Informational Interview With Clorox

I interviewed Maria Madrid who is a costs assistant manager for Clorox. These are the main things that I took away from the interview.

·         A costs assistant manager is someone who is a link between plant and corporate accountants.  In order to be a costs assistant manager, you have to have analytical skills and not just look at the costs, but be able to see the full picture and translate what that information means.

·         Over the past several years Clorox has been extremely focused on cutting costs and it order to achieve that they have been downsizing and combining roles in order to save money.

·         With CPG brands, the power of the brand name is a huge factor on how successful a company is. Without a strong brand name, people are less likely to buy your products. A strong brand name is achieved by the talent of the employees in every aspect of the company.

Informational Interview Takeaways: Tennant Company

Tennant Company Takeaways:

· The company focuses on smart investing in research opportunities to further develop new products; however, it tries to do so frugally, maintaining a spending budget.

· Tennant strives to be as environmentally friendly as possible; just this past year the business has developed a new cleaning technology called ec-H2O which is chemical-free and harmless.

· Tennant differentiates itself predominantly through manufacturing safe cleaning products versus those with harmful chemicals. Tennant’s Orbio Technologies Group is a technological development group that allows Tennant Company to maintain this competitive advantage in the CPG industry; they hope to release their next product this upcoming year.

Informational Interview Takeaways

For my informational interview, I contacted Mr. James Witmer from Earth Sun Moon Trading Company. He answered many questions in great detail, and here are three takeaways I gained from our conversation:

· Creating a “presence” in a specific market is what leads to sales. By recreating two very “UN-sophisticated websites” Mr. Witmer broadened the company’s clientele; the new sites are easier to maneuver about and explain products with more detail.

· Privacy policies are very important, especially to online stores that gather information from customers. Earth Sun Moon once had a “We never share anything, period” policy in effect. But as more and more direct-mail companies modernized and shared/rented information, Earth Sun Moon Trading Company tweaked its policy to do the same, while still allowing customers to refuse them the right to do so.

· I most revered Mr. Witmer’s explanation of Earth Sun Moon’s company culture. The owner/president receives respect only because he gives it to every single one of his employees; Mr. Witmer stated that the president “believes that using a human being in any way is immoral, and so he insists that the company/employee relationship be win-win.” He instills that belief by keeping his doors open for any questions and talking one-on-one daily with his employees. As a result, those workers have a higher morale and want to give customers the same feeling.

Is the Consumer Products Industry "Losing Its Glow"?

According to McKinsey & Company, the CPG industry seems to be doing well to the naked eye. However, it might be "losing its glow". After all the expansion in past years, this industry is not growing as rapidly in comparison. Mark McGrath, director of the Chicago office of McKinsey & Company says, "'Since the late '90s the industry has not matched its earlier strides in value, quality and convenience."'

Can this be true? Are all the new innovations we've seen while studying this industry not be helping the CPG industry as a whole? As a well-known global investment firm, should we trust them? I say yes. If you think about it, there have not been large innovations such as frozen food for a long time. Sure, CPG is making more safe, eco-friendly products, but is this enough?

http://mckinsey.com/clientservice/consumerpackagedgoods/insight.asp
http://www.mckinsey.com/aboutus/

Kimberly-Clark

Founded over 130 years ago, Kimberly-Clark is one of the most successful consumer product companies in the world. Operating in more than 35 countries, and with goods being distributed in more than 150 countries, Kimberly-Clark brought in $19.1 billion last year. Kimberly-Clark is the inventor of five of their eight major consumer product categories including the facial tissue, paper towels, toilet paper on a roll, feminine pads, and disposable training pads.  Every day, 1.3 billion people consume their brands such as Kleenex, Scott, Andrex, Huggies, Pull-Ups, Kotex.

Kimberly-Cark drives their growth by enhancing health, hygiene, and the well-being of people every day. Today the company adheres to their four core values and beliefs of being accountable, authentic, innovative, and caring. As a global company, they are “committed to cultivating a fair, respectful and engaging work environment that inspires our diverse global team to thrive professionally and contribute to the communities where we operate.” Kimberly-Clark has been a huge competitor in the consumer products industry and their growth and innovation over the past 20 years have truly impacted our world and the everyday life as we know it.

Sun & Earth, Inc

Established in 2006, Sun & Earth, Inc. has dedicated their business's pursuits on providing consumers with natural cleaners made from coconut and orange oils; the majority of national brands use harsh, man-made chemicals. Sun & Earth, Inc. hopes to reach customers who are sensitive to the chemicals in other cleaners, as well as those who are eco-friendly.

They promise that their products are as good as, or better than, the leading brands in the consumer products industry. They are free of "petroleum based cleaners, chlorine, phosphates, dyes and perfumes" (Sun & Earth, Inc.), which can harm health.

http://www.sunandearth.com/ProductsPage.aspx

Consumer trends are very important for CPG companies to take into account for they affect companies' marketing strategies. Consumer demographics are a key trend. For example, according to US census data on NetAdvantage, the age bracket demographic including 45-65 year-olds will make up 26% of the nation’s population by 2015. Companies are realizing this, and they are more strongly directing their marketing goals towards this specific age bracket. Perhaps businesses will emphasize skin repair and beauty products over other personal care products.

CPG companies also pay close attention to trends in household income. For example, while in 2008 20.5% of households made $100,000 or more, in 1970 only 7.7% of households made this much money and 22.6% of households made between $50,000 and $75,000. CPG companies must pay attention to these numbers when formulating marketing plans and target markets for their marketing. If more people have or are predicted to have more income in a particular year, companies must adjust accordingly.

http://www.netadvantage.standardandpoors.com/NASApp/NetAdvantage/showIndustrySurvey.do?code=hnd

Colgate-Palmolive's Procurement Group

According to Colgate-Palmolive's Web site, they are very committed to saving money on supply costs. They save on these costs year after year by buying from all kinds of companies from all over the world. These include man- and women-run businesses as well as minority-run businesses. Colgate strives for good supplier relationships that will surprise the stakeholders by lowering supply costs and thus making more profit.

