Project2 - Essay Example

Download file to see previous pages An FMCG company requires heavy capital investment because from product development to marketing and advertising, capital is necessary in every sector. Moreover, FMCG companies are no more limited to a particular geographic location; instead they are pursuing overseas ventures. Therefore, threat of new entrant at international market is relatively limited. P&G is one of the reputed FMCG companies and its brand, Head & Shoulders is well-recognized in the hair care industry. Consequently, it can be suggested that threat of new entrant is limited for the company and the product (Reuters, 2013).
FMCG industry is one of those industries that are heavily vulnerable to substitution, as local as well as a number of international brands are taking entry in the industry on a regular basis. However, studies suggest that P&G is a global leader in the hair care segment and have more than 20 percent of market share thereof from Pantene and Head &Shoulders (Reuters, 2013). The company has invested significantly in marketing and brand building of Head & Shoulders. The outcome is that the brand image is spreading from that of a medicated shampoo to a mass consumer product. Head & Shoulders is often marketed using celebrity endorsement which has significant positive impact on consumer buying behavior. Therefore, it can be suggested that threat of substitute is relatively less for the product (Reuters, 2013).
Purchasing behavior of consumers has significant impact on revenue of FMCG companies. However, consumer buying pattern is strongly influenced by number of competitors or substitute products and their prices within the industry. It was ascertained that consumers have relatively strong bargaining power as the choices in hair care products in large and are mostly from well-known brands such as Unilever, L’Oreal, Colgate-Palmolive and Johnson & Johnson. These companies are ...Download file to see next pagesRead More