing resources first
on the markets that offer the greatest growth opportunity. They will assess the potential for further
portfolio expansions beyond the top 10 developing markets based on the top- and bottom-line
growth progress of the core business.
 TECHNICAL ANALYSIS

Innovation Wins Decades Innovation is the driving force behind their strategy, as it
always has been at P&G. Their experience has proven that price promotion may win a
quarter here and there, but innovation wins decades. There are many examples to prove
this. Take their Laundry business in the U.K., for instance. In the late 1970s, there were
competing hard just to defend and maintain our 35% market share leadership position.

They stepped up their innovation efforts. In the three decades since, they have
introduced a series of game-changing innovations such as Daz automatic detergent,
concentrated liquid detergent, and most recently, Liquitabs. They now enjoy around a 50%
share. P&G seen the same dynamic in Oral Care. In the 1990s, P&G lost their historical lead
versus their top competitor because they simply out- innovated us. They stepped up their
innovation game once again and delivered a string of product breakthroughs including Crest
White strips, Crest Pro-Health, and Crest 3D White. P&G’s leadership of the U.S. Dentifrice
category, which is now enabling us to expand these innovative products around the world.

The investment continues to pay off. P&G currently have the strongest innovation
and global expansion program in P&G history. They are globalizing products such as Gillette
Fusion ProGlide, Crest 3D White, Laundry additives, and the Pampers thinness and
absorbency upgrade. P&G also expanding successful marketing innovation such as the
SHIKSHA education program in India, in which P&G contributes a brick to build a school
for each pack of product purchased, or the Pampers “One Pack Equals One Vaccine”
campaign with its focus on eradicating maternal and neonatal tetanus.

The Old Spice “Smell like a Man, Man” campaign generated consumer excitement
and demand that catapulted the brand to market leadership. P&G’s
global sponsorship of the Olympic Games provides an outstanding platform for integrated,
multi-branded commercial innovation.

Today, an Innovation Council made up of three members from P&G and three
members from Accenture meets regularly to understand the business needs and explore
how new virtual reality technologies can help. Both Accenture and P&G harvest and share
innovative ideas from within the team and across their respective organizations. P&G
ultimately governs the program, and projects are prioritized on the technology readiness
and business impact.

Top 20 Innovations:

Their 20 most important innovations offer significantly higher growth potential than
the balance of the innovation portfolio. Therefore, the growth of the Company depends
substantially on the success of their biggest innovations.

STRENGTHENING OUR UPSTREAM INNOVATION PROGRAM AND PIPELINE

Innovation has always been — and continues to be — P&G’s lifeblood. To

consistently win with consumers around the world across price tiers and preferences, and to
consistently win versus our best competitors, each P&G product category must have a full
portfolio of innovation. The innovation portfolios must include a mix of commercial
programs, incremental product improvements and discontinuous innovations. They have
made the creation of more discontinuous innovation a top priority, dedicating R&D
resources and funding to develop new innovations aimed at changing the game in existing
product categories and creating new ones.
 Core Strengths
P&G focuses on five core strengths required to win in the consumer products industry. They are
designed to lead in each of these areas.

Consumer Understanding

No company in the world has invested more in market research than P&G. They interact
with more than five million consumers each year in nearly 100 countries. They conduct over 15,000
research studies every year, and invest more than $350 million annually in consumer understanding.
The insights they gain help us identify opportunities for innovation and better serve and
communicate with our consumers.

Innovation

P&G is widely recognized as the industry‘s global innovation leader. Nearly all organic sales
growth over the past decade has come from new brands or improved products. They collaborate with
a global network of research partners, and more than half of all product innovation coming from P&G
today includes at least one major component from an external partner. Their contributions have
consistently helped us earn honours from the Symphony IRI New Product Pacesetters Report—the
annual list of the biggest innovations in our industry.

Over the past 16 years, P&G has had 132 products on the top 25 Pacesetters list— more
than our six largest competitors combined. P&G earned 5th place among Fortune‘s 2011 list of the
World‘s Most Admired Companies. And as of April 2011, P&G has won 22
―Product of the Year‖ recognitions, as voted on by consumers in the US, UK, France,
Holland, Italy, Spain, and South Africa.
 CHAPTER – IV

SUSTAINABILITY
 Sustainability changes that matters
P&G does this through the products and services it offers, manufacturing in an
environmentally responsible manner, and through its social responsibility programs that
improve lives for those in need around the world.

Sustainability broadly at P&G to include both environmental sustainability and social

responsibility.

ENVIRONMENTAL SUSTAINABILITY

A long-term environmental sustainability vision that includes:

Powering our plants with 100% renewable energy

Using 100% renewable or recycled materials for all products and packaging

Having zero consumer and manufacturing waste go to landfills

Designing products that delight consumers while maximizing our conservation of resources

This vision is stretching, and we believe it will take us decades to achieve. We have set
strategies in Products and Operations that help us deliver against our vision. To ensure we are holding
ourselves accountable, we have two sets of goals, for 2012 and 2020, within Products and Operations.
Long-Term Environmental Vision and 2020 Goals
P&G announced a long-term environmental sustainability vision in September 2010.
We developed this vision over the course of a year, partnering with external experts and soliciting
input from hundreds of P&G employees at all levels and functions. Our complete visionary end-
points are outlined below. These end-points are long-term in nature because some of them will take
decades to come to fruition.

Using 100% renewable or recycled materials for all products and packaging

Having zero consumer waste go to landfills

Designing products to delight consumers while maximizing the conservation of resources

Powering our plants with 100% renewable energy

Emitting no fossil-based CO2 or toxic emissions

Delivering effluent water quality that is as good as or better than influent water quality with no
contribution to water scarcity

Having zero manufacturing waste go to landfills

2020 Sustainability Goals
In order to ensure we are making progress toward our long-term environmental sustainability
vision, we have set the following goals for 2020 to hold ourselves accountable.