By decreasing supply costs, Colgate-Palmolive are be able to spend more money elsewhere in place that more money is needed, or they are able to make the cost of the product lower and more affordable to the consumers. This, in turn, increases competition because people do not want to spend a lot of money on a product like toothpaste. Lowering costs for the consumer could switch some loyalties and confirm others.

http://www.colgate.com/app/Colgate/US/Corp/ContactUs/GMLS/HomePage.cvsp

Scented Consumer Products Shown to Emit Many Unlisted Chemicals

A study was recently done by University of Washington discovered that widely used fragrance products give off many chemicals that are not listed on the label, including some that are considered toxic. The study analyzed air fresheners, laundry products, fabric softeners, soaps, hand sanitizers, lotions, deodorants, all-purpose sprays, and dish detergent.  It was found that 25 commonly used scented products emit an average of 17 chemicals each. About 133 chemicals were detected and nearly a quarter are classified as toxic or hazardous under federal law. Researchers found that even some of the “green products” emitted just as many hazardous chemicals as other products. It was also found that more than a third of the products emitted at least one chemical classified as a probably carcinogen by the EPA. Manufacturers are not required to disclose any ingredients and the only product label was ethanol.

Although the study makes no claims about the possible health effects it was found in other surveys that about 20 percent of the population reported adverse health effects from air fresheners and about 10 percent complained of adverse effects from laundry products vented to the outdoors. If more people investigate these products, consumer product companies will be able to be blamed for possible health hazards. It’s surprising to hear that companies are willingly putting chemicals into their products that are considered toxic. As a consumer I find this very disturbing that I could potentially be breathing in or using products with toxic chemicals every day.

http://www.sciencedaily.com/releases/2010/10/101026091559.htm

Growth in Profit, But Concerns Over Sales

Though margin profits have improved this past third quarter, according the Wall Street Journal, many companies are worried about the future prices. Commodity prices are on the rise, forcing many businesses to make difficult financial decisions. Whirlpool Corp. has decided to lower prices of products for consumers even though input prices rose. In the consumer products market, Procter and Gamble gross margin fell from 52.6% a year before to 51.8%. P&G are seeing their costs increase due to higher commodity costs, especially from paper pulp and plastic resin; the company is off-setting these costs by seeking out other areas within the company to cut expenses and to avoid raising prices. Though many businesses have seen an increase in profit margins, economists are skeptical as to how this will aid in lowering the unemployment rate or if the economy will see such increases next year.

Many of these companies claim to be cutting back within their businesses and lowering prices for their consumers, but they are increasing their marketing expenses (WSJ). Will the possible benefit of reaching out to more customers through advertisements override the expenses of the actual marketing?

http://online.wsj.com/article/SB10001424052748704477904575586181999090898.html?mod=WSJ_Consumerproducts_leftHeadlines

L'Oreal's Mission

According to L'Oreal's web site, they have a pretty simple mission:

"At L’ORÉAL, we believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees.
We are proud of our work."

Overall, this mission is all about helping the consumer. If the consumer is happy, they are happy. They do this by making their products so that consumers can use them and be beautiful, inside and out. This mission, though not as detailed as some of the others we have seen in class, tells the consumer who they are and why the consumer should by L'Oreal's products. If they didn't have a mission statement that told the people that L'Oreal cares, people might not be so inclined to buy from them. This adds to competition because without a mission statement like this, they would not have as many customers and would not be such a large competitor in the Consumer Products Industry.

http://www2.lorealusa.com/_en/_us/html/our-company/mission.aspx?

P&G Corporate Structure

The P&G website portrays what aspects of the company’s structure make the consumer-packaged goods corporation a global and local power. P&G divides its efforts into four primary groups: Global Business Units (GBU’s), Market Development Organizations (MDO’s), Global Business Services (GBS’s), and Lean Corporate Functions. While the Global Business Units puts a strong focus on sustaining profitability in a more global sense, that is concerning shareholders, the Market Development Organizations are responsible for truly knowing consumers and retailers in specific regions. In addition to these two branches, the Global Business Services is more concerned with human resource management. P&G understands that the greater the talent level that its corporation reflects, the higher its productivity. The corporation hopes to reduce costs by sustaining these “best-in-class” partners. The last branch of the structure, the Lean Corporate Functions branch is concerned with continually innovating within the business to ensure improvements. P&G functions in a very competitive market, one in which product differentiation may be a predominantly a function of pricing strategies. For this reason, innovating products and maintaining brand awareness and loyalty is crucial. P&G’s corporate structure seems to impressively combine advantages of horizontal and vertical organizational structures. The company has a hierarchy; one can see this in its global functions versus internal motives; however, the branches incorporate a broad range of personnel, which fosters creativity and collaboration between partners.

http://www.pg.com/en_US/company/global_structure_operations/corporate_structure.shtml

Graco's Stroller Recall

On October 20^th, Graco recalled about 2 million of its strollers. In-between 2003 and 2005, four babies were strangled due to Graco’s stoller models. It is said the US Consumer Product Safety Commission (CPSC) warned the industry about possible deaths in strollers and urged companies to redesign their strollers. The CPSC ordered the recall today after a fresh review of old cases involving strollers and finding that additional fatalities can be tied to Graco Products. CPSC spokesman, Scott Wolfson, recently stated, "We reached a point where we needed to do a recall of this product to help prevent any further harm to children.” In March of this year, Graco also recalled 1.2 million highchairs which was prompted by 464 incident reports and 24 injuries.

