Pampers And Head And Shoulders Case Study

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This part of the paper will mainly focus on two of P&G’s one billion dollar brands, Pampers and Head & Shoulders. The businesses belong to two different segments, but are both included under P&G. An analysis of how P&G strengthen their businesses, uses their resources and how and if the businesses add additional value to the whole firm, will be discussed in the following part. 4.1. Pampers - innovation and customer understanding Pampers is P&G’s biggest global brand, used by 25 million babies in about 100 different countries. In 2012, Pampers was the first of P&G’s brands to generate annual revenue of 10 billion dollar. But the road to success of Pampers since the launching in 1950’s has been challenging. A chemical engineer, Victor Mills,…show more content…
4.5. Benefits and costs of scope from Pampers and Head & Shoulders To evaluate the benefits and costs P&G gets from combining the two products of Pampers and Head & Shoulders, a closer look at the activities in the value chain will be taken. Material The segment of Health & Beauty takes advantage of the “purchasing pool” of material that the Household care segment already has created, which makes packing material cheaper compared to what competitors have to pay. But the material used for making diapers verses shampoo differ as everyone can notice. This is something that probably creates additional costs of combining the two businesses, since they cannot take advantage of scale when purchasing material compared to some of P&G’s other products. Advertising expenses The Household care segment can take advantage of the advertising budget provided for the Health & Beauty segment. Research and…show more content…
Its products reach the customers through four channels such as; mass volume retail, mom-and-pop stores, wholesale and modern retail stores. The resources need to support the businesses of Pampers and Head & Shoulder are not very different and they can therefore take advantage of scale and scope economies, as costs can be saved. Some of these savings are as mentioned from scale, and the ability to buy large volumes of raw material from suppliers to a more competitive price. Combining more products also saves cost of SG&A as it is spread over large volumes. By improved production planning, it is possible for P&G to improve its operating profit margin, and as the financial analysis shows, the company’s operating profit margin was the highest among its competitors. Though, it is important to note that Pampers and Head & Shoulders are not always sold through the same channels. For example is Head & Shoulders sold through cosmetic and beauty stores, where Pampers is not

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