Threat of Competition: HIGH
P&G’s market environment is highly competitive, with global, regional, and local competitors. In many of the markets and industry segments in which P&G sells its products, P&G competes against other branded products as well as retailers’ private-label brands.
There are many different options for consumer products. Consumers can choose not solely based on price but also brand strength and now there is even a push for environmentally friendly products. Although the options are abundant, the threat is still more moderate because of the brand equity in most products. Advertising and marketing are a large part of swaying consumers to purchase one product over another and the economies of scale that are presented with large companies (P&G) favor them in the advertising. Advertising also helps establish the brand loyalty.
Although the consumer has many options to choose from it all comes down to the value and quality of the product. Product quality and performance are important and P&G focuses on providing a quality offering to the consumer. Competition is even present with the non-branded products and with consumer spending and disposable income low, competition is increasing.
Threat of New Entrants: LOW-MODERATE
The threat of new entrants seems to be low overall but it depends on which business segment of Procter & Gamble the threat is coming from. It is a low probability for a new entrant to become as big and as well capitalized as P&G. The biggest barriers to entry are derived from research and development. Since competition is somewhat intense, a new entrant must enter the market with a product that is differentiated. Again, reputable companies with successful brand names have established relationships with retailers and have advantages when competing for shelf space. Nearly all the markets that P&G participates in are mature markets making it less attractive for new entrants.