As a consumer, it seems as if Graco is not a very good company to trust, especially when concerned about infant safety. It is likely that these recalls will continue to be very detrimental to Graco’s company and their customer satisfaction.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/10/20/bloomberg1376-LAK8OS07SXKX01-5L4IHVTMGROHLKM2V9H2QUKA4H.DTL

P&G Puts Marketing Spotlight on Newer Products

According to the Wall Street Journal, recent consumer trends have affected the consumer product market, enough to change companies’ marketing techniques. Consumers have been opting towards purchasing cheaper private-brand products, which are sold and produced directly by retailers, rather than spending the extra money for company manufacturers’ products. Companies, P&G in particular, have started reacting to this trend.

P&G, under its new market leader Melanie Healey, has launched a promotional campaign called “Have you tried this yet?” designed to spur consumer awareness and revamp consumer loyalty. The company will open a temporary store in NYC at which location customers will have the opportunity to try a variety of product lines. The campaign will also establish a website in which customers can post reviews of the products. If this campaign is successful, P&G will regain its customer loyalty. At first, its products perhaps were only a customer preference; however, by showing such consideration for its customer base, P&G hopes to have customers insist on its products.

http://online.wsj.com/article/SB10001424052702304011604575564420769116624.html?mod=WSJ_Consumerproducts_leftHeadlines

Consumer Products Lift L'Oreal

As stated in the Wall Street Journal, L'Oreal's sales increased 5.8% during the third-quarter of this year. Their products range from deodorants sold at grocery stores to loftily priced Lancome creams and scents; the lower-priced items have proven necessary in L'Oreal's growth. Since the market has been static in the current stressed economic environment, any growth has been due to market shares. In the mass-market consumer products division, sales rose 6.5% and only 5.7% in the luxury item division. Their mass-market items, such as Maybelline make-up, allows L'Oreal to gain profit from the ever-growing middle-class.

L'Oreal's widening product mix (e.g. adding a new line of deodorant this past year) has increased its target consumers, enveloping the middle-class market. Evident by third-quarter rates, positive results ensued. Perhaps increasing products that are within reach of the middle-class's price range will allow L'Oreal to continue its growth without having to lower prices of existing products.

http://online.wsj.com/article/SB10001424052702304023804575566244149896672.html?mod=WSJ_Consumerproducts_leftHeadlines

Just One Word: Bioplastics

According to the Wall Street Journal on October 18, 2010, there is a growing demand for eco-friendly products in the Consumer Products Industry. This is expected to increase the use of bioplastics for this industry that include companies all over the world. Some drivers of this new movement into eco-friendly materials include Procter and Gamble, Johnson and Johnson, Coca-Cola, and PepsiCo.

Not only is this trend going to help the environment, but it is also cheaper for the companies.

Helping to fulfill the "Green Niche," "some of these companies say their goal is not to completely replace petroleum-based plastics." All they want to do is make a product that will please customers (while making money at the same time, of course).

Again, as said in my earlier posts about the Green Movement, this will increase the competition in the Consumer Products Industry. As long as there are niches that need filling, competition will continue to increase. But will the need for aiding in the Green Movement ever stop? I don't think so because there can also be improvements--nothing is ever the best it can be.

http://online.wsj.com/article/SB10001424052748703989304575504141785646492.html?mod=WSJ_Consumerproducts_leftHeadlines

Unilever's Sustainability Strategy

According to Unilever's website, Unilever understands that the world is changing and has decided to change with it. They are focusing not only on their factories but they are also focusing on the bigger picture: from sourcing their natural resources to how their consumers dispose of their products.

Unilever added sustainability to their goals in the 1990s and then in 2005, they began to use Brand Imprint to integrate their new agenda into their old one.

Their main idea is that if they educate their consumers and then in return their consumers make a small change, this will quickly add up and make a big difference.

Stating this objective outright on their website shows their consumers that they are serious about "going green." Because of this, they will most likely gain more consumers because people know that Unilever cares and since the company is caring, maybe if they (the consumers) buy their products it means that they too care. This can increase competition because it seems like many companies are jumping on the Green Movement bandwagon. If more and more companies improve their sustainability, competition will increase and our world will be in much better shape overall.

http://www.unilever.com/sustainability/strategy/vision/index.aspx

Illinois Consumer Product Enhancement Competition

The Nielson Company, along with Walgreens and the Women's Business Development Center, is holding a Consumer Product Enhancement Competition in Illinois. Eligible candidates are females who own Illinois-based consumer product businesses. The winner receives $10,000, $5,000 worth of technical support, and advice from the Nielson Company, which is "a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related assets." The winner will be announced on December 15th and by using the prizes, the winner will have the opportunity to place her products on the shelves at Walgreens.

This is a great way to introduce new players in the consumer products industry into the mainstream market (via Walgreens). It will also strengthen such players with the help of the Nielson Company. As a result, competition among similar companies may increase, leading to a wider variety (and higher quality) of goods for consumers.

http://www.kansascity.com/2010/10/11/2297518/the-nielsen-company-joins-with.html

http://www.nielsencpecompetition.com/

"Ghost" Brands

Marketers have recently been trying to revive old and faded “ghost” brands. “Ghost brands” are brands that have become ghosts of their former, successful selves and that have now been moved down to the bottom shelf below newer products. The idea is that it “can be less expensive to stimulate consumer memories of once-famous products, which had been backed with considerable ad budgets, than to spend enormous sums to introduce all-new products.”

Two specific “ghost brands” that are attempting to be introduced are the Sure line of antiperspirants and deodorants and Pert Plus line of hair care products, both sold by the Idelle Labs division of Helen of Troy. It is said that there has been no money spent on advertising for either brand since 2007. However, Idelle is going to spend an estimated amount of $15 million on each campaign. Marketers are hoping to “reconnect with lapsed users” and “re-establish the brand name.”