Replace Petroleum-Based 25%*

Materials with Sustainably
Sourced Renewable
Materials

Cold Water Washing 70% of total washing machine loads

Packaging Reduction 20% (per consumer use)*

Consumer Solid Waste Pilot studies in both developed and developing markets to
understand how to eliminate landfilled/dumped consumer solid
waste

*vs. 2010 baseline

Renewable Energy Powering our 30%

Plants

Manufacturing Waste to Landfill < 0.5% (disposed)

Truck Transportation Reduction 20% (km/unit of volume)*

*vs. 2010 baseline

SOCIAL RESPONSIBILITY
P&G‘s focus on purpose-inspired growth drives us to not only serve our consumers with
superior product propositions, but also truly touch and improve the lives of more consumers, more
completely by contributing towards the communities we operate in. Live, Learn and Thrive is P&G‘s
global corporate cause, focusing on helping children in need around the world. The programs enable
children to get off to a healthy start, receive access to education and build skills for life.

Since 2007, P&G has improved the lives of over 315 million children. In India, our
Corporate Social Responsibility initiatives ‘Shiksha’ and the‘Parivartan - Whisper School
Program’ are helping children from lesser-privileged backgrounds, by giving them access to health
and education.

SOCIAL RESPONSIBILITY PROGRAMS IN INDIA

Shiksha (Education): Padhega India. Badhega India.

P&G‘s flagship Corporate Social Responsibility Program Shiksha is an integral part of our
global philanthropy program - Live, Learn & Thrive. Now in its 8th year, Shiksha has till date helped
280,000 underprivileged children access their right to education. The program has built & supported
over 140 schools across India, in partnership with NGOs like Round Table India (RTI), Save the
Children (STC), Army Wives Welfare Association (AWWA) and Navy Wives Welfare Association
(NWWA), amongst others.
 Shiksha began with P&G India‘s research which revealed education as the one cause that
consumers are most concerned about and are looking for a simple way to contribute to. With this
insight and founded on P&G‘s purpose, Shiksha was launched in 2005 to enable consumers to
contribute towards the cause of education of under-privileged children through simple brand choices.

Since its inception, Shiksha has made a cumulative donation of over Rs. 22 crores towards
helping children on the path to better education. This is a result of the support from our consumers
who participated in the Shikshamovement by buying P&G brands for one quarter of the year, thus
enabling P&G to contribute a part of the sales towards the cause.

Shiksha’s NGO Partners

Shiksha’s vision is to help India get to 100% Shiksha someday, and it is working
towards this vision in partnership with NGOs like Save the Children India, Army Wives
Welfare Association (AWWA), Navy Wives Welfare Association (NWWA) and Round Table
India (RTI), amongst others.

Each of Shiksha’s NGO partners focuses on a critical approach towards education, with NGO
Round Table India specializing in building educational infrastructure and supporting schools across
India, NGO Save the Children laying emphasis on the girl child via supporting the government‘s
Kasturba Gandhi Balika Vidhyalays, and the NGOs AWWA and NWWA serving the unique
educational needs of differently-abled children of naval and army officer‘s families.

Shiksha Schools

Shiksha aims to build the educational future of India ‘Brick – by – Brick’ by addressing the
need for better educational infrastructure and building the tangible asset of schools. Shiksha’s
interventions span across health and hygiene facilities at schools such as clean drinking water and
separate toilets for boys and girls, advanced educational aids such as libraries and computer centres,
as well as basic infrastructure needs such as classrooms.

100
 CHAPTER – V

RECOMMENDATION &
SUGGESTION
RECOMMENDED OR SUGGESTED STRATEGIES

The practice of incomplete market coverage should not be followed because you cannot
hijack other company customers and new customers as well. All these scenarios require following
strategies:

MARKET DEVELOPMENT STRATEGY:

P&G is emphasizing on urban areas while it has neglected the suburban areas, which is also a
big market for soaps like safeguard. For this purpose, they should efficiently utilize their Marketing
Information System to collect information about the demand and attitudes of the people in these areas.
By using this strategy, safeguard can fetch the customers of competitors and will be successful in
building new customers.

PRODUCT DEVELOPMENT STRATEGY:

It describes to develop new products or modify the existing products with respect to size,
colour, packaging, etc. Safeguard is a well-perceived product among the customers, and at this
moment, it is available in two sizes; 75gm and 125gm, which cannot satisfy the demand of every
segment.

While the products of the competitors are available in multiple sizes which provide abundant
choices for purchases to customers for example Lifebuoy Gold has 140gm and 95gm and Medicare
has80gm soap available in the market.

This provides an opportunity to the customer to have multiple choices. It can be a threat for
the market share of safeguard. On the other hand, in case of safeguard the choice to customer is very
limited. This is what they have analyzed through market survey.

Therefore, it is necessary that safeguard should be available in maximum possible sizes to

meet the selection criteria of the customer. As far as launching of new product is concerned, it is not
necessary for P&G at this moment, but in future, they will require taking this step as well because
they have some other soap like ivory, and zest which are very famous in international market.

MARKET PENETRATION STRATEGY:

It describes that a company tries to sell more of its product by introducing new supplementary
uses. Safeguard is that product, which contains such chemicals useful for beauty care as well. This
characteristic, we have analyzed through its product formula. Therefore, it is more useful to
supplement this idea with existing safeguard or introduce safeguard into different pack sizes
especially for capturing the female customers.
 BIBLIOGRAPHY

WWW.PG.COM

WWW.WIKIPEDIA.COM

WWW.FMCG.COM

WWW.PG.COM/EN_IN/