What kind of business-level strategy is Procter & Gamble pursuing?

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Proctor and Gamble is pursuing multiple avenues at once in order to improve their market position. While there are numerous different tactics companies take, they have decided to focus on more specific markets and penetrate them as thoroughly as possible. The first step to doing this is a consolidation effort....

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Proctor and Gamble is pursuing multiple avenues at once in order to improve their market position. While there are numerous different tactics companies take, they have decided to focus on more specific markets and penetrate them as thoroughly as possible. The first step to doing this is a consolidation effort. Proctor and Gamble is removing some of their more poorly performing brands in favor of those in which they can leverage their name brand and profit margins. They have offloaded Duracell, Camay, and others that were a small portion of the company's profits—though they continued to represent a significant effort.

At the same time, the company is attempting to improve its market penetration by diversifying within a "health and wellness" portfolio. Instead of diversifying between diapers and batteries, they have focused on concurrent product lines and expanded or diversified those offerings. To this end, they are releasing new options for diapers and wipes to gain a larger market share and focusing on soaps and other health- and cleanliness-related items. This will allow them to strategically position themselves to take advantage of their brand, which is well known for cleaning and healthcare products, and remove the dross that has been weighing down their margins and profits.

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At the moment, P&G is pursuing a brand consolidation strategy. Between 2014 and 2015, P&G sold 100 brands that were underperforming to Berkshire Hathaway, Unilever, and COTY Inc. The firm has decided to focus on those brands that bring in the most profits in order to maximize shareholder value and lower costs.

It was necessary to offload brands such as Duracell, Camay, and others because they only accounted for less than 10% of the company’s annual revenue. P&G spends a lot of money on advertising because that’s how they get most of their customers.

Therefore, there was no need for the company to keep spending on brands that didn’t help its earnings in a significant way. As part of its brand consolidation plan, P&G has also decided to focus on emerging markets as a way to maximize sales and profitability.

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Proctor and Gamble, like many other businesses, employ a variety of business level schemes and strategies to expand their footprint and reach out to customers. They are working hard toward quality standardization and creating complementary products, but in general, they are pursuing a diversification and penetration approach.

By following this approach, the company spreads their assets through many different product lines and attempts to penetrate the market at a variety of different places. By doing this, they spread their potential market around to reach greater numbers of customers to establish a foothold in a variety of areas.

Additionally, this strategy helps protect the company from the whims of the marketplace. By focusing on deep penetration of the marketplace, they could potentially lose large swathes of the market if another firm enters and undercuts them or the economy for that market falls drastically. By spreading their reach, they have insulated themselves to an extent against the volatility of the marketplace.

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At the business level, Proctor and Gamble is attempting to increase their market penetration, primarily through differentiation and diversification of their product offerings. What they want to do is spread brand awareness as much as possible and get their hands in as many different areas and markets as they can. To this end, they attempt to create a wide variety of products in similar but clearly differentiated areas (like diapers as compared to soaps—both are related to cleanliness and both are home goods, but more specifically, they are stratified). They promote and advertise for these products heavily so that a wide variety of markets and customer groups hear about and trust their products.

This action helps them to gain market share by finding a very broad customer base. This is useful because, while their products are consumable, they're not always quickly consumable goods. Something like laundry detergent or soaps may be consumed but at a slow rate, and therefore the broader audience they can draw, the more constant income they will generate.

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