I believe it’s going to be very interesting to see what will happen when these “ghost” brands are reintroduced and what the consumer response will be.

http://www.nytimes.com/2010/10/11/business/media/11adnewsletter1.html?sq=Consumer products&st=cse&adxnnl=1&scp=1&src=busln&adxnnlx=1286848899-aesJT/86swf1WCpUGkDBzQ

Retailers' Holiday Hinges on Discounts

This article comments on the common goal of consumer attraction among various consumer packaged goods companies during the holiday season. A 2.3% increase in overall holiday sales is expected for this year over last year, and much of this increase, as Wal-Mart Stores’ chief executive says, will be as a result of a “price-focused” approach to marketing.

This past September, the back-to-school season increased the consumer demand; however, lately, customers just aren’t buying as much. A mother of two in St. Louis explained: “I can’t spend what I would like to spend in fear of the well running dry.” It is evident that this price-focused device of marketing is highly necessary. The increasing prevalence of sales on consumer-packaged items will boost companies’ net profit substantially.

http://online.wsj.com/article/SB10001424052748703298504575534322091748554.html

Moody's Upgrades Clorox On Debt Reduction After Burt's Bees Buy

According to the Wall Street Journal on October 5, 2010, Moody's Investment Service increased its rating of Clorox by one step because of their great earning in profits which brought them out of debt--In 2008, they earned $925 million because they took over Burt's Bees. This acquisition brought Clorox closer to the "health-and-wellness" department of the consumer products industry.

However, Moody's Investment Service does not see a change in rating due to Clorox's recent selling of a "private-equity firm" for $780 million.

This boost in ratings could potentially increase the variety of their consumers. Since they are moving more towards the "health-and-wellness" department, their types of consumers will most likely increase because they are now selling a larger variety of products.

http://online.wsj.com/article/BT-CO-20101005-711045.html

J&J Admits Misleading U.S. Motrin Recall

Johnson & Johnson were recently reprimanded in Congress over their Motrin recall in 2009. This year J&J has had to pull over 300 million bottles of top selling brand medicines from American shelves this year, including child brands.  The recall came about when the FDA found contaminated ingredients and fifthly equipment at a Pennsylvania factory and then problems with a Puerto Rico Plant. The FDA was told of the Motrin recall in April of 2009, however they did not hear about a recall plan till months later. A unit of J&J did not alert stores and the FDA about the 2009 recall and instead bought back the stock through contractors posing as customers. Although there were no reported injuries due to the product, lawmakers have accused J&J of placing their profits over the welfare of their customers.

It is said that the company is spending $100 million to improve manufacturing and they are trying to get some of their products back on the market. Many store shelves that once held J&J brands, now are empty giving other companies an advantage. J&J’s stock has decreased and experts have said that J&J will have to convince buyers to consume their products once production consumes. As a consumer, it’s frightening to hear that commonly used cold medicines are being recalled because they are being considered unsafe.

http://www.reuters.com/article/idUSTRE68S5DP20100930?pageNumber=2

FDA Warns on Mouth-Rinse Marketing

Sodium Fluoride, an active ingredient in Johnson & Johnson's Listerine Total Care Anticavity Mouthwash and CVS and Walgreens's generic brands of mouthwash, has been claimed by such companies to prevent gum disease and reduce plaque. The FDA disproved the claim after clinical studies proved that sodium fluoride only prevents cavities. All the companies must revoke the claims "within 15 days or risk seizure of the product or other civil or criminal penalties" (WSJ).

Johnson & Johnson reported an increase in earnings, but forecasts a decrease for the rest of the year; CVS is struggling to keep up with the prospering Walgreens Care Corp.

Since many consumer products deal with the health of their consumers, it is important for FDA warnings to be taken into account quickly. Although no health risks have been reported from sodium fluoride, consumer loyalty may be tested if the companies do not take the warning seriously. The companies have to prove their interest in their customers. Johnson & Johnson has much to prove since many of their over-the-counter medications have recently been recalled (WSJ).

http://online.wsj.com/article/SB10001424052748703882404575520111491711620.html?mod=WSJ_Consumerproducts_leftHeadlines

P&G Sets New Environmental Goals

P&G, the worlds largest consumer products company, proves to us that even the most efficient and profitable businesses can continue cutting costs on their production. The company has recently pledged to improve its energy efficiency by reducing waste build-up. P&G plans to accomplish this goal by using only renewable energy to fuel its factories as well as renewable inputs to construct and ship its products. Bob McDonald, CEO of the company, is motivated by social recognition and “do[ing] the right thing;” however, there are other benefits as well.

By converting 100% of its inputs into renewable resources, P&G will cut its production costs enormously. Money that would go towards purchasing non-renewable materials could be tacked onto the company’s net revenue and either saved or put towards another function of the business, like advertising. Although it is a lofty goal, this 100% reduction of waste could help solidify P&G’s top spot in the industry for many years to come.

http://online.wsj.com/article/SB10001424052748704654004575518122291029064.html

Unilever's Expensive New Sheen

In the Wall Street Journal on September 28th, it stated that Unilever is paying $37 million for Alberto Culver, a deal that may be looked as a trick. This new acquisition should increase Unilever's after-tax profit .5 percent. In the future, Unilever will need to expand its beauty products such as TRESemme because this part of the company is only a small part of the sales at this moment in time. This acquisition has also made Unilever the "world's top supplier of hand conditioner and No. 2 in shampoo to add to its leading position in deodorants." However, competition is growing with L'Oreal and Procter and Gamble right up with Unilever in the hierarchy.

