1 person to respond to
Robert Williams RE: Week 2 Discussion
Procter & Gamble Company applies its generic strategy to achieve competitive advantage in the consumer goods industry. Michael Porters model for generic competitive strategies focuses on business approaches that lead to competitiveness and resilience amid competition. In the case of Procter & Gambles generic strategy, the emphasis is on product quality and value. These factors are significant in supporting Procter and Gambles efforts to achieve and maintain a leadership position in the consumer goods industry.
Because I work in a service environment,I have chosen to create a product for P&G that is appealing! Over 98% of consumers today utilize laundry products for their personal use and although the many brands available afford the consumer a desired end result, none seem to facilitate efficiency and convenience. Quick Clean provides a dual-purpose laundry system that is unlike any other product. Each package contains one laundry sheet that is biodegradable, accomplishes a fresh pressed look on all fabrics and removes stains in 10 minutes. Our current manufacturing process allows us to easily adapt our new product for competitive pricing, distribution channeling, and advertising to reach the target markets efficiently. By communicating a cost-effective product that provides convenience without sacrificing quality, P&G’s perception of convenience will entice consumers to take on a once seemingly dreaded task that is now expedient and efficient. I believe this product will benefit consumers who desire a more convenient and effective method of doing laundry while supporting the value objectives of the company.
Focus strategy is Porters generic strategy that concentrates on a small segment and within the given segment, the firm attempts to achieve differentiation or cost advantage (Mintzberg, et.al. 2014). The strategy works best mostly for these companies that do not have enough resources to mount sale in a large market. Focus strategy involves choosing to focus on small and manageable group of customers or selling in a specific geographical area that the company can manage (Mintzberg, et.al. 2014). Because the focus is of Procter and Gamble is wide, this method is successful. This also assists with managing expenses and gains control with market share.
Pricing strategy is one of the most powerful strategies a company can use to gain competitive advantage. Procter & Gamble Companys primary intensive growth strategy is market penetration. The organization starts with the introductions of products at a lower price and builds pricing upwards upon time and popularity. This creates attraction to the new product and creates market share. Once loyalty is gained, the gradual price hikes will not be shunned by all consumers, as seeking out substitutes may not be easily attainable (Mintzberg, et.al. 2014). This is related to focus strategy.
A product strategy is the foundation for the entire product lifecycle. As product leaders develop and adjust their product strategy, they zero in on target audiences and define the key product and customer attributes necessary to achieve success. Strategy is comprised of three parts: vision, goals, and initiatives. Product strategy is the creative clause that each company holds to develop the wow factor in the market. The value of the product must be perceived by the consumer.
References
Marci Martin. 2021. Business News Daily. How Porters Five Forces Can Help Small Business Analyze the Competition.
Mintzberg, Henry and, Quinn, James Brian (2014). The strategy process: Concepts, Contexts, Cases. Prentice Hall
2nd person to respond to
Radavon
RE: Week 2 Discussion
Dear prof and classmates,
For a strategy development project, I selected a company that operates in the financial services industry in Europe. It is called OVB and is one of the biggest German-born brokerage companies in the European Union.
They offer vast financial advisory services to all customer segments covering almost all financial products available in each of the EU markets.
In order to narrow the selection, I will focus on selling one product. Thus a variation of life insurance products is called risk life insurance. It is a more specific product without the investment or capital structure part.
The financial advisory service is a vast playing field with many international and local competitions. Once the advisory company obtains the license from the regulator in one EU state, it can do the business in the other EU states. The advisory company usually has MLM (multi-level marketing) organization structure.
I will only focus on our domestic and small Slovak market for simplicity. Despite it being a small market, the dynamics here are massive, and with upcoming new technologies such as AI, chatbots, and online business, the rivalry will be even tenser.
1. competitive rivalry (1)
The competitive rivalry is vast. Because the local market is small, all companies must cover a broader portfolio of services. OVB faces other MLM brokerage agencies, digital brokers, and insurance and bank retail staff selling the same or similar products. On top, many insurers and banks have tight agent networks. There are also other types of indirect competition selling insurance products such as travel agents, electronic shops, etc.
2. the bargaining power of suppliers (1)
Suppliers are, in these cases, insurers present on the market with their products. They have the power to change the parameters of the products anytime and are dictating the level of commission based on the insurer’s conditions and not brokerage.
3. the bargaining power of customers (1)
The bargaining power of customers is enormous, as they can call and chat with thousands of other brokers available on the market. This is the only level where brokers could differentiate themselves.
4. the threat of new entrants (1)
The threat is high and usually comes with unsatisfied brokers with a low commission level. So, after initial experience in MLM company for several years, they usually create their independent agency.
5. substitute products and services (1)
It is not easy to compare such risk life insurance products. However, it is easy to switch from one product to another because all insurers on the market offer similar products or variations. It just needs to be explained to the customer, which is a vital part of advisers.
Overall competition can have significant power on profitability for brokerage companies. They definitely must consider “what if” questions and assess future opportunities for growth (2).
On the other side larger the brokerage company, the better commission levels can negotiate with banks and insurers.
Best Regards
Radovan
References:
1. M. Martin. 2021. BNdaily.com. How Porter’s Five Forces Can Help Small Businesses Analyze the Competition
2. JWI540. Week 2. Lecture Notes