This competition is proving to be a good thing for Unilever. Without it, they probably would not have tried to buy Alberto Culver or any other companies they have acquired. They wouldn't have to because there would be no threat of anyone taking over their company. But the question is: will this very steep price paid for Alberto Culver actually pay off?

http://online.wsj.com/article/SB10001424052748704654004575518103803288226.html?mod=WSJ_Consumerproducts_leftHeadlines

J&J's Quality Control Draws Scrutiny

Johnson and Johnson recalled bottles of infant and children's Tylenol in August 2009 after learning that the medicine could be contaminated with bacteria that can "cause serious respiratory infections like pneumonia in patients suffering from weakened immune systems" (WSJ). Though recalled in August, it was not made public until September. J&J's corporate responsibility is in question. Though previous events, such as 1982's quick and public recall of tampered bottles, have strengthened J&J's image, they will have to work hard to gain back their customer's good will. J&J sells a large variety of products, so pulling Tylenol from the shelves for a short period of time will not harm the company financially.

J&J should have immediately warned the public when this issued arose. As stated in the article, the variety of products sold by J&J aids it the company's ability to pull Tylenol from the shelves without monetarily harming them. With customers now on edge due to the safety of their purchased products, as well as lack of trust they now have in J&J, the company may now lose more clientele than if they were to publicly announce the recall when it first happened.

Wall Street Journal, print. (29 September 2010)

Bed Bath & Beyond Posts Higher Net

Over the course of this past year, Bed Bath & Beyond Inc. has been a model for other house ware businesses, exceeding its own profit predictions again and again. The business has only been able to further increase its revenue as a result of Linens ‘N Things’ drop out from the market. Acting as a leader in the industry, Bed Bath & Beyond capitalized on this loss of competition by reducing its advertising costs, a heads up and logical financial move by the company.

Bed Bath’s improvements are evident. In the latest period of this past year, it increased its profit by 34% and its revenue by 12% since last year. The company had predicted a sales increase in the high single digits by the end of the year, and it generated 7.4% increase, which was on the upside of the prediction. In addition, the company’s gross margin rose by .5% as well.

As a result of such steady improvement, Bed Bath continues to grow. In just the latest marking period of this year, the company has opened seven new stores.

http://online.wsj.com/article/SB10001424052748703860104575508262854850010.html?mod=WSJ_Consumerproducts_leftHeadlines

P&G's Impact In The Consumer Product Industry

Proctor & Gamble (P&G) is currently the most influential and largest producer in the consumer products industry. P&G has more than 250 brands and focus on five main categories: laundry and cleaning, beauty care, paper goods, food and beverages, and health care. Their major brands include Crest, Charmin, Downy, Pampers, and Tide, Pantene, and Pringles. They believe in sustainability and have a high environmental awareness. P&G is always innovating and reformulating products to make sure they are safe in respect to human health and the environment. P&G’s strong marketing strategies and high sales performance have continued to pressure other consumer product companies and have secured them as the leader in the industry.

Recently, an article was published in the New York Times on how one of P&G’s brands, known as Cascade, has been experiencing issues with their dishwashing detergent. Responding to a recent environmentally friendly law, detergent makers had to cut back on phosphate, a crucial ingredient of dishwashing detergent. Consumers have been extremely disappointed with the efficiency of Cascade’s detergent and say that they are running their dishwashers twice in order to fully clean their dishes, which is resulting in more unnecessary water consumption. As a result, Cascade is doing their part to protect bodies of freshwater; however, they are losing consumers rapidly.

http://www.sustainability-index.com/djsi_pdf/Bios06/CBR_ProcterGamble_06.pdf

http://www.nytimes.com/2010/09/19/science/earth/19clean.html?ref=procter_and_gamble

Unilever in Advanced Talks to Buy Alberto Culver

In this Article of The Wall Street Journal on September 27, 2010, it is stated that Unilever wants to buy Alberto Culver Co., a company that makes hair products. They will pay "$35.50 cash", which is more than the price said prior to this one. The Alberto Culver Co. consists of products made by TRESemme, Nexxus, St. Ives, and Noxzema. This purchase is happening one year after Unilever purchased Sara Lee Corp for $1.72 billion in cash.

Unilever includes brands such as Dove, Degree, and Suave. Its sales are up 7.9% for these products and the total sales for the entire company are up 3.8% from last year.

The acquisition would put Unilever in competition with Procter and Gamble. This would also increase Unilever's presence in North America.

If this purchase does go through, the competition in the Consumer Product Goods Industry will increase. Unilever will probably become an even more prominent company in this industry and will then have more control.

http://online.wsj.com/article/SB10001424052748704082104575516451048694186.html?mod=WSJ_Consumerproducts_leftHeadlines

Compass to Buy Ergo Baby Carrier

Compass Diversified Holdings Inc. has decided to buy Ergo Baby Carrier Inc., a newly emerging baby products company. Compass has looked to support small to medium sized companies that have the potential to grow despite the upset state of the economy. Ergo has proven its potential, gaining revenues of $22.8 million in 2009.

By merging with Compass, Ergo will benefit greatly, for Compass will further diversify the products the growing business offers. Not only will consumers now associate Ergo’s reputation with Compass, but they will also have a wider variety of products to choose from. This should increase consumer demand for Compass products. At the same time, Compass, investing in leaders of niche markets, will benefit from Ergo’s top notch specialization in baby carriers, baby backpacks, and other products that reflect this particular niche.

http://online.wsj.com/article/SB10001424052748704394704575496222162050434.html

P&G's Merge With Gillette

In 2005, Proctor & Gamble merged with Gillette Co. in a $57 million deal, creating the world’s biggest consumer-products enterprise.  The combination brought the marketing strengths of P&G, whose products are marketed towards women, together with Gillette’s high profit brands which are marketed towards men. News of the merge immediately sent Gillette’s shares up 12 percent; however P&G dropped 2.7 percent. The merge was said to result in the elimination of about 4 percent of the combined workforce of about 140,000. The merger created a company with revenues of more than $60 billion.

                P&G has remained one of the most successful consumer products enterprises. In 2006, revenues went up 12.6% and its ranking went up to become the 24^th largest corporation in America. Since 2005, stock increased up until around 2009 when the economic crisis hit and stock prices plummeted. However, since the stock market crash, stock prices for P&G have been increasing at a steady rate.

http://money.cnn.com/quote/quote.html?symb=PG

http://www.msnbc.msn.com/id/6878219/

http://money.cnn.com/magazines/fortune/fortune500/snapshots/1389.html

The Green Paper Company: Using the Eco-Friendly Environment of Today for a Profit

The Green Paper Company, as according to their website (greenpapercompany.com), emerged in 2008 as the industry's first "reliable source for post-consumer recycled stationery." All products are composed of 30%-100% recycled material. Their products are also produced in mid-west USA with US materials, contributing to the lessening of their carbon footprint (e.g. shipping distance is decreased). Not only are their products green, but the methods in which they make them are, as well. Any component of their process is eco-friendly, from "paperclips to pens."

Today's society has become very aware of our environment. Damaging effects of careless consumers in the past, such as CFCs in hairspray used by many females, have left a huge imprint on our world today. Many up and coming businesses,like the Green Paper Company, are taking the consumers' preference of "green" into account when starting up. Existing companies are launching new lines of eco-friendly products to keep up with such competitors. One example includes Clorox, which has a new line called Green Works, which is comprised of natural household cleaning products. The green trend has created a new branch for starting businesses and has forced older businesses to accommodate to the new consumer preference.

http://www.clorox.com/

greenpapercompany.com

NewPage Group Inc.

According to www.hoovers.com, a well respected financial reporting website, NewPage Group Inc. is a new company which formed between April 2008 and June 2008. This company produces paper (about 4.4 million tons every year) and sells its paper and paper products. It is part of NewPage Corp, one of the largest producers of coated and specialty paper in North America. This is a private company with 8,503 employees.

Since this smaller company joined a larger one, it added to the old company's competitiveness because it could help make more products for less money. Since this company already had a larger company to connect to, they were not bothered by this highly competitive industry. Had they had to start on their own, they would have needed to have a huge amount of resources in order to affect the competition. Therefore, this company affected the competition because they helped make NewPage Corp. more competitive.

http://www.hoovers.com/company/NewPage_Group_Inc/ryxtcxi-1.html

J&J Bids $2.3 Billion for Crucell

Johnson & Johnson has put down a bid of $2.3 billion to buy a part of Crucell "that doesn't already own a bid" so that Johnson & Johnson can have more control in the area of vaccines. Johnson & Johnson has already stated that if it does gain control of Crucell, they will keep all "senior management and its existing facilities."

However, a representative of Crucell, shareholder Gertjan van der Baan, says that this bid is too low due to the potential of the company if it does join up with Johnson & Johnson.

Johnson & Johnson wants the control of vaccines because vaccines have more sales and profits than prescription-drugs with not as much competition. As of now, Crucell and Johnson & Johnson are working together to make a vaccine for all flu strains which is in its early stages of production.

If Johnson & Johnson buys Crucell, Johnson & Johnson will earn a very large profit from these vaccines. The price of buying the company will probably be covered by profits from the vaccines in a short amount of time. But what if the vaccines do not help the company enough? Will the vaccines still have been considered a "good buy" if Johnson & Johnson is still helping humanity in the long run because these two companies can work together to make better vaccines than we have today? Or will there be no affect because the vaccines are already available to the consumer through Crucell so nothing will change if Johnson & Johnson buys Crucell?

Avon: The Company For Women

For nearly 125 years, Avon’s goal has been to help women achieve empowerment. They believe in “commitment to such critical areas as economical empowerment, environmental stewardship, and production responsibility." They have given tens of millions of Avon Independent Sales Representatives the opportunity to earn money in order to provide for their families and potentially "realize their personal dreams." Avon’s foundation and who they strive to be is based on five key principles of trust, respect, belief, humility, and integrity. 

Avon is committed to the well-being of women and society by contributing to philanthropic efforts such as supporting a cure for breast cancer and an end to domestic violence. By 2010, Avon will have contributed over $1 million to philanthropic funds. By 2012, they also have plans to reduce energy consumption by 10%, GHG emissions by 10%, and water consumption by 7%. They strive to maintain their commitment of being a “socially responsible, ethical company that is watched and emulated as a model of success.”

http://responsibility.avoncompany.com/page-88-Welcome

Colgate Palmolive Company: Ethics and Society

Colgate Palmolive Company has three fundamental values: caring, global teamwork, and continuous improvement. Colgate Palmolive focuses on being ethical in all situations dealing with “Colgate people, customers, shareholders and business partners,” as well as protecting the environment. Working throughout the globe allows the Company to grow through technologies and talents abound in other nations. Products and services are continually enhanced to provide better goods for customers.

Seeing as one of Colgate Palmolive Company’s values is continuous improvement, they have and continue to achieve environmental good-doings in order to protect and better our environment. They have reduced waste and packaging. They had goals set up between the years of 2002 and 2010 to exceed environmental regulations: “reduce energy use per ton of production by 25%, reduce CO₂ emissions per ton of production by 25%, reduce water use per ton of production by 40%, [and] reduce wastewater contaminants by 30%. “ Not only do their good deeds protect our world, but “it makes good business sense.” This is so because it proves to the community that this company cares about society, increases support for Colgate Palmolive.

http://www.colgate.com/app/Colgate/US/Corp/LivingOurValues/CoreValues.cvsp

Electronic Mirrors Sell Lipstick and a Makeover

Major sellers, for example Wal-Mart, are beginning to test what are called "virtual mirrors" in their stores. This new function was created by a small start-up called EZface Inc., and its idea is aiding in larger competing companies' sales.

The service offers an individual kiosk to a consumer in which she can select an number of different makeup applications. At the push of a button, the consumer can simulate her appearance with the addition of the stores makeup.

The service that Wal-Mart is providing for EZface makes one wonder whether the startup would survive without a larger facilitator. Cosmetic companies may not feel the need to place EZface services within their stores. Although L'Oreal has updated its website with new customer functions that use the IBM technology behind EZface, L'Oreal has not established kiosks in stores. In light of corporate social responsibility, Wal-Mart is a good corporate neighbor in this case, aiding in another company's growth. This improves Wal-Mart's overall reputation as well as its sales.

http://online.wsj.com/article/SB10001424052748703700904575391213196820750.html

J&J Stepping Up Fight Over Drug

In this article, Johnson & Johnson states that they want to be paid for damages done by Merck & Co while Johnson & Johnson was trying to "dissolve a partnership for the anti-inflammatory drugs of Remicade and Simponi." However, Merck says that if they do pay the damages, the affects would "have a 'material adverse affect' on its financial position, liquidity and operational results."

The dispute will be heard later this month over a minimum of twelve business days. Three federal judges will listen to the case and then decide within twenty business days after the trial who wins the case. The winner of the case will get the ownership of Remicade, a drug that treats arthritis and gastrointestinal disorders.

The fight began last year when Johnson & Johnson was doing business with Schering-Plough who was then bought by Merck. Johnson & Johnson wanted to keep their terms of distribution of drugs but Merck would not agree.

Ethics play a very large part in this dispute. Is it ethical for Johnson & Johnson to dissolve their partnership? Or is it ethical for Merck to not allow the dissolve? Johnson & Johnson's Credo of Values states that it is their promise to put their customers first. I don't think they are doing this by trying to dissolve these medications that could help people. Yes, they may lose some money because of the drugs, but they will be sticking by their values. Also, Johnson & Johnson has a huge profit. How much could this one product affect them, assuming there is not a giant recall once it is out on the shelves? However, they also say that it is their responsibility to keep prices low and give their suppliers and distributers the opportunity to make a fair profit. If not dissolving the product means that prices rise and they lose profit, this is not the right thing to do.

It seems to me like Johnson & Johnson is stuck between a rock and a hard place. Their position is complicated and unless we know the outcome of dissolving the drugs or not dissolving the drugs, we cannot judge whether Johnson & Johnson is making the ethical choice.

http://online.wsj.com/article/SB10001424052748703720004575477512417209570.html?KEYWORDS=Johnson+and+Johnson

Estee Lauder, Elizabeth Arden Swing to Profit

Estee Lauder Company and Elizabeth Arden Incorporation both increased profits this past fiscal quarter due to an increase in consumer purchases.

Estee Lauder saw a decrease in fragrance purchases and an increase in skin-care products, and as a result, the company reconfigured their pricing; international purchases, especially in Asia (and particularly China), have increased, part of which is due to duty-free stores in airports. Estee Lauder’s fourth-quarter profit was reported to be $23.9 million.

Elizabeth Arden saw an increase of purchases in both departments. Profits can be accounted to higher income-tax benefits due to an increase in those sales, as well as decreasing costs and bettering technology. Elizabeth Arden’s fourth-quarter profit was reported at $2.3 million

Due to markets in other areas of the world, Estee Lauder was able to make a profit this past quarter, as opposed to losing money as in the following year. The increase of travel in Asia, especially China, had great impact on the profits accrued. The duty-free stores in international airports allow foreign consumers to purchase products without being charged extra fees. Seeing the trend in international travel, it would be wise to fill more shelves in more airports with such beauty products; the benefits and profits are evident.

http://online.wsj.com/article/SB10001424052748704407804575425083509669028.html

"Shoppers Still Stick To Payday Purchases"

Recently it has been noticed that many consumers are sticking to the “paycheck cycle”, although the economy has been improving. The “paycheck cycle” consists of consumers buying products typically during the first week of the month in the U.S and then cutting back on spending as they run out of money. The cycle is typically driven by people who are living from “paycheck to paycheck.”


Consumer companies have been having a difficult time figuring out how to appeal to consumers and use this system to their. It’s been important to learn how to time promotions and when to increase the stock of demand for certain products. The more-affordable brands have been most affected by this system because shoppers with low incomes and those receiving government benefits are the ones who need to stock up on necessities at the beginning of the month when they first receive their paychecks.

It’s important for consumer product companies to understand this cycle and increase discounts during times when consumer spending increases. They need to work with consumers and their habits in order to succeed in this economy, especially when we are in a recession. It is likely that this cycle will become habit and it’s going to become necessary to work with it rather than against it.

http://online.wsj.com/article/SB10001424052748703618504575459563277106940.html?mod=WSJ_Consumerproducts_leftHeadlines

Estée Lauder's Counter Makeover

Estee Lauder cosmetic company has recently altered its selling to be more consumer- friendly by making its products more easily accessible in department stores as well as showing more overall customer concern.

The company originally lost sales as a result of inconvenience in stores. Customers could not easily browse products, price tags were somewhat hidden, so the buying process was tedious. In consequence, department stores’ profits, which account for a third of the beauty industry’s profit, dropped by 9% in the past year in comparison to the mere 1% overall industry decline.

Estee Lauder has incorporated a new counter design, placing its products out in the open for browsing. The chain Macy’s agrees with this change saying consumers like to “browse independently,” so the company has evidently become more costumer-friendly. This move along with the addition of new stores and television ads has increased consumer demand. In particular, Estee Lauder has given away around 400,000 free samples of Advanced Night Repair eye treatment. This is not all. The company follows up on each consumer’s opinion of the product ten days after receiving it to show more consumer consideration, a key aspect to making a customer love a product.

In reflection, consumer awareness is crucial. The fact that sales doubled during the week of this free product give-away reveals that consumers appreciate that companies keep their interests in mind.

To Wash Hands of Palm Oil Unilever Embraces Algae

Unilever, producer of Dove soap, Vaseline lotion, Magnum ice cream and other mainstream products, is committed to the use of algae as a source of getting natural oil. This is instead of using palm oil which can be harmful to the environment. Unilever recently invested in a company called Solazyme Inc., which "harvests" this algae, because there was an increasing amount of pressure to become eco-friendly.

This algae will not take the place of natural oils any time soon (it might take up to seven years for this to happen) because this new process needs to be tested on humans and changes need to be made. However, algae is seen to have great potential.

The process through which Solazyme "harvests" the oil is somewhat simple: they use plant-matter as food for microalgae which naturally have the ability to make oil without harming the environment.

Other companies such as Nestle and Kraft are also looking into alternatives to natural oil. Solazyme, among other things, is also trying to use algae in fuel for the Navy.

If companies like this are able to use oils from algae, demand will increase because people who are trying to promote saving the environment will be more apt to buying these products. This may take a long time to perfect, but it is on its way. Overall, the companies who are pursuing this alternative will benefit because of the huge push for eco-friendly products.

http://online.wsj.com/article/SB10001424052748703720004575477531661393258.html?mod=WSJ_Consumerproducts_leftHeadlines

Regulators: Rash Not Pampers's Fault

The Pampers brand of Procter & Gamble Company had been under inspection by the U.S. Consumer Product Safety Commission and Health Canada to declare the effect the new Pampers Dry Max diapers had on skin. 4,700 reports of diaper rash were reported to the CPSC, but about 85% of reports followed the national attention surrounding the allegations.

Pampers comprises 11% of Procter & Gamble’s revenue. P&G lost sales during the controversy, but has since increased revenue. With the report from CPSC stating there is “no link between the company’s new Pampers Dry Max diapers and reports of diaper rash,” it can be inferred that revenue will continue to rise because, as a society, we tend to return to our old habits, which include purchasing familiar brands, like Pampers.

http://online.wsj.com/article/SB10001424052748704206804575467820450509254.html

Heavy P&G Promotions Pinch Profit

Proctor and Gamble, due to the recession, has been having a difficult time making profits overall within the consumer goods industry. As of August 4th, P&G was up five percent in their sales due to publicity. However, they had to lower their prices so the company's overall prices were less than expected.

Usually, Proctor and Gamble offers high-end products but because of the hard economic times had to put out more products which the consumer would be more likely to purchase. They used price promotions and created new products to try to get consumers to purchase their goods, raising the amount of products sold overall; changes in prices lowered sales by one percent as a whole.

Lower prices of Proctor and Gamble products is beneficial for consumers because they are able to purchase more products for less money. Lower prices are also beneficial for the company overall because people will return to the corporation later, even after prices have risen again.

http://online.wsj.com/article/SB10001424052748703545604575406873653461804.html

"Cost Savings, Sales Help L'Oréal's First-Half Profit"

After a difficult year in 2009, the world’s largest cosmetic company by revenue, L’Oréal, has had an operating profit increase of 21% to €1.67 billion this year. They launched a series of initiatives such as new lines of cheaper and more basic products outside their existing brands of Maybelline, L'Oréal Paris, and Lancôme. L’Oréal has been taking advantage of emerging markets in China, Brazil, and India where new western brands products are in high demand. They have expanded their production of new products such as deodorant which has captured a larger range of shoppers. L’Oreal has also benefitted from cutting back on their job perks and traveling cost, however, they have not decided to let up on advertising and research spending.


L’Oréal’s higher price tags on its products have given the company an advantage compared to other companies with tighter margins. By taking advantage of new emerging markets, L’Oreal is going to continue to grow and continue to pressure other cosmetic companies. Their strong rebound from the economic crisis will continue to uphold their reputation as the world’s largest cosmetic company.

As consumers, we will continue to be affected by L’Oréal’s profits as we are bombarded with advertisements selling Maybelline lipstick, L’Oreal’s Paris’s hair product line, and Lancôme fragrances. As business students, this company’s profit is important because it will affect all cosmetic companies in the consumer product goods industry.

"Panasonic Says US Flat-Panel TV Sales Slowing": Knowing One's Consumer Demand

A combination of a “deteriorating economy” and over production of smaller sized televisions by U.S. manufacturers has caused a significant decrease in sales for Sony and Panasonic. Ironically, an optimistic sales benchmark for these products is supposed to be one aspect facilitating future economic recovery.

-Sony’s sales increase prediction: 67%

-Panasonic’s sales increase prediction: 33%

It makes sense that inventory of LCD televisions has recently increased as a result of a recuperating economy after an economic slump in early July and beforehand. Supply is now higher, allowing Sony and Panasonic to lower their prices, in turn attracting more demand from consumers. Supply should continue to bounce back.

-2 extra weeks of inventory in U.S.

A decrease of sales in China could be the result of a decline in trade with foreign nations. For either country in the trade relationship, a lack of supply and higher prices might have repelled consumers significantly. Panasonic or Sony may have also attained a surplus of smaller sized televisions, those in lower demand, and they are now lacking in sales.

Above all, it is important for these two companies to understand the specific consumer demand which is larger sized televisions, for people tend to replace their old televisions with newer and larger models at low prices.

-Television depreciation: 20%-30% per year

My Article

http://online.wsj.com/article/SB10001424052748703632304575451620301585114.html
I'm writing about this article. It's titled Cost Savings, Sales Help L'Oréal's First-Half Profit.
-Lisa

First Post

Hey Connor, Molly, and Kelsea,
This is our blog! Just remember to post what you're writing about right when you decide!
-Lisa